2015 (5) TMI 1004 - AT - Customs

Levy of penalty - CHA - appellant was made co-noticee, wherein it was alleged that the appellant Shri Sanjay Kashikar filed the Bill of Entry in a casual manner and failed to exercise due diligence to ascertain the correctness of the information regarding true nature of the same. It was also alleged that the importer and the appellant deliberately attempted to clear the goods on payment of zero duty by mis-declaring the goods with the intention to evade payment of duty, thereby making it liable for confiscation under Section 111(m) & (o) of the Customs Act, 1962. Accordingly, it was alleged that the appellant appears to be liable for penalty under Section 112(a) & 114AA of the Customs Act, 1962. Held that - the issue is settled by the main party, before Settlement Commission. The issue is also squarely covered by the majority decision of this Tribunal in the case of S.K. Colombowala 2007 (7) TMI 514 - CESTAT, MUMBAI , wherein this Tribunal has held that once the case is settled by the Settlement Commission, it is settled in its entirety and such a case then, cannot be adjudicated qua other co-noticees. As regards imposition of penalty under Section 112 on the co-noticee, it was held that cases against all co-notcees comes to an end once order of settlement is passed in respect of the person entitled to file an application before the Settlement Commission, hence penalty imposed on the appellant cannot be sustained. - Decided in favor of appellant.

Summary

Issues: Mis-declaration of imported goods, Allegations of mis-classification, Penalty imposition under Customs Act

Issue 1: Mis-declaration of imported goods
The appellant, a proprietor of a firm holding a CHA License, filed a Bill of Entry for clearance of goods on behalf of their clients, misinterpreting the goods as telecommunication equipment instead of solar inverters. The Department alleged mis-declaration and failure to exercise due diligence, leading to an investigation and a show-cause notice. The appellant was made co-noticee with the importer, facing allegations of attempting to clear goods on zero duty by mis-declaring them, thus evading duty payment.

Issue 2: Allegations of mis-classification
The Department issued a show-cause notice to the appellant, alleging mis-classification of imported goods under the Customs Tariff. The investigation revealed that the goods were solar inverters classified under a different category. The Commissioner imposed a penalty on the appellant under the Customs Act for this mis-classification, leading to the appellant's appeal before the Tribunal.

Issue 3: Penalty imposition under Customs Act
The appellant argued against the penalty, claiming that the mis-classification was not intentional and that the first check examination was conducted to ascertain the goods' classification. The appellant contended that there was no provision for confiscation of goods due to mis-classification and that no false declarations were made knowingly. The appellant further highlighted the Settlement Commission's decision in the main noticee's case, where no confiscation or fine was ordered, questioning the imposition of penalty on the appellant.

Judgment Analysis:
The Tribunal considered the settled case of the main party before the Settlement Commission and the precedent set by a previous Tribunal decision. The Tribunal held that once a case is settled by the Settlement Commission, it cannot be adjudicated against other co-noticees. Relying on the precedent, the Tribunal concluded that the penalty imposed on the appellant for mis-classification could not be sustained. Therefore, the Tribunal set aside the penalty imposed on the appellant under the Customs Act, allowing the appeal and granting consequential benefits, if any, in accordance with the law.

This detailed analysis covers the mis-declaration of imported goods, allegations of mis-classification, and the penalty imposition under the Customs Act, providing a comprehensive overview of the judgment delivered by the Tribunal.