2014 (11) TMI 1103 - HC - Customs

Validity of order passed by Settlement Commission - CHA - undervaluation and misdeclaration - import of Base Oil classifiable under CTH 2710 19 60 - the petitioner/Company and its Managing Partner claim immunity from penalty and fine solely relying upon the earlier order passed by the Settlement Commission dated 24-8-2012 - Held that - there was no evidence to show that the co-applicants derived pecuniary advantage though they had assisted in documentation etc. the Settlement Commission was inclined to take a lenient view and absolved them from imposition of penalty. Accordingly the Commission passed the order imposing penalty only on the main applicant namely M/s. Lubecon Petroproducts Pvt. Ltd. and granted full immunity from penalty in respect of co-applicants which included Mr. Zahroorul Huq This Court is inclined to make such an observation in the light of the fact that all allegations against the petitioner emanated on account of the action said to have been done by Mr. Zahroorul Huq. Once full immunity from penalty has been granted to the said Mr. Zahroorul Huq it necessarily follows that the benefit should also flow to the petitioner/company - the Commission ought to have taken into consideration the earlier order dated 24-8-2012 as it emanates from the same cause of action and granted full immunity from penalty to the petitioner. The petitioner s Customs House Agent Licence having already been revoked and as against the said order the petitioner has filed an appeal before the CESTAT which shall be independently agitated by the petitioners and this order shall have no effect on those proceedings. - petitioner/company is granted full immunity from penalty - petition allowed.

Summary

Issues:
Challenge to order passed by Customs and Central Excise Settlement Commission regarding penalty imposition on Customs House Agent and Managing Partner for facilitating misdeclaration and undervaluation of imported goods.

Analysis:
1. The petitioner, a Customs House Agent (CHA), and its Managing Partner challenged an order by the Customs and Central Excise Settlement Commission regarding a show cause notice issued to an importer for undervaluation and misdeclaration of imported goods.

2. The petitioner filed an application before the Settlement Commission, contending that the importer was issued a show cause notice demanding differential duty. The Commission settled the issue by demanding duty, interest, redemption fine, and penalty, granting full immunity to co-applicants but imposing penalties on the CHA and Managing Partner.

3. The petitioner argued for full immunity based on the earlier order exonerating co-applicants. The Commission held the CHA and Managing Partner responsible for facilitating misdeclaration by not obtaining required authorization from the importer, imposing penalties on them.

4. Proceedings were initiated under Customs House Agent Regulations, leading to the revocation of the petitioner's license, pending appeal before CESTAT.

5. The Commission found the CHA and Managing Partner liable for penalties due to their involvement in facilitating misdeclaration and undervaluation, rejecting their claim for immunity based on the earlier order.

6. The Court observed that since full immunity was granted to co-applicants, including an employee of the petitioner, the same benefit should extend to the petitioner/company, setting aside the penalty imposed by the Commission.

7. The Court emphasized that the allegations against the petitioner arose from actions of the employee who received immunity, thus warranting the extension of the same benefit to the petitioner/company.

8. Consequently, the Court allowed the writ petitions, granting full immunity from penalty to the petitioner/company based on the earlier order's findings, ensuring no discrimination against them, and directing the separate appeal regarding the CHA license revocation to proceed independently.