2009 (10) TMI 625 - HC - Customs

Penalty - penalty under the provisions of Section 114 of the Customs Act, 1962 (for short the Act ) for being in the position of an abettor with an exporter, who had not only misdeclared the goods meant for export but had also over-valued the goods with an intention to claim additional or extra duty draw-back to which, he was otherwise not entitled to - Tribunal reduced the penalty from Rs. 2,00,000/- to Rs. 50,000/- in terms of the order - Held that - no error or mistake or illegality in the order passed by the Tribunal and accordingly, this appeal is dismissed.

Summary

Issues:
Appeal against imposition of penalty under Section 114 of the Customs Act, 1962 for abetting misdeclaration and over-valuation of goods for duty draw-back.

Analysis:
The case involved an appeal by a Custom House clearing agent against penalties imposed under Section 114 of the Customs Act, 1962 for abetting an exporter in misdeclaration and over-valuation of goods for duty draw-back. The Original Authority had levied a penalty of Rs. 2,00,000 on the appellant-license holder for being an abettor in the exporter's actions. The First Appellate Authority upheld the penalty but considered the duty draw-back amount and maintained the penalty at Rs. 2,00,000. The Appellate Tribunal reduced the penalty to Rs. 50,000 considering the appellant's clean record. The appellant challenged the reduced penalty, arguing lack of evidence for a contumacious role, failure to exercise due diligence, and innocence in the exporter's mischief. The High Court found no substantial questions of law for examination as the Tribunal's order favored the appellant, dismissing the appeal.

The Original Authority not only imposed a penalty but also considered canceling the appellant's license due to involvement in abetting misdeclaration and over-valuation of goods. The First Appellate Authority upheld the penalty of Rs. 2,00,000 imposed by the Original Authority, taking into account the duty draw-back amount. The Appellate Tribunal reduced the penalty to Rs. 50,000 due to the appellant's clean record, despite confirming the appellant's involvement as an abettor. The appellant challenged the reduced penalty on various grounds, including lack of evidence for a contumacious role, failure to exercise due diligence, and innocence in the exporter's actions. The High Court dismissed the appeal, finding no substantial questions of law for examination as the Tribunal's order favored the appellant.

The appellant's counsel argued against the penalty, claiming no justification for its imposition as the appellant had acted as per client instructions without suppressing or misdeclaring goods. The counsel challenged the reduced penalty of Rs. 50,000 as unsustainable. However, the High Court found no merit in the appellant's arguments, stating that the Tribunal's order, reducing the penalty from Rs. 2,00,000 to Rs. 50,000, was in favor of the appellant. The Court emphasized that the appellant was a beneficiary of the reduced penalty and not a victim, as the findings of abetment were upheld by the lower authorities.

In conclusion, the High Court dismissed the appeal, stating that no substantial questions of law arose for examination within the scope of Section 130 jurisdiction. The Court found no error or illegality in the Tribunal's order, which favored the appellant by reducing the penalty. The Court affirmed the findings of abetment against the appellant, as upheld by the lower authorities, and upheld the penalty of Rs. 50,000 imposed by the Tribunal.