2011 (3) TMI 1305 - AT - Customs

Misappropriation of goods - show cause notice dated 22-12-98 was issued on the ground that the export obligation has not been fulfilled and gold procured duty free has not been accounted for and accordingly duty was sought to be demanded from M/s. MMTC the importer and penalties were sought to be imposed on M/s. MMTC - assessee contested that there is no evidence of the appellant director personally removing the gold and taking gold or gold ornament from the strong room of the NOIDA Processing Zone - Held that - While there is no direct evidence substantiating the charge of clandestine removal by the appellant company and involvement of the appellant director in such clandestine removal their failure to account for duty free gold is clearly established - the appellants dealt with 15 Kgs. of gold which are liable for confiscation in view of non-fulfilment of export obligation - Considering the entire facts & including the facts that appellant company was a job worker and that the Commissioner has upheld the demand of duty against M/s. MMTC deem it appropriate to reduce the penalty imposed on the appellant company from Rs. 25 lakhs to Rs. 5 lakh and penalty imposed on the appellant director from Rs. 25 lakh to Rs. 3 lakh.Decided against the assessee

Summary

Issues:
Appeal against Commissioner's order dated 30-11-05 regarding duty demand, penalties, and missing gold allegations.

Analysis:
The case involved missing gold allegations against an appellant company with a unit in NEPZ for manufacturing and exporting gold jewelry. Customs Authorities sealed the strong room based on alleged malpractice suspicions. Despite a criminal complaint by M/s. MMTC, the appellant was discharged by the Additional Chief Judicial Magistrate due to lack of evidence of misappropriation. A show cause notice was issued for unfulfilled export obligations and duty demand, which the Commissioner upheld, imposing penalties on M/s. MMTC and the appellants.

The appellant argued that there was no evidence of gold removal, and the responsibility lay with M/s. MMTC for gold accountal and export obligations. They sought to set aside penalties, highlighting the lack of collusion allegations. The Commissioner's reliance on unnamed statements was contested, emphasizing the absence of key statements.

The Tribunal noted the duty-free import of gold by M/s. MMTC and the appellant's receipt of 16 kgs., with discrepancies in export obligations fulfillment. Despite no direct evidence of gold removal by the appellant director, their failure to account for duty-free gold was established. Penalties were deemed warranted due to non-fulfillment of obligations.

Considering the circumstances, the Tribunal reduced penalties on the appellant company and director from Rs. 25 lakhs to Rs. 5 lakhs and Rs. 25 lakhs to Rs. 3 lakhs, respectively. The decision was based on the appellant's role as a job worker, the upheld duty demand against M/s. MMTC, and the overall case specifics.

In conclusion, the appeals were disposed of with reduced penalties imposed on the appellant company and director, acknowledging their responsibilities in the context of duty-free gold import and unfulfilled export obligations.