2011 (6) TMI 646 - AT - Customs

Waiver of pre-deposit and stay of recovery - stay applications filed by the three Directors of the company were allowed as per the said order dated 3-12-10, subject to compliance by the company with the above direction for pre-deposit - company did not make any pre-deposit Held that - Managing Director was admittedly looking after the day-to-day affairs of the company. He executed the bond on behalf of the company and was aware of the obligations of the company. None of the Directors filed any reply to the show-cause notice, and therefore the allegations raised against them in the show-cause notice for imposing penalties under Sec. 112 of the Customs Act remained undenied, appellants are liable to be penalized under Sec. 112(a) of the Customs Act, they have not produced any evidence of the latest financial status. Hence the plea of financial hardships is unsustainable, appellants directed to pre-deposit

Issues:
Waiver of pre-deposit and stay of recovery of penalties under Sec. 112(a) of the Customs Act for Directors of M/s. Parasrampuria Industries Ltd.

Detailed Analysis:

1. Background and Stay Applications:
The Directors of M/s. Parasrampuria Industries Ltd. sought waiver of pre-deposit and stay of recovery of penalties imposed on them under Sec. 112(a) of the Customs Act. The company had previously filed an appeal against the Commissioner's order, and the Bench had directed them to pre-deposit a specific amount towards the demand of duty. The Directors' stay applications were allowed subject to compliance by the company, which was not fulfilled. The Bench then directed the stay applications to be listed for hearing due to non-compliance, leading to the current circumstances.

2. Preliminary Objection and Ruling:
The JCDR raised a preliminary objection, arguing that the applications had been disposed of earlier and could not be reheard. However, the objection was overruled by the Bench based on several reasons, including the non-compliance with the conditions of the previous order, the direction for listing the applications for hearing, the need to consider the applications on merits, and adherence to the rule of natural justice.

3. Merits of the Case:
During the hearing, the appellants' counsel argued that there were no valid reasons for imposing penalties under Sec. 112(a) of the Act, emphasizing that the penalties were not justified by the evidence. The counsel cited various case laws to support the argument that the penalties were not sustainable and requested waiver of pre-deposit and stay of recovery.

4. Financial Hardships and Response:
The appellants' counsel also pleaded financial hardships for the clients, presenting Form No. 16 certificates as evidence. However, there was no documentary evidence of the latest financial status of the appellants. The JCDR highlighted that the appellants did not respond to the investigating agency's summons and pointed out the role of the Managing Director in the company's affairs.

5. Decision and Rationale:
After considering the submissions, the Bench found that the appellants did not respond adequately to the show-cause notice, which led to the allegations against them being deemed admitted. The Bench distinguished the cited case laws and concluded that the penalties imposed were justified under Sec. 112(a) of the Customs Act. Despite the plea of financial hardships, the Bench refrained from asking for full deposit and directed specific amounts to be pre-deposited by the appellants within a specified period.

In conclusion, the judgment upheld the penalties imposed on the Directors of M/s. Parasrampuria Industries Ltd. under Sec. 112(a) of the Customs Act, directing them to pre-deposit specific amounts while considering the circumstances and arguments presented during the proceedings.

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