2013 (10) TMI 902 - HC - Customs

Valuation of the imported goods - Quantification of penalty - Adjudicating authority reduced penalty from ₹ 25 Lakhs to ₹ 5 Lakhs - Appellant contends that no amount of penalty should be imposed - Held that - differential customs duty as directed by the Tribunal has already been paid by the said Company and that during the pendency of the appeal before the Tribunal, appellants were granted interim stay against the recovery of the penalty imposed by the adjudicating officer - revenue had raised the dispute about the valuation of the goods for the purpose of assessment in respect of an agreement entered into by the said Company commencing from a date three years prior to the appellants joining the said Company. Therefore, this was not a case for imposing penalty on the appellants - Ad interim stay granted to assessee.

Issues:
1. Jurisdiction of the Court to entertain appeals against penalty imposed on former employees.
2. Maintainability of the appeals under Section 130(E) of the Customs Act, 1962.
3. Challenge to the impugned order based on non-consideration of the Finance Act (No.2) 2009.
4. Grant of interim stay against the recovery of penalties imposed on the appellants.

Jurisdiction of the Court to entertain appeals against penalty imposed on former employees:
The appeals were filed by two former employees challenging the penalties imposed on them by the Customs, Excise and Service Tax Appellate Tribunal. The respondents argued that since the penalties were based on the valuation of imported goods for assessment, the appeals should be filed before the Supreme Court as per Section 130(E) of the Customs Act, 1962. However, the appellants contended that the penalties were related to their roles as employees and not the valuation of goods, making the appeals maintainable before the High Court. The Court admitted the appeals for consideration based on similar precedents.

Maintainability of the appeals under Section 130(E) of the Customs Act, 1962:
The Court considered the jurisdictional issue raised by the respondents regarding the maintainability of the appeals under Section 130(E) of the Customs Act, 1962. The appellants argued that the penalties imposed on them were not related to the valuation of goods but were specific to their roles as employees of the company. Citing previous court orders, the appellants contended that the appeals challenging the penalties were admissible before the High Court. The Court admitted the appeals for further consideration based on substantial questions of law.

Challenge to the impugned order based on non-consideration of the Finance Act (No.2) 2009:
The appellants sought to challenge the impugned order of the Tribunal on the grounds that their argument regarding the non-imposability of penalties under Section 92 of Finance Act (No.2) 2009 was not adequately addressed. They contended that the Tribunal should have provided separate reasons for upholding the penalties under Section 112 of the Customs Act, 1962. The Court admitted the appeals on substantial questions of law related to the sustenance of penalties and the alleged error in not setting aside the penalties under the Finance Act.

Grant of interim stay against the recovery of penalties imposed on the appellants:
The appellants requested an interim stay against the recovery of penalties amounting to Rs.25,00,000 and Rs.5,00,000 respectively. The appellants argued that the penalties were unjustified as they were not related to the valuation of goods but to their roles as employees. The Court, considering the submissions made by the appellants, granted an ad-interim stay against the recovery of penalties at that stage, with further proceedings scheduled after six weeks.

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