2014 (1) TMI 65 - AT - Customs

Failure to clear goods - Goods left uncleared in warehouse beyond permissible warehousing period of 12 months - Adjudicating authority permitted the re-export of balance quantity of un-cleared imported goods granting exemption from payment of interest - Imposition of penalty - Held that - The main reason advanced by the importer is that due to lack of market demand for the product, they are not clearing the goods, but wish to re-export the balance unclerared quantity to the foreign buyers. They have informed this vide letter dated 4-12-2009. Order of adjudicating authority while permitting re-export of the balance goods and exempting payment of interest, imposing penalty of Rs. 1 lakh (Rupees One Lakh), which I find is without any reason or evidence. Though, the Commissioner (Appeals) observed that the ratio in the case of Syndicate Shipping Services Pvt. Ltd. v. CC Chennai - 2003 (3) TMI 158 - CEGAT, CHENNAI , is not applicable as the facts are different, I find the ratio of this order will be squarely applicable, in the instant case as the order deals mainly with the grounds for imposition of penalty under Section of Customs Act, 1962. As it is clear, penalties under Section 117 are for contravention, not expressly mentioned. But, there should be sufficient evidences to show mala fide intention resulting in contravention of any provisions warranting penalty - Decided in favour of assessee.

Summary

Issues:
Imposition of penalty under Section 117 of the Customs Act, 1962 for failure to clear imported goods within the warehousing period without establishing mala fide intention.

Analysis:
The case involves M/s. Hazel Mercantile Ltd. Mumbai, which imported Mosstanol L and warehoused it but failed to clear a portion of the goods within the permissible 12-month warehousing period, without applying for an extension. The adjudicating authority allowed re-export of the remaining quantity but imposed a penalty of Rs. 1 lakh under Section 117. The Commissioner (Appeals) upheld this decision, leading to the current appeal.

The appellant argued that there was no evidence of deliberate violation of the Customs Act, 1962, and no mala fide intention was established for the delay in clearing the goods. The Revenue relied on previous decisions, but the judge found them irrelevant due to differing facts. The importer's reason for non-clearance was lack of market demand, with the intention to re-export the remaining goods, as communicated in a letter.

The judge noted that the order lacked justification for imposing the penalty and found it unsupported by evidence. Referring to a specific Tribunal order, it was emphasized that penalties under Section 117 require sufficient evidence of mala fide intention leading to contravention. The absence of such evidence in this case rendered the penalty unsustainable. The judge highlighted that failure by a Custom House Agent alone is not grounds for personal penalty unless mala fide intention is proven.

Consequently, the appeal was allowed as no evidence of mala fide intention was presented, making the penalty under Section 117 unjustifiable. The judgment emphasized the necessity of establishing mala fide intent for penalties under the Customs Act, 1962, and the importance of evidence in such cases.