2014 (5) TMI 867 - AT - Customs

Waiver of pre-deposit of penalty - import of Polyester Spun Yarn - customs duty exemption under Duty Free Credit Entitlement (DFCE) scheme - Held that - it is an admitted position that the appellant knowing fully well facilitated the diversion of the goods imported under Target Plus Scheme in complete disregard of the provisions of law, for which he received a consideration. Thus, the appellant appears to have actively aided and abetted evasion of customs duty and, therefore, penalty was imposable on the appellant under the provisions of Section 112(b) of the Customs Act, 1962. If penalty is imposable, there is no reason why at the interim stage, the applicant should not be put to terms. A pre-deposit of ₹ 15 lakhs against the confirmed penalty of ₹ 75 lakhs works out to only 20% of the penalty imposed and cannot be said to be harsh or excessive. Even in the earlier order of the Tribunal, the appellant has paid a sum of ₹ 68 lakhs against the confirmation of duty demand of ₹ 1.79 crore, which approximately works out to 40% of the demand confirmed. Therefore, in the present case, a pre-deposit of ₹ 15 lakhs ordered by the Member (Technical) cannot be faulted - Decided against assessee.

Issues Involved:
1. Waiver of pre-deposit of penalty.
2. Consistency in judicial decisions.
3. Role and liability of the appellant in the evasion of customs duty.

Detailed Analysis:

1. Waiver of Pre-Deposit of Penalty:

The applicant sought a waiver of the pre-deposit of a penalty amounting to Rs. 75,00,000/- imposed under Section 112(b)(i) of the Customs Act, 1962. Initially, the Tribunal directed the applicant to make a pre-deposit of 20% of the penalty within eight weeks. The applicant moved for a modification, contending that he was not the importer but a commission agent. The Tribunal recalled the stay order and listed the matter for hearing along with co-noticees' stay applications.

During the hearing, the applicant's counsel argued that since the Tribunal had granted an unconditional waiver of pre-deposit to the main party and co-noticees in a related matter, the applicant should also receive the same relief. The Tribunal's general practice of granting waivers to co-noticees if the main party is granted a waiver was cited, along with supporting judgments from various High Courts emphasizing judicial consistency.

The opposing argument from the Revenue was that each stay application should be considered independently, and the applicant, being the main orchestrator behind the diversion of goods, should be required to make a pre-deposit.

2. Consistency in Judicial Decisions:

The Tribunal noted the importance of consistency in judicial decisions, referencing several judgments:
- Mercedes Benz India Pvt. Ltd. vs. Union of India: Emphasized the need for judicial decorum and consistency in decisions.
- M/s. Gammon India Ltd. vs. Commissioner of Customs Mumbai: Highlighted the importance of following precedents to maintain judicial integrity.
- M/s. Pearl Enterprises & Amandeep Kansal vs. Union of India: Stressed the significance of consistency in judicial orders to avoid discrimination and maintain public confidence in the judicial system.

These judgments collectively underscored that deviation from established judicial norms without proper reasoning undermines the judicial process and public trust.

3. Role and Liability of the Appellant in the Evasion of Customs Duty:

The applicant's involvement in the evasion scheme was detailed, showing his active participation in importing goods under the Target Plus Scheme and diverting them into the open market, thus violating Notification No. 32/2005. The applicant admitted to his role in the scheme during the investigation. The adjudicating authority imposed a significant penalty on the applicant due to his central role in the evasion.

The Member (Technical) disagreed with the waiver, arguing that the applicant's role warranted a pre-deposit to safeguard revenue interests. The Member (Technical) emphasized that cases involving outright evasion of duty should be treated differently from those involving legal interpretation, and each player's role must be examined individually.

Majority Decision:

The Third Member, upon reviewing the difference of opinion, concurred with the Member (Technical), stating that the pre-deposit of Rs. 15 lakhs was reasonable given the circumstances. The decision was based on the appellant's admitted involvement in the duty evasion scheme and the need to safeguard revenue interests.

Final Order:

The applicant was directed to pre-deposit Rs. 15 lakhs within eight weeks, with compliance to be reported on a specified date. Upon such deposit, the requirement for pre-deposit of the balance amount would be waived, and recovery stayed during the appeal's pendency.

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