2014 (10) TMI 80 - HC - Customs

Imposition of penalty - Whether the CESTAT was right and justified in imposing penalty of ₹ 3 lacs on assessee, though it has recorded that Mr. Neeraj Jain was the main culprit - Held that - total fine imposed on Neeraj Jain is ₹ 7 lacs. Penalty of ₹ 1 lac each has also been imposed on Shailender Singh and Santosh Kumar Jain, but they were not appellants before the Tribunal in the batch of appeals decided by the impugned order. It is submitted that when penalty of ₹ 7 lacs has been imposed on Neeraj Jain, then the penalty of ₹ 3 lacs on appellant M.L. Chandra is not justified even if we accept that M.L. Chandra was to share profit with Neeraj Jain in the ratio of 80% 20%. Penalty should be proportionate. It is also submitted that penalty of ₹ 1 lac has been imposed on Santosh Kumar Jain, but penalty of ₹ 3 lacs has been imposed on the appellant. Santosh Kumar Jain, it is claimed and submitted is the recorded proprietor. It is brought to our notice that M.L. Chandra was hospitalized immediately after recording of his statement dated 31st January, 2004 and the retraction dated 5th February, 2004 was made while the said appellant was still in hospital - Penalty redeuced - Decided partly in favour of assessee.

Summary

Issues:
1. Imposition of penalty on the appellant by the Customs, Excise and Service Tax Appellate Tribunal.
2. Misdeclaration of export goods by M/s. Amber Traders Company.
3. Involvement of M.L. Chandra in fraudulent export activities.
4. Retraction of statement by M.L. Chandra.
5. Discrepancy in penalties imposed on different individuals involved.

Analysis:

1. The Tribunal imposed a penalty of Rs. 3 lakhs on the appellant, M.L. Chandra, despite acknowledging that another individual, Neeraj Jain, was the main culprit behind the fraudulent activities. The main issue raised was whether this penalty was justified given the circumstances.

2. The Tribunal found that M/s. Amber Traders Company and M/s. Zigma International were engaged in fraudulent exports to claim duty drawbacks. The actual value of the exported goods was significantly lower than declared, indicating misdeclaration and over-valuation to gain under the Duty Free Relinquishment Certificate Scheme.

3. M.L. Chandra's involvement in the fraudulent activities was established through statements and evidence. Despite attempts to retract his initial statement, the Tribunal considered his association with the fraudulent exports based on his admission of involvement and profit-sharing arrangement with Neeraj Jain.

4. The issue of M.L. Chandra's retraction of his statement was raised during the proceedings. While the judicial member did not address this retraction, the technical member noted the discrepancy but ultimately concluded that the earlier statement was more credible and not made under duress.

5. Discrepancies in the penalties imposed on different individuals, including Neeraj Jain and Santosh Kumar Jain, were highlighted. The Court considered the quantum of fines imposed on others and decided to reduce M.L. Chandra's penalty from Rs. 3 lakhs to Rs. 2 lakhs, citing proportionality and the circumstances surrounding his statement and hospitalization.

In conclusion, the Court accepted the appellant's statement, reduced the penalty imposed on M.L. Chandra, and directed the balance amount to be deposited within a specified timeframe. The appeal was disposed of without costs, addressing the issues raised regarding the imposition of penalties and the appellant's involvement in the fraudulent export activities.