2015 (10) TMI 604 - AT - Customs

Procurement of goods without valid documents Confiscation of goods Show cause notice was issued and Adjudicating Authority confiscated seized imported goods and imposed duties and penalty as goods were procured without payment of duty and valid documents Appellant challenges order of confiscation on grounds that seized goods were not prohibited goods Held that - appellants had not disputed receipt of imported POY without any documents Hence, demand of interest under Section 28AB of Act is justified Admittedly, appellants received imported POY, without any documents in violation of various provisions under Import/Export Exim Policy and Customs Act therefore confiscation of goods is justified Appellant-firm has already paid duty during investigation and there is no sufficient materials available on record for imposition of penalty on partners of both firms Therefore impugned order is modified in so far as demand of duty alongwith interest upheld, penalty and redemption fines imposed are reduced Decided partly in favour of Assesse.

Summary

Issues:
1. Confiscation of imported goods without valid documents
2. Imposition of penalties on partners of the firms
3. Demand of duty and interest under Customs Act

Confiscation of imported goods without valid documents:
The case involved M/s Alpha Synthetics and M/s Cosmic Textile, where imported Polyester Yarn (POY) was found without proper duty documents. The Customs Officers seized the goods and issued show cause notices. The Adjudicating Authority confiscated the goods provisionally released to both firms and imposed fines, duty demands, and penalties under the Customs Act. The appellants did not dispute the duty demand but challenged the confiscation under Section 111(d) of the Customs Act. The Tribunal found the goods were notified items under Section 123 of the Customs Act, justifying the duty demand and interest under Section 28AB. The confiscation was deemed justified as the goods were received without valid documents, violating import regulations.

Imposition of penalties on partners of the firms:
The appellants contested the penalties imposed on the partners, citing precedents from the Hon'ble Gujarat High Court. The Tribunal acknowledged the Gujarat High Court's rulings that once the partnership firm is penalized, penalties on partners may not be warranted. As the firms had already paid duty during the investigation and insufficient evidence existed for penalizing the partners, the Tribunal set aside the penalties on the partners of both firms.

Demand of duty and interest under Customs Act:
The appellants did not dispute the duty demand under Section 125 of the Customs Act and Notification No. 53/97-Cus. The Tribunal upheld the duty demand along with interest under Section 28AB, considering the imported POY as a notified item under Section 123 of the Customs Act. The Tribunal modified the impugned order, reducing the penalties imposed on M/s Alpha and M/s Cosmic, along with the redemption fines. Ultimately, the penalties on the partners of the firms were set aside, and the appeals were allowed.

This judgment highlights the legal intricacies surrounding the confiscation of imported goods without valid documents, the imposition of penalties on partners of firms, and the demand of duty and interest under the Customs Act. The Tribunal's analysis considered relevant provisions of the Customs Act, precedents from the Gujarat High Court, and the specific circumstances of the case to arrive at a balanced decision.