2015 (11) TMI 1322 - AT - Customs

Levy of penalty for abetting in Evasion of duty - import of newsprint at concessional rate of duty of 5% under Notification No. 21/2002 Cus - Held that - Show Cause Notice brings out their role and required them to show cause as to why they should not be penalised under Section 112 of Customs Act, 1962. The impugned goods were imported at the behest of the proprietor of the appellants. The fact that the proprietor of the appellants paid ₹ 28 lakhs towards differential duty when he was not even the importer on paper also shows their involvement in the modus operandi to evade customs duty on import of newsprint. He was the sole purchaser of the entire quantity of impugned newsprint imported and as he has been dealing in the newsprint for a considerable period of time, he was fully aware that the impugned newsprint was imported at concessional rate of duty on actual user condition. - Mr. M L Gupta, proprietor of the two appellants abetted the smuggling of impugned goods which were liable to confiscation and was purchasing the said newsprint imported at concessional rate of duty. Thus, the appellants are clearly liable to penalty - Decided in favour of Revenue.

Summary

Issues:
Penalties imposed on appellants for evasion of customs duty on newsprint by misuse of import facility.

Analysis:
The case involved the evasion of customs duty on newsprint through misuse of the concessional rate of duty under Notification No. 21/2002 Cus. The appellants imported newsprint in the name of non-functional small-time newspaper publishers and sold it in the open market, contrary to the actual user condition. The RNI certificate was obtained under false pretenses, and the appellants were found to have abetted in the duty evasion. The primary adjudicating authority confirmed the demand of customs duty and imposed penalties of Rs. 5 lakhs each on the appellants, considering their role in the evasion scheme.

During the hearing, the advocate for the appellants did not appear, and the appellants contended that they were not importers and did not abet any evasion, arguing against the penalty imposition. The Departmental Representative argued that the appellants were involved in abetting duty evasion, justifying the penalties. The primary adjudicating authority detailed the involvement of other noticees in the evasion scheme, highlighting their connections with the appellants and their role in purchasing the imported newsprint at concessional rates. Despite no duty demand against the appellants, penalties were imposed based on their active participation in the evasion scheme.

The Tribunal found that the penalty imposition was justified as the appellants were involved in abetting the smuggling of goods and were aware of the duty evasion scheme. The appellants' proprietor had paid a substantial amount towards differential duty, indicating their complicity in the evasion. The Tribunal upheld the penalties imposed, stating that the amount was reasonable and not arbitrary. The appellants' involvement in the evasion scheme and their awareness of the duty evasion warranted the penalty imposition, leading to the dismissal of the appeals.