2007 (8) TMI 155 - AT - Customs

Penalty Revenue seeking to impose penalty on the appellant on the basis of incriminating statements of third persons but appellant view is that they were not received any SCN and not providing any opportunity of being heard Penalty set aside

Summary

Issues:
1. Appeal against penalty imposed on importer for diversion of raw silk.
2. Allegations against individuals involved in the diversion of imported raw silk.
3. Validity of penalty imposed based on uncorroborated statements.
4. Imposition of penalty under Section 114A of the Customs Act.
5. Lack of opportunity for personal hearing before imposition of penalty.
6. Interpretation of legal provisions applicable at the time of the offense.

Analysis:
1. The appeal was filed against the penalty imposed on the importer for diverting raw silk imported under the DEEC Scheme. The investigation revealed that the importer had contravened the post-import condition by not converting the raw silk to finished products for export, rendering it liable for confiscation. The Commissioner imposed a penalty on the importer and demanded duty along with interest on the imported raw silk.

2. The individuals involved in the diversion of imported raw silk were identified through statements recorded during the investigation. The statements indicated the role of various parties, including a consultant and a partner of a textile corporation, in the diversion of raw silk for pecuniary gain. The Commissioner found them liable for penalties under the Customs Act based on their involvement in the transactions.

3. The validity of the penalty imposed based on uncorroborated statements was challenged in the appeal. The appellant argued that penalties cannot be solely imposed on the basis of statements made by co-accused or co-noticees without corroborative evidence. Citing relevant case laws, the appellant contended that such statements lack evidentiary value and should not be the sole basis for penalization.

4. The appeal also addressed the imposition of a penalty under Section 114A of the Customs Act. The Revenue sought to penalize the importer under this section, claiming that it could be invoked in proceedings initiated after a specific date. However, the Tribunal found that the alleged transactions took place before the enactment of Section 114A, making the imposition of penalty under this provision invalid.

5. The appellant raised concerns about not receiving a Show Cause Notice and not being given an opportunity for a personal hearing before the adjudication. The Tribunal noted the lack of evidence of serving a Show Cause Notice to the appellant and emphasized the importance of providing an opportunity for the accused to present their case before imposing penalties.

6. The Tribunal interpreted the legal provisions applicable at the time of the offense and concluded that the penalty imposed under Section 114A, enacted after the transactions occurred, was not valid. The judgment highlighted that individuals cannot be penalized for acts that were not punishable under existing provisions at the time of the offense, leading to the dismissal of the Revenue's appeal and the allowance of the appellant's appeal against the penalty.