2018 (12) TMI 1841 - AT - Customs

Penalty u/s Section 112(a) of the Customs Act, 1962 on CHA - It has been contended in the appeal memorandum that since the goods were imported against advance license and the benefit of exemption were extended to such imports, the said CHAs were responsible for due compliance of the requirement of conditions laid down in Notification No. 43/2002-CUS., dated 19-4-2002 - HELD THAT - Imposition of penalty under Section 112(a) ibid will not be justified on the ground that their role and duties are not extendable up to the stage of manufacture of the final product by the respondent and exportation thereof. Hence, we do not find any infirmity in the impugned, in so far as it has dropped the show cause proceedings against the CHA s, seeking for imposition of penalty. With regard to the issue of imposition of penalty on Shri Jagdish Sharma, Manager of the respondent, Revenue has contended that he was having an ID Card for collecting the licenses from DGFT, which implies that he was well aware of the provisions of Export and Import Policy and accordingly, is exposed to the penal consequences provided under Section 112(a) ibid. We find that the Revenue has not brought on any iota of evidence to substantiate the fact of that the said employee of the respondent did any act or omission which have rendered the imported goods liable for confiscation. Since, the department specifically alleged that penal provisions have rightly been invoked against the said employee, the onus entirely lies with the Revenue to prove that the conditions of the statute have been contravened, justifying for invocation of Section 112 ibid. The non-imposition of penalty on Shri Jagdish Sharma in the impugned order is proper and justified. With regard to the grounds urged by Revenue that penalty under Section 114A ibid should be calculated, taking into consideration the duty and the interest amount, we are of the view that such interpretation of Revenue cannot be sustained in view of the clear and un-ambiguous wordings used in the said statutory provisions - Section 114A ibid mandates imposition of equal penalty of the duty or interest determined under Section 28 ibid. Since, the word or is finding place between duty and interest, it cannot be interpreted that penalty should be imposed equal to the duty and interest so determined in the course of adjudication. The impugned order has correctly interpreted the provisions of Section 114A ibid in imposing equal amount of penalty in respect of the confirmed duty demand - Appeal dismissed - decided against Revenue.

Summary

Issues:
- Imposition of penalty on CHAs for non-compliance with license conditions
- Imposition of penalty on the manager for violation of license conditions
- Calculation of penalty under Section 114A of the Customs Act, 1962

Imposition of Penalty on CHAs:
The Revenue appealed against the impugned order for not imposing penalties on the CHAs, Shri Omprakash Tiwari and M/s. S.K. Mehra, alleging their responsibility in ensuring compliance with license conditions. The Tribunal found that the role of CHAs is limited to the clearance of goods and does not extend to monitoring the subsequent use of the imported items. As there was no evidence of negligence in their duties during clearance, the imposition of penalties under Section 112(a) was deemed unjustified. The Tribunal upheld the decision to drop the show cause proceedings against the CHAs.

Imposition of Penalty on Manager:
Regarding the penalty on the manager, Shri Jagdish Sharma, the Revenue argued that his possession of an ID card for collecting licenses implied awareness of the export-import policy, justifying penalty under Section 112(a). However, the Tribunal emphasized the lack of evidence proving the manager's involvement in actions leading to the goods being liable for confiscation. Since the Revenue failed to substantiate the alleged violations, the Tribunal deemed the non-imposition of penalty on the manager as appropriate and justified.

Calculation of Penalty under Section 114A:
The Revenue contended that the penalty under Section 114A should include both duty and interest amounts evaded. However, the Tribunal interpreted the statutory provisions to mandate an equal penalty either on the duty or interest determined under Section 28. The use of the word "or" between duty and interest precluded the interpretation of imposing a penalty equal to both duty and interest. Therefore, the Tribunal upheld the impugned order's calculation of an equal penalty in line with the confirmed duty demand.

In conclusion, the Tribunal dismissed the Revenue's appeals, finding no merit in their arguments based on the issues raised. The decision highlighted the importance of substantiating claims with evidence and interpreting statutory provisions accurately to determine penalties in customs-related matters.