2016 (5) TMI 173 - AT - Customs

Imposition of penalty - Smuggling of foreign branded cigarettes and liquor - brought in the guise of computer casing - falls under the category of lending of their IEC Code to Shri Sujit Satam - Held that - the statement of Shri Kishore Shah clearly indicates that he was monitoring the activities and had allowed the use of IEC Code of M/s. Darshana Impex in collusion with Shri Sujit Satam. Shri Kishore Shah also had helped Shri Sujit Satam for arranging banker s cheque or demand draft for the payment of duty on the mis-declared goods i.e. computer casing, in the name of one of the employees. These facts indicate that Shri Kishore Shah was aware of nefarious activity of Shri Sujit Satam as otherwise he would have issued demand draft of the firm M/s Darshana Impex. Since the consignment which is confiscated by the adjudicating authority is of M/s Darshana Impex and Shri Kishore Shah handling day-to-day activity of said firm he is liable for penalty under Section 112(a) of the Customs Act, 1962. The adjudicating authority while attributing the role of Shri Pravin Gada, has not indicated how Shri Pravin Gada is liable to be penalized under Section 112(a) of the Customs Act, 1962 as it is very clear that Shri Pravin Gada had given a Letter of Authority to Shri Kishore Shah as Manager to look after the day-to-day affairs. Therefore the penalties imposed on Shri Pravin Gada seems to be unwarranted as he may have been kept in dark by the Manager and the same is liable to be set aside. - Decided partly in favour of appellnat

Summary

Issues:
Penalty imposed under Section 112(a) of the Customs Act, 1962 on grounds of connivance and collusion for smuggling restricted items - Appeal against Order-in-Original No. 92/2004/CAC/CC/RJM dated 28.09.2004 - Appellants Shri Kishore P. Shah and Shri Pravin V. Gada - Appeal based on lending of IEC Code - Different roles and liabilities of the appellants - Interpretation of relevant case laws - Decision on penalties.

Analysis:
The judgment pertains to two appeals challenging penalties imposed under Section 112(a) of the Customs Act, 1962 on the grounds of connivance and collusion for smuggling restricted items, specifically foreign branded cigarettes and liquor. Both appellants, Shri Kishore P. Shah and Shri Pravin V. Gada, were penalized by the adjudicating authority. The key contention raised was that the appellants merely lent their IEC Code to another individual involved in smuggling, which according to the appellants' counsel, does not constitute an offense under the Customs Act. The appellants relied on previous legal precedents to support their argument, emphasizing that lending an IEC Code does not amount to an offense.

Upon reviewing the case records and submissions, the Tribunal analyzed the roles and liabilities of each appellant separately. In the case of Shri Kishore Shah, it was found that he actively participated in monitoring the activities of the firm involved in smuggling, allowed the use of the IEC Code in collusion with the main perpetrator, and facilitated the payment of duty on mis-declared goods. The Tribunal concluded that Shri Kishore Shah was aware of the illicit activities and upheld the penalty imposed on him under Section 112(a) of the Customs Act, 1962.

Conversely, regarding Shri Pravin Gada, who was the Proprietor of the firm, the Tribunal noted that he had delegated the day-to-day affairs to another individual and claimed ignorance of the smuggling activities. The Tribunal found that Shri Pravin Gada had given a Letter of Authority to the Manager to oversee operations and had not paid for the duty liability of the smuggled consignment. As a result, the Tribunal held that the penalties imposed on Shri Pravin Gada were unwarranted, giving him the benefit of the doubt and setting aside the penalty.

Furthermore, the Tribunal addressed the legal precedents cited by the appellants' counsel regarding the lending of IEC for imports, emphasizing that the circumstances in the present case, involving the smuggling of restricted items, were distinguishable from the cases cited. The Tribunal highlighted the intention to smuggle cigarettes and liquor under the guise of computer casing, rendering the cited precedents inapplicable to the current scenario.

In conclusion, the Tribunal allowed the appeal of Shri Pravin Gada, setting aside the penalty imposed on him, while rejecting the appeal filed by Shri Kishore Shah and upholding the penalty imposed on him. The judgment was pronounced in court on 27.04.2016.