2016 (5) TMI 830 - AT - Customs

Imposition of penalty - Smuggling of Red Sanders - Non-compliance of KYC Norms in terms of Public Notice No. 17/2012 - Held that - appellant has not taken the KYC norms of the exporter/person who has placed the order for container for the purpose of stuffing of the goods. Therefore, by following the decision of this Tribunal in the case of Scope Amra Logistics (I) Pvt. Ltd. Vs. C.C.E.C & S.T., Aurangabad 2015 (6) TMI 652 - CESTAT MUMBAI which is on the same footing of present appellant, the appellant is found guilty of non-compliance of Public Notice No. 17/2012 and liable for penalty. The penalty is reduced from ₹ 10 lakhs to ₹ 3 lakhs. - Decided partly in favour of appellant

Summary

Issues involved:
Penalty imposed for non-compliance of KYC norms under Public Notice No. 17/2012 in a case related to smuggling of Red Sanders.

Detailed Analysis:
The appeals were directed against an Order-in-Original imposing penalties on the appellant company and a sales executive for not complying with KYC norms under Public Notice No. 17/2012 in a Red Sanders smuggling case. The appellant argued that they complied with KYC norms of the freight forwarder who ordered the container, not the actual exporter, and cited precedents for penalty waiver. The Revenue representative reiterated the findings of the impugned order and referenced a similar case where penalties were reduced but upheld for non-compliance with the same Public Notice. The Member (Judicial) carefully considered the submissions and noted that the penalties were imposed for not following the KYC norms specified in Public Notice No. 17/2012, which required obtaining specific documents from the exporter/person seeking the container. The Member disagreed with the appellant's argument, stating that the KYC norms of the actual exporter were not obtained, as required. Referring to a previous case, it was observed that penalties were justified for not complying with KYC norms, even if not involved in smuggling. Consequently, the penalties on the appellant company were reduced from Rs. 10 lakhs to Rs. 3 lakhs, following the precedent. The appeal of the sales executive was allowed.

In conclusion, the appellant was found guilty of non-compliance with Public Notice No. 17/2012 and held liable for penalties. However, based on the precedent, the penalty on the appellant company was reduced. The judgment emphasized the importance of adhering to KYC norms to prevent smuggling activities, even if not directly involved in the illegal act. The decision highlighted the significance of following regulatory directives and the consequences of non-compliance, underscoring the need for strict adherence to prescribed norms in such cases.