2016 (7) TMI 412 - AT - Customs

Levy of penalty u/s 114AA on artificial person - involvement of the appellant in the entire undervaluation process - It was submitted that, if at all any penalty is imposable that shall be imposed under section 114AA on the employee but not on the employer. The vicarious liability is not the intention of that section. - Held that - When the magnitude of the penalty is looked into there appears no further consideration to be made since the appellant through e-mail transaction has stepped up into the shoe to benefit his client importer. Appellant s involvement was consciously and knowingly which cannot be ruled out. Law is well settled that fraud is a nullity and should get burial death. Therefore, any interference to the appellate order shall be a mockery for which the appeal is dismissed. - Decided against the appellant.

Summary

Issues:
Reduction of penalty under section 112A of Customs Act, 1962, applicability of section 114AA to artificial person, involvement of appellant in undervaluation process, vicarious liability, sympathetic reduction of penalty by learned Commissioner (Appeals), hawala money transaction, imposition of penalties for breach of law, magnitude of penalty, appellant's conscious involvement, dismissal of appeal.

Analysis:

The appellant vehemently opposes the order passed by the learned Commissioner (Appeals) which reduced the penalties imposed under sections 112A and 114AA of the Customs Act, 1962. The appellant argues that section 114AA is not applicable to an artificial person and contends that he should not be liable for penalties as he did not subscribe his signature to any fraudulent document. The appellant asserts that if any penalty is to be imposed, it should be on the employee and not the employer, emphasizing that vicarious liability was not the intention of that section.

The Revenue, on the other hand, argues that the learned Commissioner (Appeals) showed sympathy in reducing the penalties from the originally determined quantum. Upon hearing both sides and examining the records, the Tribunal notes that the differential value sent to the bank account appeared to be part of a hawala money transaction facilitated through undervaluation. The Tribunal rejects the appellant's argument that section 114AA only applies to the person directly involved, stating that when a breach of law is detected, the person behind a business concern cannot escape penal consequences.

Regarding the magnitude of the penalty, the Tribunal finds no grounds for further consideration, as the appellant knowingly engaged in email transactions to benefit the importer, demonstrating conscious involvement. The Tribunal emphasizes that fraud is unacceptable and should be condemned unequivocally. Therefore, any interference with the appellate order would undermine the law, leading to the dismissal of the appeal. The judgment is dictated and pronounced in open court by the Tribunal.