2016 (8) TMI 830 - AT - Customs

Imposition of penalty under Sec 112(a) of the Customs Act 1962 import of diesel engines 100% EOU ITC bond re-warehousing certificate Held that - appellant Natwar Dalmia is not any office bearer of La Grande and has not signed any Customs documents. His statement has also not been recorded by the department. The findings given by the Adjudicating authority is Shri Natwar Dalmia & his family have orchestrated the whole fraud with the sole intention of selling the good. No findings have been given by the Adjudicating authority as to what role specifically Sh. Natwar Lal played which could be penalized under Sec 112(a) of the Customs Act 1962. Penalty if any could have been imposed upon the importer company as per the relied upon case laws penalty not imposed appeal allowed decided in favor of appellant.

Summary

Issues Involved:
1. Penalty imposition on appellant Natwar Dalmia under Sec 112(a) of the Customs Act 1962.
2. Withdrawal of appeal filed by La Grande Projects Ltd.

Analysis:

Issue 1: Penalty imposition on appellant Natwar Dalmia under Sec 112(a) of the Customs Act 1962:

The case involved an appeal by appellant Natwar Dalmia against a penalty of ?105 lakh imposed under Sec 112(a) of the Customs Act 1962. The appellant argued that no statement was recorded by the investigation and that he was implicated based on statements of directors of La Grande Projects Ltd. It was highlighted that similar cases in Mumbai and Indore had resulted in no penalty on Natwar Dalmia. The appellant's counsel referenced various case laws to support the argument that penal liability should be borne by the importer company only. The Revenue contended that Natwar Dalmia was the mastermind behind the fraud, as stated by other directors, and defended the penalty imposed.

The Tribunal considered the arguments and case laws cited. It noted that in similar cases in Mumbai and Indore, no penalty was imposed on Natwar Dalmia. The Tribunal referred to case laws emphasizing that the liability of a shareholder would be limited to his shareholding and that penalties on officers of the company are not permissible in the absence of fraud or misappropriation. It was observed that Natwar Dalmia was not an office bearer of La Grande, had not signed any Customs documents, and his specific role in the fraud was not established. Considering the principles of equity and the lack of direct involvement of Natwar Dalmia, the Tribunal found the penalty imposed on him unsustainable and set it aside, allowing the appeal.

Issue 2: Withdrawal of appeal filed by La Grande Projects Ltd:

The appeal filed by La Grande Projects Ltd was sought to be withdrawn as no adverse order had been passed against the appellant by the Adjudicating authority. The appellant's counsel requested that the appeal be allowed to be withdrawn. The Tribunal disposed of Appeal No. C/350/1998 as withdrawn.

In conclusion, the Tribunal allowed the appeal filed by Natwar Dalmia, setting aside the penalty imposed under Sec 112(a) of the Customs Act 1962. The appeal filed by La Grande Projects Ltd was disposed of as withdrawn.