2016 (11) TMI 179 - AT - Customs

Penalty - Evasion of duty - Notification No. 140/87-Cus. Dated 27.3.1987 - Held that - On investigation, it was established that the goods were diverted to the local market from the port of importation (Kandla Gujarat) and never reached the factory premises of the Company, at North Karnataka, thereby contravening the conditions of the exemption notification inasmuch as the imported goods were not utilised for manufacturing the final products, but diverted into local market - The statements of others especially Shri Srinivas Naik, Whole-time Director, and Shri Vinayak D. Gavdi, Manager (Administration) clearly establishes that both Shri R N Shetty and Shri Vijay Venkatarao Kamat are responsible for the said evasion of duty. As regards the plea of limitation, it is observed that the goods were imported and cleared under License No. 0001145 dated 21.02.1990 availing the benefit of exemption under Notification No. 140/87-Cus. Dated 27.3.1987, which prescribes certain conditions, according to which they were to use the imported goods for manufacture of specified goods which were to be exported - It is settled law that when the goods are imported under certain conditions and under Bond, limitation does not apply till the conditions are fulfilled and the Bond is discharged - Appeals are dismissed - Decided against the assessee.

Summary

Issues:
- Adjudication order adequacy of personal hearing
- Penalty imposition on individuals
- Duty evasion and diversion of imported goods
- Role of individuals in defrauding the Public Exchequer
- Admissibility of statements under Customs Act
- Cooperation in adjudication proceedings
- Plea of limitation in penalty imposition

Adjudication Order Adequacy of Personal Hearing:
The Tribunal had previously set aside the adjudication order due to inadequate opportunity for personal hearing. Liberty was granted to raise all issues during de-novo proceedings. The subsequent order imposed penalties on individuals, leading to the current appeals.

Penalty Imposition on Individuals:
The penalties were imposed on the individuals involved in the case, namely, Shri R N Shetty and Shri Vijay Venkatarao Kamat. Shri R N Shetty, the Chairman, and Shri Vijay Venkatarao Kamat, the Executive Director, were held accountable for the diversion of imported goods to the local market, contravening exemption notification conditions.

Duty Evasion and Diversion of Imported Goods:
The case involved the import of HDPE granules under specific conditions for manufacturing purposes. However, the goods were diverted to the local market instead of being used for manufacturing final products, violating the exemption notification terms.

Role of Individuals in Defrauding the Public Exchequer:
Shri R N Shetty and Shri Vijay Venkatarao Kamat were found responsible for defrauding the Public Exchequer by diverting imported goods. Shri R N Shetty, as the Chairman, and Shri Vijay Venkatarao Kamat, as the Executive Director, were directly implicated in the evasion of duty.

Admissibility of Statements under Customs Act:
Statements recorded under Section 108 of the Customs Act were deemed judicial proceedings and admissible evidence. Statements from various individuals, including Shri R N Shetty and Shri Vijay Venkatarao Kamat, corroborated their involvement in the duty evasion scheme.

Cooperation in Adjudication Proceedings:
The appellants failed to cooperate in the adjudication proceedings despite directions from the Tribunal. They did not appear for the cross-examination of witnesses, leading to observations of non-cooperation and lack of support for their contentions.

Plea of Limitation in Penalty Imposition:
The plea of limitation was rejected as the continuing obligations under the exemption notification needed to be fulfilled for the discharge of the bond and license. The penalties imposed on the appellants were upheld due to the significant duty evasion amount and non-compliance with the exemption conditions.

In conclusion, the Tribunal upheld the impugned order, dismissing both appeals and maintaining the penalties imposed on the individuals involved in the duty evasion scheme, emphasizing the importance of fulfilling import conditions and preventing defrauding of the Public Exchequer.