2016 (12) TMI 1313 - AT - Customs

Imposition of penalty u/s 112(a) and (b) of the Customs Act, 1962 - seperate penalties imposed on firm and partners of the firm - Held that - M/s Navmi Enterprises and its partner Shri Vinod Manjrekar were actively involved in helping for smuggling of contraband goods. Therefore the adjudicating authority has rightly imposed the penalty on M/s Navmi Enterprises. As regard penalty on Shri Vinod Manjrekar partner of the partnership firm M/s Navmi Enterprises, the partnership firm consists of it s partners, the firm does not have an independent status without the partners. If any liability arises against the partnership firm i.e. shifted on partners of partnership firm in the sharing ratio of the partners, therefore, the partners cannot be treated different then the partnership firm. With this logic if the penalty imposed on the partnership firm, a separate penalty on the partner will tantamount to double penalty on the same person - if the penalty is imposed on the partnership firm, a separate penalty on its partners should not be imposed. Appeal disposed off - penalty on firm upheld, whereas penalty on partner withheld.

Summary

Issues:
1. Imposition of penalty under Section 112(a) and (b) of the Customs Act, 1962 on the appellant partnership firm for involvement in smuggling contraband goods.
2. Role and liability of the partners of the partnership firm in the smuggling activities.
3. Consideration of penalty imposition on partners of a partnership firm in addition to the firm itself.

Analysis:
1. The appeals were filed against an Order-in-Original passed by the Commissioner of Customs imposing a penalty of ?1,00,000 on the appellant partnership firm for arranging containers used in smuggling contraband goods. The goods were confiscated, and the sale proceeds were appropriated by the government. The appellant firm claimed they were unaware of the actual contents of the containers, as the documents described the goods differently. The Assistant Commissioner representing the Revenue supported the findings of the impugned order.

2. The adjudicating authority found clear involvement of the appellant partnership firm and its partners in the smuggling activities based on recovered documents and admissions. The partners were actively engaged in actions facilitating the smuggling, leading to the confiscation of the goods under relevant sections of the Customs Act, 1962. Despite the firm's claim of innocence due to lack of knowledge about the goods, the authority found no evidence supporting their innocence. Consequently, the penalty under Section 112(a) and (b) was rightly imposed on the firm and its partner, indicating their liability in the smuggling operation.

3. In considering the imposition of a penalty on the partner of the partnership firm, the tribunal referred to previous judgments to support the view that partners should not be separately penalized if a penalty is already imposed on the partnership firm. The tribunal reasoned that partners cannot be treated differently from the firm, as any liability on the firm is shared by the partners. Therefore, imposing a separate penalty on the partner would amount to double penalization. Relying on the cited judgments, the tribunal waived the penalty on the partner of the firm, while upholding the penalty on the partnership firm itself.

In conclusion, the tribunal dismissed the appeal of the partnership firm while allowing the appeal of the partner by waiving the penalty imposed on him. The judgment highlighted the active involvement of the partnership firm and its partner in smuggling activities, leading to the imposition of penalties under the Customs Act, 1962.