2017 (3) TMI 1194 - AT - Customs

Imposition of personal penalties u/s 112 of the CA, 1962 - the appellants are alleged to have purchased imported fabrics which were diverted by an EOU which was imported for actual consumption of the said EOU - Held that - the various statements recorded of the co-noticees indicate that both the appellants had visited the premises of the EOU and took inspection of the goods and the statements also records that both the appellants were indulged in purchase of fabrics in cash without any documents - the appellants claim of ignorance, is without any merits. The penalty of ₹ 2 lakhs each on these two appellants is definitely excessive considering that fact that there could be element of doubt as to whether they were aware of the goods being diverted, particularly so when they were taken to a warehouse for inspection of the goods - also the penalty imposed on the Chartered Accountant, is on higher side - the ends of justice will be met if the penalties imposed on both these appellants are reduced to Rupees Fifty thousand each from ₹ 2 lakh Appeal allowed - decided partly in favor of appellants.

Summary

Issues:
Imposition of penalties under Section 112 of the Customs Act, 1962 on the appellants.

Analysis:
The judgment pertains to two appeals challenging the Order-in-Original passed by the Commissioner of Central Excise, Thane - I, imposing penalties on the appellants under Section 112 of the Customs Act, 1962. The issue revolves around the alleged purchase of imported fabrics by the appellants, which were diverted from an EOU intended for actual consumption by the said EOU. The adjudicating authority found that the appellants were aware of the diversion and applied the relevant provisions of the Customs Act, 1962. The appellants contended that they had visited a warehouse within India and purchased the fabrics from there, unaware of any diversion from an EOU. They argued that the notice lacked specificity regarding the quantity procured and questioned the excessive penalty imposed compared to a co-noticee.

Upon reviewing the submissions and records, it was established that the appellants indeed procured materials from an EOU that had been diverted. Despite the appellants' claim of ignorance, statements from co-noticees indicated their involvement in purchasing goods without proper documentation. The appellants' defense of being unaware of the goods' status was deemed meritless. However, considering the doubt regarding their awareness of the diversion, especially after visiting the warehouse, the excessive penalties of ?2 lakhs each were deemed unwarranted. The penalty reduction to ?50,000 each was deemed sufficient to serve the ends of justice. The penalty imposed on the Chartered Accountant involved in issuing a solvency certificate without verification was also noted to be lower, further justifying the reduction in penalties for the appellants.

In conclusion, the penalties imposed under Section 112(a) of the Customs Act, 1962 on the appellants were reduced to ?50,000 each, and the appeals were disposed of accordingly. The impugned order was upheld with the mentioned modifications, and the judgment was pronounced in court on 23/02/2017.