2017 (5) TMI 1123 - AT - Customs

Penalty u/s 114(iii) of the CA, 1962 - IEC code - Held that - Provisions of Section 114 of the CA, 1962 will not be applicable in this case as just introducing to a person who enabled the main accused/appellant to get I.E. Code by any stretch of imagination does not call for imposing penalty u/s 114 (iii) of the CA, 1962 - penalty set aside - decided in favor of appellant.

Summary

Issues:
1. Applicability of penalty under Section 114(iii) of the Customs Act, 1962 on Shri Syed Hatim Rustom.
2. Imposition of penalty on Shri Mukesh Sharma under Section 114(iii) of the Customs Act, 1962.
3. Redetermination of export value under Section 76 of the Customs Act, 1962.

Analysis:

Issue 1: Applicability of penalty under Section 114(iii) on Shri Syed Hatim Rustom
The case involved a penalty imposed on Shri Syed Hatim Rustom under Section 114(iii) of the Customs Act, 1962. The advocate argued that the penalty was not applicable as Rustom's role was merely introducing the main accused to a Chartered Accountant. The Tribunal found that the adjudicating authority erred in concluding that Rustom should be penalized for facilitating the main accused in obtaining an I.E. Code. The Tribunal held that merely introducing the main accused to someone who helped in obtaining the I.E. Code does not warrant a penalty under Section 114(iii). Consequently, the Tribunal set aside the penalty imposed on Shri Syed Hatim Rustom and allowed his appeal.

Issue 2: Imposition of penalty on Shri Mukesh Sharma
Regarding Shri Mukesh Sharma's case, the Tribunal noted that the only charge against him was making a payment to someone for procuring substandard goods for export. The evidence presented was insufficient to hold Sharma responsible for a penalty under Section 114(iii) of the Customs Act, 1962. Additionally, being one of the exporters for the purchase of substandard goods was not a valid reason for imposing such a penalty. Therefore, the Tribunal overturned the penalty imposed on Shri Mukesh Sharma and allowed his appeal.

Issue 3: Redetermination of export value under Section 76
The Tribunal also considered the argument that the provisions of Section 113 of the Customs Act, 1962 were not applicable in this case since the adjudicating authority had redetermined the export value under Section 76. As a result, the Tribunal concluded that the question of imposing a penalty under Section 114 did not arise. Consequently, the Tribunal set aside the impugned order to the extent challenged in the appeals and allowed both appeals.

In conclusion, the Tribunal found that the penalties imposed on both Shri Syed Hatim Rustom and Shri Mukesh Sharma were not justified based on the evidence and circumstances presented. The Tribunal also clarified the inapplicability of certain sections of the Customs Act, 1962 in the context of the cases at hand, ultimately setting aside the penalties and allowing the appeals.