2008 (9) TMI 350 - AT - Customs

Personal Penalty Managing Director (MD) Non-fulfillment of export obligation held that - As the finding of offence of rendering the imported goods liable for confiscation to penalize the importer was found to have been incorrectly made, a functionary of the importer firm could not be penalized for having abetted the same offence. In the result, the impugned penalty is set aside and this appeal this allowed.

Summary

Issues: Waiver of pre-deposit and stay of recovery of penalty under Section 112(a) of the Customs Act, 1962 for violation of EPCG scheme conditions.

Analysis:
1. The appeal involved a request for waiver of pre-deposit and stay of recovery of a penalty imposed under Section 112(a) of the Customs Act, 1962. The penalty was imposed on the Managing Director of a company for violating conditions of the EPCG scheme related to import of machinery.

2. The importer failed to fulfill the conditions of the EPCG scheme by not manufacturing and exporting goods as required. The machinery imported under the scheme was found to have been shifted to a different premises than indicated on the license. The Commissioner of Customs imposed a penalty and demanded exemption availed on the import along with interest.

3. The appellant argued that the penalty was imposed prematurely as the time limit for fulfilling export obligations had been extended by the DGFT. It was also contended that the authority to penalize for relocating the machinery should have been the DGFT, not the Commissioner of Customs. The appellant relied on a previous Tribunal decision where a similar appeal was allowed.

4. The JDR representing the respondent contended that the penalty was rightly imposed as the imported goods were shifted in violation of license conditions. The Commissioner had the authority to take action for violations of license conditions related to import of goods.

5. The Tribunal considered the arguments and previous decisions. It was noted that the penalty related to liability for confiscation of goods was set aside in a previous case where the DGFT had allowed time for fulfilling export obligations. The Tribunal held that the penalty imposed on the Managing Director was incorrect since the importer was not found liable for confiscation. The penalty was set aside, and the appeal was allowed.

6. Ultimately, the Tribunal found that penalizing the Managing Director for abetting the offense of rendering imported goods liable for confiscation was incorrect. As the importer was not found liable for confiscation, the penalty on the Managing Director was set aside, and the appeal was allowed. The stay application was also disposed of accordingly.