2017 (9) TMI 1008 - AT - Customs

Penalties u/s 112 (a) & 112 (b) of the Customs Act, 1962 - It was found that JVL diverted the imported goods in the open market in violation of the conditions of the exemption notification M/s JVL and its directors - Held that - there is no serious attempt on behalf of the appellants to refute the findings of the Adjudicating Authority - It is apparent on the face of the records, that the appellants were involved in the evasion of Customs duty. Hence, the impositions of penalties on the appellants are justified - appeal dismissed - decided against appellant.

Summary

Issues:
1. Imposition of penalties on appellants under Section 112 (a) & 112 (b) of the Customs Act, 1962 for alleged evasion of Customs duty.
2. Allegation of conspiracy and illegitimate import involving manipulation of high sea sale agreement.
3. Role of M/s JVL, M/s ACI Oils, and M/s Soma Clearing Agents in the diversion of imported goods.
4. Legal arguments regarding knowledge of alleged duty evasion and applicability of penalties.

Analysis:
1. The judgment involved the imposition of penalties on the appellants under Section 112 (a) & 112 (b) of the Customs Act, 1962 for their alleged involvement in the evasion of Customs duty. The Commissioner of Customs found that M/s JVL and M/s ACI Oils engaged in a conspiracy to import goods at a lower duty rate through a fraudulent scheme. M/s JVL diverted the imported goods in violation of exemption conditions, leading to penalties being imposed on M/s ACI Oils and M/s Soma Clearing Agents. The Settlement Commission had already settled the matter with M/s JVL, implying their involvement in the evasion. The Tribunal upheld the penalties, citing lack of serious attempts to refute the findings and evidence of involvement in duty evasion.

2. The case revolved around the allegation of a conspiracy and illegitimate import scheme involving the manipulation of a high sea sale agreement. M/s JVL and M/s ACI Oils were accused of orchestrating a modus operandi where the ownership of goods appeared to change hands to qualify for duty exemptions. M/s ACI Oils knowingly participated in the scheme by allowing their name to be used as the high seas buyer, despite not meeting the necessary import qualifications. The investigation revealed that M/s ACI Oils facilitated the illegal import, leading to penalties under various sections of the Customs Act.

3. The judgment detailed the roles of M/s JVL, M/s ACI Oils, and M/s Soma Clearing Agents in the diversion of imported goods and the subsequent evasion of Customs duty. M/s JVL orchestrated the scheme, while M/s ACI Oils knowingly participated in the fraudulent import process. M/s Soma Clearing Agents, as a Customs House Agent (CHA), failed to fulfill their legal responsibilities by not disclosing the illegitimacy of the import scheme, despite being aware of the irregularities. The failure of M/s Soma Clearing Agents to act diligently in handling the import process resulted in their liability for penalties under the Customs Act.

4. The legal arguments presented in the case focused on the appellants' knowledge of the alleged duty evasion and the applicability of penalties. The appellants claimed ignorance of the evasion, citing case laws to support their defense. However, the Tribunal found that the Settlement Commission had already imposed penalties on co-noticees, justifying the penalties on the appellants. The lack of substantial efforts to challenge the adjudicating authority's findings and the clear involvement in the duty evasion scheme led to the dismissal of the appeals and upheld penalties on the appellants.