2018 (2) TMI 948 - AT - Customs

Penalties u/s 114AA of the Customs Act 1962 - smuggling of MOP in the guise of Bentonite Powder - penalty on N.A. Jayaram - charge against the N.A Jayaram is that he has issued invoices of Muriate of Potash (MOP) in the name of Bentonite Powder - Held that - it is admitted by the appellant that they have issued invoice from Sakaleshapur as the invoice in question has been issued by the appellant in the case of MOP in the guise of Bentonite Powder and without detection of DRI the said activity of the appellant could not have been reliable - penalty rightly imposed. Penalty on Mehaboob Khan has been imposed on the basis of transaction between Shri N.A. Jayaram and Shri Mehaboob Khan - Held that - Revenue has no positive evidence against the Mehaboob Khan therefore penalty against Shri Mehaboob Khan is set aside - penalty set aside. Penalty on N.J. Shyla - allegation against Smt N.J. Shyla is that he has taken godown on rent in which MOP was stored by Shri N.A. Jayaram - Held that - The fact of storage by N.A. Jayaram has not been disputed and it is a case of smuggling of MOP therefore the penalty on Shri N.A. Jayaram is imposed - quantum of penalty reduced. Penalty on Rajesh Balar - allegation against Shri Rajesh Balar is that he has provided details of overseas buyer and also provided test reports of Bentonite Powder of M/s. SGS India Pvt. Ltd. Chennai - Held that - the fact on records that the test report has been provided by Shri Rajesh Balar therefore the culpability of Shri Rajesh Balar stands proved - penalty upheld but quantum reduced. Appeal allowed in part.

Summary

Issues:
Penalties under Section 114AA of the Customs Act 1962 imposed on appellants for smuggling MOP under the guise of 'Bentonite Powder'.

Analysis:
1. N.A. Jayaram:
The charge against N.A. Jayaram was issuing invoices of Muriate of Potash (MOP) as 'Bentonite Powder'. The appellant contended that the invoices were issued from Sakaleshpur, not Bangalore, and they were not involved in selling MOP. However, it was admitted that the invoices were issued in the case of MOP as 'Bentonite Powder'. The penalty was rightly imposed, but due to the high amount, it was reduced to ?2.5 lakhs. The appeal by N.A. Jayaram was disposed of accordingly.

2. Mehaboob Khan:
Penalty on Mehaboob Khan was based on a transaction with N.A. Jayaram for selling MOP. The Revenue alleged the sale without producing substantial evidence, relying only on bank transactions. The appellant showed the amount received as a loan from N.A. Jayaram for a flat purchase, supported by IT returns. As the Revenue lacked positive evidence against Mehaboob Khan, the penalty was set aside, following the orders of the Additional Commissioner of Customs. The appeal by Mehaboob Khan was allowed.

3. N.J. Shyla:
N.J. Shyla was alleged to have taken a godown on rent where MOP was stored by N.A. Jayaram. As the storage was not disputed, and it was a case of smuggling, the penalty on N.J. Shyla was confirmed but reduced from ?1,00,000 to ?50,000 under Section 114(i) of the Customs Act, 1962.

4. Rajesh Balar:
Rajesh Balar provided details of overseas buyers and test reports of Bentonite Powder to export MOP, claiming it was Bentonite Powder. Although the statement was retracted, providing the test report proved culpability. The penalty was rightly imposed but reduced from ?50,00,000 to ?5,00,000 due to the high value of goods. The appeal was disposed of accordingly.

The order passed imposed penalties on N.A. Jayaram and N.J. Shyla, confirmed the penalty on Shyla, reduced the penalty on Rajesh Balar, and set aside the penalty on Mehaboob Khan. The appeals were disposed of on 24/10/2017.