2018 (2) TMI 1425 - AT - Customs

Penalty u/s 114 AA of the Customs Act, 1962 - The Revenue contended that the whole modus operandi adopted by the importer was to avail the benefit of Section 74 even after a lapse of two years from the date of import - Held that - it is clear that the appellant is in a responsible position and coordinated the imports and other operations as deposed by the customs house agent. In fact, the appellant appeared before the authorities and gave various explanation with reference to the impugned consignment. He also undertook to provide additional supporting documents, clarifications as sought by the officers. Some of these documents, originally promised to be supplied, were not provided. This was also recorded by the original authority. All these will reveal that the appellant cannot be considered as a lower level employee executing the directions of responsible senior person of the company - If the appellant is not a responsible person directly connected to the present dispute, it is not clear as to why he is coordinating the action with the CHA and deposed before the customs authorities in the follow up investigations also. In other words, an un-connected employee of a company, as claimed by the appellant, has no business in these activities. The goods were lying un-cleared, as claimed by the appellant, with customs department, duty of ₹ 5.61 crores, have been duly discharged and appropriated to the Government; a penalty of ₹ 5 crores has been imposed on the importer/re-exporter under Section 114 of the Customs Act, 1962 - the interest of justice will be met if the penalty imposed on the present appellant is reduced to ₹ 50 lakhs from ₹ 1 crore - appeal allowed in part.

Summary

Issues:
1. Imposition of penalty under Section 114 AA of the Customs Act, 1962 on the present appellant.
2. Applicability of Section 114 AA for acts committed prior to its introduction.
3. Role and responsibility of the present appellant as a Director of the importing company.
4. Reduction of penalty imposed on the present appellant.

Issue 1: Imposition of Penalty under Section 114 AA:
The appellant was penalized under Section 114 AA of the Customs Act, 1962, by the Commissioner of Customs for his involvement in a case where telecommunication equipment imported by M/s Atlas Interactive India Pvt Ltd could not be used in India due to a dispute with BSNL. The appellant, a Director of the importing company, was held liable for acts and omissions related to the attempted re-export of the goods. The Revenue contended that the importer's actions were aimed at availing benefits under Section 74 of the Act. The appellant argued that he was merely following instructions and should not be penalized personally. The Tribunal noted that the transaction was not a bona fide business deal, and the appellant's role as a Director carried significant responsibility beyond that of a regular employee.

Issue 2: Applicability of Section 114 AA:
The appellant raised a legal objection regarding the applicability of Section 114 AA to acts committed before its introduction in 2006. However, the Tribunal found that the dispute originated from the import in December 2004, with subsequent events and attempts at re-export occurring after the introduction of the section. Therefore, the objection raised by the appellant on this issue was deemed meritless.

Issue 3: Role and Responsibility of the Present Appellant:
The Tribunal emphasized that the appellant, as a Director of the importing company, played a crucial role in coordinating imports and other operations related to the impugned goods. Despite claiming not to be an authorized signatory for statutory documents, the appellant actively participated in dealings with customs authorities and provided explanations and documents related to the consignment. The Tribunal rejected the appellant's argument of being a lower-level employee, highlighting his integral involvement in the activities linked to the import.

Issue 4: Reduction of Penalty:
While upholding the penalty imposed on the present appellant, the Tribunal decided to reduce the amount from ?1 crore to ?50 lakhs. This reduction was based on the circumstances of the case, including the clearance of duty amounting to ?5.61 crores and the imposition of a penalty of ?5 crores on the importer/re-exporter under Section 114 of the Customs Act, 1962. The Tribunal concluded that justice would be served by reducing the penalty on the present appellant.

In conclusion, the Tribunal upheld the imposition of a penalty on the present appellant under Section 114 AA of the Customs Act, 1962, while also addressing the issues of applicability of the section, the appellant's role as a Director, and the reduction of the penalty amount.