2018 (10) TMI 566 - AT - Customs

Penalty u/s 114 of CA - duty drawback - It is the case of the Revenue that on investigation, it was found that the consignment entered for export i.e., Cotton Denim Garments was mis-declared on quality and valuation and it was sought to be exported to avail ineligible higher drawback - Held that - The Adjudicating Authority has not recorded the exact role played by the M/s Exim Services, except that failure to cancel the first drawback shipping bill and thereafter filing the second shipping bill with proper reasons and intimation to the proper officer, have aided the exporter to conceal the crime. The appellant M/s Exim Services would not be covered under Section 114 for simple reason they had filed shipping bill as per the documents received by them in the first instance or in the second instance of filing drawback shipping bills were on instructions. There is nothing on record to indicate the appellant M/s Exim Services had instructed/aided M/s Suryakiran International Limited for claiming ineligible drawback on the export of mis-declared and overvalued Denim Garments - In the absence of any such evidence, the appellant herein is not liable to be penalized under Section 114 of the Customs Act, 1962 - penalty set aside. Penalty imposed on M/s Expo Freight Pvt. Ltd. - only allegations against them is they had provided container to M/s Suryakiran International Ltd., for the export of mis-declared undervalued Denim Garment for export - Held that - The findings of the Adjudicating Authority do not indicate any specific role by M/s Exim Services and penalty is imposed only on the finding of the Adjudicating Authority expo freight aided the exporter by providing the container, cannot be held has an activity for visiting penalty under Section 114 of the Customs Act, 1962 - penalty set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of penalty under Section 114 of the Customs Act, 1962 on two appellants.
- Role and liability of the appellants in relation to mis-declared export goods.
- Interpretation of Section 114 and applicability to the actions of the appellants.

Analysis:
1. Imposition of Penalty: The judgment addresses two appeals against the same Order-in-Original, concerning penalties imposed on the appellants under Section 114 of the Customs Act, 1962. The penalties were imposed by the Adjudicating Authority based on alleged involvement in mis-declaration and attempted export of goods to avail ineligible benefits.

2. Role and Liability: The key issue revolves around determining the liability of the appellants in the mis-declared export scenario. The Adjudicating Authority found M/s Exim Services liable for aiding the exporter by filing drawback shipping bills without canceling the free shipping bill, while M/s Expo Freight Pvt. Ltd. was alleged to have provided containers for the mis-declared export.

3. Interpretation of Section 114: The judgment delves into the interpretation of Section 114 of the Customs Act, 1962 concerning penalties. The Tribunal analyzed the exact role played by the appellants in the export process and whether their actions constituted grounds for penalization under the said section.

4. Decision - M/s Exim Services: The Tribunal found that M/s Exim Services did not have a definitive role in aiding the mis-declaration and ineligible benefit claims. It was noted that the appellant acted as per instructions received and did not instruct or aid the exporter in the fraudulent activities. Citing precedent, the Tribunal concluded that the penalty imposed on M/s Exim Services was unwarranted and set it aside.

5. Decision - M/s Expo Freight Pvt. Ltd.: Regarding M/s Expo Freight Pvt. Ltd., the Tribunal noted that the only allegation against them was providing containers for the mis-declared export. However, the Tribunal found that this action alone did not warrant penalty under Section 114. Consequently, the penalty imposed on M/s Expo Freight Pvt. Ltd. was also set aside.

6. Conclusion: The Tribunal accepted the appeals filed by both appellants, setting aside the penalties imposed on them by the Adjudicating Authority. The judgment highlights the importance of establishing a direct link between the actions of the appellants and the fraudulent activities to justify penalties under Section 114 of the Customs Act, 1962.