2019 (4) TMI 188 - AT - Customs

Penalty u/s 112(b) of Customs Act, 1962 - smuggling of diamonds - Held that - Shri Dhanji Nanji Varia, Shri Vikram Natavarlal Patel and Shri Jaisukh Gobarbhai Savalia have admitted that they have earlier purchased/ polished the diamonds smuggled by the two main noticees. They have admitted that they were not aware of that the diamonds were of Zimbabwe origin and no KPC certificate was given to them - a reasonable conclusion can be reached that the appellants were regularly dealing in smuggled diamonds which they knew or had reasons to believe about the illicit nature and therefore liable to confiscation. In these circumstances, imposition of penalty on the appellants under Section 112(b) is fully justified. Further, penalty of ₹ 5 Lakh each has been imposed on these appellants. Looking at the degree of involvement it is felt that penalties of ₹ 5 Lakh each on these three appellants namely Shri Jaisukh Gobarbhai Savalia, Shri Vikram Natvarlal Patel and Shri Dhanji Nanji Varia is excessive and the same are reduced to ₹ 50,000/- each. Penalty on Ms. Mancy H Kumpavat - Held that - It is seen that she may have assisted in the activities of two main noticees but she was not directly involved in any manner. In these circumstances, imposition of penalty under Section 112(b) of the Customs Act, 1962 on Ms. Mancy H Kumpawat is not justified and the same is set-aside. Appeal allowed in part.

Summary

Issues: Imposition of penalties under Section 112(b) of the Customs Act, 1962 on four appellants for their involvement in dealing with smuggled diamonds.

Analysis:
1. The appellants were co-noticees in a case involving smuggling of diamonds by two main noticees. The appellants had either purchased or polished diamonds from the main noticees during previous visits. The appellants argued that they were not involved in the smuggling of diamonds confiscated in the impugned proceedings. They contended that since there was no proposal for confiscation of earlier imports made by the main noticees, Section 112(b) of the Customs Act, 1962 could not be invoked. The appellants relied on a previous Tribunal decision to support their case.

2. The appellants admitted to purchasing/polishing smuggled diamonds from the main noticees without being aware of their origin or possessing a KPC certificate. They were found to be regularly dealing with the main noticees, indicating their knowledge or belief in the illicit nature of the diamonds. Consequently, the imposition of penalties under Section 112(b) was deemed justified. However, the original penalty amounts of ?5 Lakhs each on three appellants were considered excessive and reduced to ?50,000 each due to the degree of their involvement.

3. Regarding one of the co-noticees, it was alleged that she acted as an interpreter for the main noticees during their dealings with local workers/buyers of diamonds. While she was aware of the illicit activities of the main noticees and assisted them, she was not directly involved in any illegal activities. As a result, the imposition of a penalty on her under Section 112(b) was deemed unjustified, and her appeal was allowed.

In conclusion, the appeal of the co-noticee acting as an interpreter was allowed, while the appeals of the three appellants were partly allowed with reduced penalties.