2019 (5) TMI 1240 - AT - Customs

Levy of penalty - Warehousing of goods - Goods missing when it was in their custody - Demand of duty along with interest on the missing bonded cargo - HELD THAT - No enquiry was conducted by the Commissioner under Regulation 12 which is envisaged and the procedure as prescribed under Regulation 12 has not been complied with. Further, the impugned order is contradictory because the Commissioner in para 21 of the impugned order has dropped the proceedings against the appellant under Regulation 11 12 but in the order portion, he still imposed penalty of ₹ 50,000/- under Regulation 12(8) of the Handling of Cargo in Customs Area Regulations 2009. The impugned order is contradictory because the Commissioner in para 21 of the impugned order has dropped the proceedings against the appellant under Regulation 11 12 but in the order portion, he still imposed penalty of ₹ 50,000/- (Rupees Fifty Thousand only) under Regulation 12(8) of the Handling of Cargo in Customs Area Regulations 2009. Penalty not sustainable - duty of demand alongwith interest upheld - appeal allowed in part.

Summary

Issues:
1. Duty confirmation and penalty imposition on missing bonded cargo of Vodka by CCSP under Customs regulations.
2. Legal basis for penalty imposition under Handling of Cargo in Customs Area Regulations.
3. Compliance with procedural requirements for penalty imposition.

Analysis:
1. The appeal challenged an order confirming duty of ?12,227 along with interest and imposing a penalty of ?50,000 on the appellant for missing bonded cargo of Vodka by the CCSP under Customs regulations. The appellant, a Container Freight Station, stored imported goods without a warehousing license, leading to the missing cargo. The Commissioner upheld the duty demand and penalty citing regulations 6(i) and (j) of the Handling of Cargo in Customs Area Regulations, 2009.

2. The appellant contended that the penalty imposition lacked a legal basis under Regulation 12(8) of the Handling of Cargo in Customs Area Regulations, 2009. The appellant argued that no proper procedure was followed for penalty imposition, as no inquiry was conducted, and no opportunity was given to present evidence. The appellant also highlighted the contradiction in dropping proceedings under Regulations 11 and 12 while still imposing a penalty under Regulation 12(8).

3. The Tribunal, after hearing both parties, found the duty amount to be payable by the appellant due to the missing bonded cargo. However, the Tribunal ruled that the penalty imposition of ?50,000 was unsustainable in law. The Tribunal noted the lack of compliance with the prescribed procedure under Regulation 12 for penalty imposition and the contradictory nature of the impugned order. Consequently, the Tribunal set aside the penalty but confirmed the duty demand along with interest for the missing bonded cargo under Regulations 6(i) and (j) of the Handling of Cargo in Customs Areas Regulations, 2009. The appeal was partly allowed, with the penalty being revoked.