2019 (7) TMI 967 - AT - Customs

100% EOU - Imposition of penalty u/s 112(a) of Customs Act, 1962 - violation of import conditions - diversion of goods to local market instead of being used for the purpose for which it was imported - HELD THAT - The evidences brought on record i.e. statements of various transporters, who had been approached by the CHA, in their statements before the authorities had categorically stated that the Appellant was fully aware of the fact that the goods were to be delivered at Surat instead of Mathura. The Commissioner in his findings has analyzed all the evidences and concluded that the Appellant was fully aware of diversion of the goods at Surat even though the goods on paper were consigned to Mathura - The learned Advocate for the Appellant made a feeble attempt to establish the fact that the goods were received at Mathura and in support a sample re-ware housing certificate issued by the departmental officer enclosed with the submissions. There is no merit in the argument of the learned Advocate for the Appellant that the goods were received at Mathura. The inescapable conclusion is that the imported goods were diverted to Surat and the Appellant was in the knowledge of the same as none of the statements were challenged by way of cross examination nor retracted. The imposition of penalty on the Appellant, who is an employee of CHA, appears to be harsh - the ends of justice will be met if the penalty is reduced to ₹ 50,000/- - appeal allowed in part.

Summary

Issues:
1. Alleged diversion of imported goods.
2. Imposition of penalty under Section 112(a) of Customs Act, 1962.

Issue 1: Alleged diversion of imported goods

The case involved an appeal against an Order-in-Original passed by the CC (Export) JNCH, Nhava Sheva, regarding the alleged diversion of goods imported by a company to the local market instead of their intended use. The appellant, an employee of a Customs House Agent (CHA), was penalized for his involvement in the diversion. The appellant argued that he was unaware of the diversion and merely coordinated the delivery of goods as per instructions. The revenue contended that the appellant was complicit in the diversion, as evidenced by statements from transporters. The Tribunal considered the evidence, including re-warehousing certificates and statements, and concluded that the goods were indeed diverted to the local market. However, acknowledging the appellant's role as an employee of the CHA, the penalty imposed was reduced from ?5.00 lakhs to ?50,000, finding the original penalty too harsh.

Issue 2: Imposition of penalty under Section 112(a) of Customs Act, 1962

The central issue for determination in the appeal was whether the penalty of ?5.00 lakhs under Section 112(a) of the Customs Act, 1962 was justifiable. The appellant argued that he was not aware of the diversion and merely acted on behalf of the CHA. The revenue contended that the appellant was fully aware of the diversion, as indicated by statements from transporters. The Tribunal analyzed the evidence presented, including the appellant's submissions and the revenue's arguments. While confirming the diversion of goods, the Tribunal found the original penalty excessive given the appellant's role. Consequently, the penalty was reduced to ?50,000 to align with the circumstances and the appellant's involvement as an employee of the CHA. The appeal was partly allowed to the extent of reducing the penalty imposed on the appellant.

This detailed analysis of the judgment highlights the key issues of alleged diversion of imported goods and the imposition of penalty under the Customs Act, 1962. The Tribunal's decision considered the evidence presented by both parties and ultimately reduced the penalty imposed on the appellant, taking into account his role as an employee of a Customs House Agent.