2019 (11) TMI 1345 - AT - Customs

Imposition of penalty u/s 114A and 112(a) of Customs Act - Liability of penalty u/s 112(a) on on the authorized signatory or on the proprietor of the firm - HELD THAT - A reading of the provisions of Section 114A makes it very clear that the penalty under this Section is payable by the person by whom duty or interest there upon is payable - In this case duty is payable by the respondents i.e., M/s. Flower World. It being a proprietary concern the duty is payable by Smt. V.M. Hareefa - the impugned order is not maintainable to that extent. Imposition of penalty on Shri J. Shamsudeen under 112(a) of Customs Act, 1962 - HELD THAT - It is found from the records of the case that Shri J. Shamsudeen has been the authorised signatory of the respondents. He has filed various documents and liasoned with the customs authorities in the imports under taken by the respondents. He was in the knowledge of the fact that for each of their imports they carried two sets of invoices (i) one showing a lesser value for the purpose of customs and the other showing higher value for the purpose of actual payment - Shri J Shamsudeen has made himself liable to pay penalty under Section 112(a) of the Customs Act, 1962. Penalty of ₹ 54,76,724/- along with applicable interest imposed on Shri J. Shamsudeen, Authorised Signatory, of the respondents, under Section 114A of the Customs Act, 1962 is set aside - penalty, of ₹ 54,76,724/- along with applicable interest, imposed on Smt. V. M. Hareefa, Proprietrix of the respondents, under Section 114A of the Customs Act, 1962 - penalty of ₹ 5,00,000/- imposed on J. Shamsudeen, authorised signatory, of the respondents, under Section 112(a) of the Customs Act, 1962. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
1. Imposition of penalty under Section 114A of the Customs Act, 1962 on the person liable to pay duty.
2. Applicability of penalty under Section 112(a) of the Customs Act, 1962 on an authorized signatory.

Issue 1: Imposition of penalty under Section 114A of the Customs Act, 1962 on the person liable to pay duty:

The case involved M/s. Flower World, where discrepancies were found in the invoices submitted for imports. The Commissioner of Customs confirmed the redetermination of duty and imposed a penalty under Section 114A on Shri J. Shamsudeen, the authorized signatory. The Department contended that the penalty should be imposed on the proprietrix, Smt. V.M. Hareefa, as per Section 114A. The Tribunal analyzed Section 114A and relevant case laws, concluding that the penalty under this section is payable by the person liable to pay duty, which in this case was the proprietrix. Therefore, the penalty imposed on Shri J. Shamsudeen was set aside, and a penalty was imposed on Smt. V. M. Hareefa.

Issue 2: Applicability of penalty under Section 112(a) of the Customs Act, 1962 on an authorized signatory:

The Department argued that Shri J. Shamsudeen, by colluding with the supplier and being aware of the under-valuation of goods, should be penalized under Section 112(a) instead of Section 114A. The Tribunal observed that Shri J. Shamsudeen, as the authorized signatory, was involved in submitting documents to customs and was complicit in the under-valuation scheme. This conduct rendered the imported goods liable for confiscation under Section 112(a). Consequently, a penalty of &8377; 5,00,000 was imposed on Shri J. Shamsudeen under Section 112(a of the Customs Act, 1962.

In conclusion, the Tribunal modified the impugned order by setting aside the penalty imposed on Shri J. Shamsudeen under Section 114A and imposing it on Smt. V. M. Hareefa. Additionally, a penalty under Section 112(a) was levied on Shri J. Shamsudeen. The judgment clarified the distinction between the liabilities of the person liable to pay duty and an authorized signatory in cases of duty evasion and under-valuation, ensuring appropriate penalties were imposed based on individual responsibilities.