2020 (1) TMI 242 - AT - Customs

Imposition of penalty on Director of the company - mis-declaration of goods - import of Molybdenum ore - appellants have claimed that the same is ore, claiming benefit of notification - case of Revenue is that trading of Molybdenum ore to prepare concentrate amounts to manufacture; therefore the benefit available for ores cannot be extended to the concentrates - Benefit of N/N. 4/2006 dated 1.3.2006 - HELD THAT - Vide the statements dated 4.10.2011 and 5.11.2012 Shri Ramesh Shah has expressed his opinion that ores and concentrates fall under the same heading; further he had accepted that exemption from CVD was wrongly claimed on account of their not being aware of the amended notification No.4 of Chapter 28; we find that Shri Ramesh Shah was also giving evasive answers such as he was not aware as to how and why the CHA declared the goods to be ore. It is anybody s guess that the CHA will not be benefited in any manner by this mis-declaration. Shri Ramesh Shah being at the helm of the affairs of the Company has liaison with valid suppliers, CHA and the Customs Authorities - Shri Ramesh Shah cannot extricate himself from mis declaration made by M/s. Sakar Industries Pvt.Ltd. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Interpretation of notification No.4/2006 regarding Molybdenum ore and concentrate.
2. Imposition of penalty under Section 112(a) of the Customs Act, 1962 for mis-declaration.
3. Involvement of the Director in the mis-declaration and evasion of customs duty.

Analysis:
1. The case revolves around the interpretation of notification No.4/2006 concerning the classification of Molybdenum ore and concentrate for availing benefits. The appellant, a Director of a company importing the goods, claimed that the imported material qualified as ore eligible for benefits. However, the department argued that post-amendment in the Finance Act, 2011, trading Molybdenum ore to prepare concentrate amounts to manufacturing, thus disqualifying the concentrates from the benefits available for ores. The Tribunal relied on the Apex Court's decision in a similar case, holding that the impugned goods fell under a specific tariff item, making them ineligible for the notification's benefits.

2. The appeal also addressed the imposition of a penalty of ?1,00,000 on the appellant under Section 112(a) of the Customs Act, 1962. The appellant's counsel contended that there was no evidence of conscious involvement in customs duty evasion through mis-declaration. It was argued that since the goods were not liable for confiscation, the penalty was unjustified. The counsel emphasized that the issue pertained to CENVAT duty and was a matter of statutory interpretation, citing a precedent where the Apex Court ruled against imposing penalties solely based on interpretation issues.

3. The Tribunal examined the involvement of the Director in the mis-declaration and evasion of customs duty. The Commissioner had observed that the Director was actively engaged in mis-declaring the imported goods to wrongly avail benefits under the notification. Statements from the Director indicated awareness of the mis-declaration and attempts to evade CVD by claiming exemptions erroneously. The Tribunal found that the Director's association with suppliers, Customs Authorities, and lack of clarity in responses indicated his involvement in the mis-declaration. Considering these factors, the Tribunal upheld the impugned order, dismissing the appeal and affirming the penalty imposed.

In conclusion, the Tribunal upheld the decision based on the involvement of the Director in the mis-declaration, the ineligibility of the goods for benefits under the notification, and the lack of grounds to interfere with the penalty imposed under the Customs Act, 1962.