2020 (2) TMI 611 - AT - Customs

Imposition of penalty - illegal exportation of Red sanders - prohibited goods or not - proper investigation not carried out - principles of natural justice - HELD THAT - It is quite evident that none of these persons were traced and investigated by the investigating authority/ DRI in the present case. Amongst the persons who have not been investigated the name of present appellant figures. However, even without questioning them, or causing investigation, these person have been made the party to the show cause notice. The appellant have not been investigated in the case of present seizure and confiscation of red sanders. The statement that has been relied upon by the Commissioner, is also in case of some another investigation, seizure and confiscation. It is really irony that it has been admitted that even the true identity etc of the appellant has not been established in the present case and the Commissioner has imposed penalty even when the investigations against the appellant are still pending in the present case. It is also not under stood as to how and on basis of which evidence linkage has been established between the appellants and present consignment of Red Sanders confiscated in the impugned order. Imposition of penalty - HELD THAT - Section 114 of CA shows that this section is applicable only in respect of the person who has done any act of omission or commission qua the goods held liable for confiscation under Section 113. Any act performed by the person in respect of any other goods which may be similar/ same/ identical, but not the subject matter of the proceedings cannot be reason for imposition of penalty under this section. Thus without leading the evidence to the effect of establishing the act of omission/ commission in relation to the goods confiscated in these proceedings i.e. 15.010 MTs of Red Sanders, illegally exported, the penalty imposed under this section cannot be sustained. The number of person including the present appellant have not been investigated in this case, and the investigation are kept open, our order setting aside the penalty herein should not be treated as exoneration of the appellant in the proceedings which follow on completion of investigations against those persons - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of Red Sanders Wood logs and penalties imposed under the Customs Act, 1962.
2. Imposition of penalties on various individuals involved in the illegal export of Red Sanders.

Confiscation of Red Sanders Wood logs and Penalties:
The appeal was against the order-in-original by the Commissioner of Central Excise, Rohtak, directing the absolute confiscation of 537 logs of Red Sanders Wood and imposing penalties under various sections of the Customs Act, 1962. The Commissioner ordered the confiscation of the goods recovered from one container but refrained from confiscating goods from two other containers due to unavailability. Penalties were imposed on M/s D R Foods Limited, its directors, and several individuals for their involvement in the illegal export of Red Sanders. The penalties ranged from ?10 lakhs to ?1.5 crores based on the roles played by the entities in the illegal export.

Imposition of Penalties on Various Individuals:
The case revolved around the penalty of ?10 lakhs imposed on one of the appellants, Shri A T Maideen, for his involvement in the illegal export of Red Sanders. The investigation revealed that the goods exported contained contraband Red Sanders, which led to the seizure and subsequent show cause notice. The Commissioner imposed the penalty on Shri A T Maideen based on specific intelligence and evidence gathered during the investigation. However, it was noted that several individuals mentioned in the investigation were not traced or investigated, raising concerns about the basis for imposing penalties. The Commissioner's reliance on statements from a different investigation to impose penalties in the present case was questioned, highlighting the lack of established linkage between the appellants and the confiscated goods.

In the analysis, it was emphasized that penalties under Section 114(i) of the Customs Act, 1962 could only be imposed if the person's acts directly related to the goods liable for confiscation under Section 113. The decision highlighted the necessity of establishing a clear connection between the individual's actions and the confiscated goods to justify the penalties imposed. The judgment also underscored that the setting aside of penalties for certain individuals did not equate to exoneration, as investigations against them were ongoing. Ultimately, the appeal was allowed, setting aside the impugned order concerning the specific appellant in question, pending further investigations and proceedings against other individuals involved in the case.