2020 (11) TMI 463 - AT - Customs

Imposition of Penalty u/s 112A of the Customs Act, 1962 - providing of two different invoices for the imported goods - allegation of abetting the importer in evasion of customs duty by causing misdeclaration - Difference of Opinion - HELD THAT - There are contrary decision on this issue. Therefore, it would be in the interest of justice to refer the matter to Larger Bench of this Tribunal to decide the issue, which is as follows - (i) Whether penalty under Section 112(a) of the Customs Act, 1962 can be imposed during the period 2012-13 to an exporter who has mis-declared the goods located in Dubai, UAE or not? The Registry is directed to place the matter before the Hon ble President with a request to constitute a Larger Bench to decide the above issue.

Summary

Issues involved:
Imposition of penalties under Section 112A of the Customs Act, 1962 on a foreign company incorporated in Dubai for alleged collusion with Indian importers in misdeclaration of goods to evade customs duty.
Interpretation of territorial jurisdiction of the Customs Act, 1962 in relation to overseas suppliers.
Contradictory decisions on the applicability of penalties under Section 112(a) of the Customs Act, 1962 to exporters located outside India during the period 2012-13.

Analysis:

1. Imposition of Penalties: The appellant, a company incorporated in Dubai, was penalized under Section 112A of the Customs Act, 1962 for allegedly colluding with Indian importers in misdeclaration of goods to evade customs duty. The appellant argued that it had no business operations in India, all transactions were accounted for, and the Customs Act's jurisdiction does not extend beyond Indian territory. The appellant cited various legal precedents to support its position, emphasizing that the Act does not apply extraterritorially. However, the Tribunal noted conflicting decisions on this issue and decided to refer it to a Larger Bench for resolution.

2. Territorial Jurisdiction: The Tribunal examined the provisions of the Customs Act, 1962 and highlighted that it extends to the whole of India, including territorial waters. The appellant's counsel relied on the decision in HI Lingos case and argued that the Act lacks extraterritorial jurisdiction, thus penalties cannot be imposed on entities outside India. The Tribunal acknowledged the conflicting interpretations in previous cases and decided to seek clarification from a Larger Bench on whether penalties under Section 112(a) can be applied to exporters located outside India during the relevant period.

3. Contradictory Decisions: The Tribunal observed contradictory decisions on the issue of imposing penalties under Section 112(a) of the Customs Act, 1962 on exporters located outside India. Despite the appellant's reliance on legal precedents supporting its position, including the decision in Relax Safety Industries, the Tribunal noted that penalties were upheld in the appellant's own case. Due to the conflicting interpretations and the importance of resolving the issue for clarity and consistency, the Tribunal decided to refer the matter to a Larger Bench for a definitive decision.

In conclusion, the Tribunal acknowledged the complexity and conflicting interpretations surrounding the application of penalties under Section 112(a) of the Customs Act, 1962 to foreign exporters and deemed it necessary to seek clarification from a Larger Bench to ensure uniformity and consistency in legal interpretation.