2022 (3) TMI 417 - AT - Customs

Levy of pealty - absolute confiscation - Smuggling - Gold - non-compliance of section 129 (e) of Customs Act, 1962 - pre-deposit of 7.5% of duty/penalty not complied - HELD THAT - The original adjudicating authority has not order any demand of duty. However, penalty of ₹ 4,00,000/- has been imposed upon the appellant. The amount of ₹ 75,000 40,000 as has already been deposited by the appellant is definitely more than 7.5% of the aforesaid amount of penalty. Hence, it is held that Commissioner (Appeals) has committed an error while not considering the aforesaid amount already deposited by the appellant as the amount of pre-deposit of 7.5 % of the penalty. Commissioner (Appeals) is directed to afford the proper opportunity of personal hearing to the appellant and to decide the appeal on merits of the case - Appeal allowed by way of remand.

Summary

Issues:
1. Confiscation of gold bars for alleged smuggling.
2. Imposition of penalty on the appellant.
3. Technical ground of non-deposit of penalty amount.

Analysis:

Issue 1: Confiscation of gold bars for alleged smuggling
The appellant was intercepted at the airport with two yellow metal bars, assessed as 999 Gold, weighing 710 grams. The Show Cause Notice proposed absolute confiscation of the bars and imposition of a penalty of ?4,00,000 on the appellant for alleged smuggling of gold. The appellant contended that the gold was purchased by him against payment, supported by an invoice, and the funds were obtained by selling his property in Kandahar. The appellant, an Indian citizen, had deposited amounts on different occasions, claiming to be financially constrained. The authorities did not consider the appellant's submissions, leading to the appeal.

Issue 2: Imposition of penalty on the appellant
The appellant argued that the penalty imposed was disproportionate and that the deposited amounts should be considered as pre-deposit under section 128 of the Customs Act. The authorities alleged that the appellant attempted to evade duty by concealing the gold in a plastic cover and crossing the green channel. However, the Tribunal noted that the penalty amount was not linked to any duty demand, and the appellant had already deposited an amount exceeding 7.5% of the penalty imposed. The Commissioner (Appeals) was directed to provide a proper hearing to the appellant and decide the appeal on its merits within three months.

Issue 3: Technical ground of non-deposit of penalty amount
The order under challenge was based on the technical non-compliance of section 129(e) of the Customs Act, requiring a deposit of 7.5% of the duty/penalty in dispute. The Tribunal found that the Commissioner (Appeals) erred in not considering the amounts already deposited by the appellant as part of the required pre-deposit. Consequently, the order was set aside, and the matter was remanded to the Commissioner (Appeals) for a decision on the case's merits after affording the appellant a proper hearing.

In conclusion, the Tribunal allowed the appeal by remanding the case for a fresh decision, emphasizing the importance of considering the appellant's submissions and ensuring a fair adjudication process in line with the Customs Act.