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2022 (6) TMI 1225 - AT - CustomsLevy of penalty u/s 112(a) of the Customs Act, 1962 - Allegation of evasion of anti-dumping duty - mis-declaring the country of origin as Malaysia, instead of China - penalty imposed upon the appellants Jayesh Mehta and Harshad Vadodaria on the ground that appellants herein have aided and abetted the importer in importing the goods by way of mis-declaring the country of origin - validity of SCN - appellant points out that impugned order imposed penalty under section 112 (a) of the Act whereas show cause notice proposed penalty under section 112 (b) of the Act - appropriation of amounts deposited by or on behalf of company during investigation towards duty and interest liability - HELD THAT - The appellants said role in relation to import of goods is not borne out of facts on record. Significantly, the case of the department of mis-declaration of Chinese origin goods for evading anti-dumping duty is wholly directed against Nalin Mehta. Jayesh Mehta has stated in his statement that he attended the work of customs clearance as representative of CHA and acted upon the direction of Nalin Mehta. There is no evidence to show that at the time of imports he was aware that goods were allegedly being mis-declared by Nalin Mehta to customs. Harshad Vadodaria has specifically stated in his statement that he was not aware that by using his factory s name and IEC Nalin Mehta and Jayesh Mehta indulged in evasion of anti-dumping duty by mis-declaring the country of origin. There is no other reliable and corroborative evidence to establish that appellants herein had knowledge that goods imported were of Chinese Origin, in that view it cannot be said that appellants herein have committed any act or omission, which rendered the goods liable to confiscation, accordingly penalty under section 112 (a) cannot be sustained. Validity of SCN - HELD THAT - The impugned order imposed penalty under section 112 (a) whereas show cause notice invoked section 112 (b) of the Act, appellants herein were not put to notice under section 112 (a), the same cannot sustain in view of judgement in the case of AMRIT FOODS VERSUS COMMISSIONER OF CENTRAL EXCISE, UP. 2005 (10) TMI 96 - SUPREME COURT where The Tribunal has set aside the order of the Commissioner on the ground that neither the show cause notice nor the order of the Commissioner specified which particular clause of Rule 173Q had been allegedly contravened by the appellant. We are of the view that the finding of the Tribunal is correct. Rule 173Q contains six clauses the contents of which are not same. It was, therefore, necessary for the assessee to be put on notice as to the exact nature of contravention for which the assessee was liable under the provisions of the 173Q. This not having been done the Tribunal's finding cannot be faulted. Appropriation of amounts deposited by or on behalf of company, Shobha Plastics, during investigation towards duty and interest liability - HELD THAT - As regards, Shobha Plastics, it is seen that vide Order dated 05.11.2008 the Commissioner of Customs, Ahmedabad fastened duty liability jointly and severally upon Shobha Plastics and Nalin Mehta. However, the said Order dated 05.11.2008 was set aside by Tribunal vide its Order dated 15.04.2009 with a direction to the Commissioner to fix duty liabilities on each and every individual separately. Accordingly, Commissioner vide his common Order dated 19.01.2011 held Nalin Mehta to be the importer of the goods and fixed duty liability upon him along with interest and penalties. The present appellant, Shobha Plastics was not held liable to duty. Department has not preferred appeal against that order dated 19.01.2011 and hence the same has attained finality. In that view, appropriation of amounts deposited by or on behalf of Shobha Plastics during investigation towards duty and interest liability in the impugned order cannot be sustained. Appeal allowed - decided in favor of appellant.
Issues involved:
1. Imposition of penalties under section 112(a) of the Customs Act, 1962 2. Appropriation of amounts deposited during investigation 3. Jurisdiction of DRI to issue show cause notice 4. Role and liability of individuals in import transactions Analysis: 1. Imposition of penalties under section 112(a) of the Customs Act, 1962: The case involved appeals against penalties imposed under section 112(a) of the Customs Act. The appellants challenged the penalties imposed on them, arguing that they did not have a role in the alleged mis-declaration of goods. The Tribunal found that the appellants, Jayesh Mehta and Harshad Vadodaria, did not have sufficient evidence to prove their knowledge or involvement in the mis-declaration of the country of origin of the imported goods. Consequently, the penalties imposed under section 112(a) were deemed unsustainable. Additionally, the imposition of penalties under a different provision than the one invoked in the show cause notice was considered legally flawed, citing relevant case law. 2. Appropriation of amounts deposited during investigation: Regarding the appropriation of amounts deposited during the investigation against duty and interest liabilities, the Tribunal noted that the duty liability was initially fastened jointly and severally upon Shobha Plastics and another individual. However, subsequent orders clarified the duty liabilities on individual parties separately. As Shobha Plastics was not held liable for duty, the Tribunal found that the appropriation of amounts deposited by or on behalf of Shobha Plastics towards duty and interest liabilities was not sustainable. 3. Jurisdiction of DRI to issue show cause notice: The issue of the jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue show cause notices was raised during the proceedings. The Tribunal had previously remanded the case for fresh adjudication, keeping all issues open, including the DRI's jurisdiction. However, despite this, the Principal Commissioner proceeded to pass an order before the DRI jurisdiction issue was resolved. The matter was requested to be kept pending due to the unresolved jurisdictional issue and the pending appeal of another party before higher courts. 4. Role and liability of individuals in import transactions: The case involved allegations of mis-declaration of goods to evade anti-dumping duty. The Tribunal examined the roles and liabilities of the individuals involved in the import transactions. It was found that the appellants did not have sufficient evidence to establish their knowledge or involvement in the alleged mis-declaration. The Tribunal emphasized that the case against mis-declaration was primarily directed at another individual, and the appellants' lack of awareness or involvement in the wrongdoing rendered the penalties imposed on them unsustainable. In conclusion, the Tribunal set aside the impugned order to the extent it was against the present appellants, allowing all appeals with consequential reliefs. The judgment was pronounced on 27.06.2022 by the Appellate Tribunal CESTAT Ahmedabad.
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