2008 (1) TMI 150 - AT - Customs

Penalty imposed on employee u/s 114 of Customs Act on the ground that he was close associate of employer - huge amount of drawback has been claimed by employer by obtaining IEC code, filing up account opening forms, affixing photographs of persons known to him, his employees appellant admitted that he was working for Shri Rajesh Bhasin(employer) but there is no evidence that he has been benefited with the fraud or he is party to the fraud penalty not imposable

Summary

Issues: Appeal against penalty imposition under Section 114 of Customs Act.

Analysis:
1. Background: The appellant filed an appeal against a penalty of Rs. Two lakhs imposed under Section 114 of the Customs Act. The matter was remanded by the Supreme Court for fresh adjudication.

2. Appellant's Contention: The appellant argued that he was wrongly penalized as he was not directly involved in the fraud orchestrated by Shri Rajesh Bhasin. The appellant claimed to be an employee of Bhasin and denied benefiting from the fraudulent activities. The appellant highlighted that there was no evidence linking him to the misdeclaration of goods or withdrawal of funds from the bank accounts involved in the fraud.

3. Revenue's Contention: The Revenue argued that the appellant, by assisting Shri Rajesh Bhasin, was complicit in the fraudulent activities. They pointed out that poor quality goods were exported to claim a significant amount of drawback, using addresses associated with the appellant.

4. Adjudication: The adjudicating authority imposed the penalty based on the appellant's alleged close association with Shri Rajesh Bhasin. However, upon review of the evidence, it was found that the bank manager's statement did not indicate direct involvement of the appellant in operating the fraudulent accounts. Additionally, Shri Rajesh Bhasin's statement clarified that the premises were rented in the appellant's name as he worked for Bhasin. The appellant's lack of benefit from the fraud and absence of concrete evidence linking him to the fraudulent activities led to the setting aside of the penalty.

5. Decision: The Tribunal found merit in the appellant's contentions and set aside the impugned order, allowing the appeal. The judgment emphasized the lack of evidence proving the appellant's active involvement in the fraud despite his association with the main perpetrator, Shri Rajesh Bhasin.

This detailed analysis covers the appellant's defense, the Revenue's arguments, the adjudication process, and the final decision of the Tribunal, providing a comprehensive overview of the legal judgment regarding the appeal against the penalty imposition under Section 114 of the Customs Act.