2022 (9) TMI 1352 - AT - Customs

Levy of penalty on Customs Broker and Managing Director u/s 112 (a) - Deemed conclusion of proceedings on payment of duty with interest - benefits of sub-Section 6(i) of Section 28 of the Customs Act -proceedings against the Appellant-Customs Broker - conclusion of proceeding against goods which were seized under Section 110 of the Customs Act or liable for confiscation on the other Sections of Customs Act - HELD THAT - While applying this provision against the Appellant, the Commissioner had observed that the goods were seized under Section 110 and liable for confiscation under Section 111(m) of the Customs Act, 1962 and hence the co-noticee M/s. Damani Shipping Pvt. Ltd. (present Appellant) is out of the purview of the clarification of the Board Circular No. 11/2016-Cus. dated 15.03.2016. Further, Section 28(6)(i) of the Customs Act, 1962 clearly reveals that the proceedings in respect of such persons or other persons to whom the notice is served under sub-Section (1) or sub-Section (4) of the Section 28 of the Customs Act, shall, without prejudice to the provisions of Section 135, 135A and 140 be deemed to be conclusive as to the matters stated therein. The Board Circular No. 11/2016-Cus. in unambiguous terms clarified that other person implies that other person to which no demand of duty is raised with notice served under Section 1 or sub-Section 4 of Section 28, as the case me be. Hence the Appellant s case squarely covered under provision. Since it was a co-notice to whom no demand notice was made but notice under Section 28 was served. Ambiguity arises because of the fact that at the end of para 6 it was noted that case involving seizure of goods under Section 110 of the Customs Act or cases where confiscation proceedings are involved, would be out of the purview of this Circular - the said Circular has not personified any violator individually since it had categorically stated that cases involving seizer and confiscation would be out of the purview of the Circular and therefore the order passed by the Commissioner in allowing the benefit contained in Section 28(6)(i) to the importer company and its Managing Director and denying the same to the Appellant who is charged under same penal provisions under Section 112, 114(A), 114(A)(A) in the same case is unsustainable in law and equity. Appeal allowed.

Summary

Issues:
Refusal to extend benefits of sub-Section 6(i) of Section 28 of the Customs Act in concluding proceedings against the Appellant-Customs Broker after differential duty with required penalty was paid by the importer and confirmation of penalty of Rs.50,000/- against the Appellant under Section 112(A) of the Customs Act, 1962 by the Commissioner of Customs (Import), Mumbai.

Analysis:

1. Refusal to Extend Benefits under Section 28(6)(i):
The Appellant, a Customs Broker, challenged the refusal to extend benefits under Section 28(6)(i) of the Customs Act by the Commissioner despite the importer paying the duty, interest, and penalty. The Commissioner held that since the goods were seized under Section 110 and liable for confiscation under Section 111(m), the benefit could not be extended to the Appellant. However, the Appellant argued that the Circular No. 11/2016-Cus. does not override Section 28 and that the Commissioner's decision was erroneous.

2. Interpretation of Section 28(6)(i) and Circular No. 11/2016-Cus.:
Section 28(6)(i) states that proceedings against persons who have paid duty, interest, and penalty shall be deemed conclusive. The Circular clarifies that closure of proceedings is contingent upon compliance with duty payment. It also excludes cases involving seizure and confiscation under specific sections. The Appellant contended that the Circular does not apply to their case as no demand notice was raised against them, only a notice under Section 28.

3. Comparison with Judicial Decisions:
The Appellant cited judicial decisions supporting their interpretation of Section 28(6)(i) and argued that the Commissioner's decision was unsustainable. They highlighted inconsistencies in treating the importer and the Appellant differently despite being charged under the same penal provisions. The Appellant emphasized that the Circular should not override statutory provisions.

4. Arguments by the Respondent:
The Respondent, representing the Customs Department, relied on a High Court judgment to support the Commissioner's decision. They pointed out the Director's confession under Section 108 of intentional misclassification, justifying the penalty on the Appellant.

5. Conclusion and Tribunal's Decision:
After analyzing the provisions of Section 28(6)(i) and the Circular, the Tribunal found that the Circular's exclusion of cases involving seizure and confiscation did not apply to the Appellant's situation. The Tribunal held that the Commissioner's decision to deny the benefit to the Appellant while granting it to others involved in the same case was legally unsound. Consequently, the Tribunal allowed the appeal and set aside the penalty imposed on the Appellant.

In conclusion, the Tribunal's decision clarified the application of Section 28(6)(i) and the Circular in cases involving duty payment and penalties under the Customs Act. The judgment emphasized the need for consistent interpretation and application of statutory provisions, ensuring equitable treatment for all parties involved in customs proceedings.