2022 (11) TMI 1285 - AT - Customs

Confirmation of penalty, after 15 years of issue of show-cause notice on the Appellant, under Section 112 of the Customs Act - importation by a third party of ATMs and its Controllers for alleged mis-declaration of description and value of goods - Time Limitation - HELD THAT - On limitation, this Tribunal had specifically condoned the period of delay of 5 years and 4 months in filing the appeals by imposing cost of Rs.20,000/- that has been paid to the Respondent-Department. This being so and having been addressed by this Tribunal the ground that appeal is barred by limitation cannot be agitated again. In respect of the unusual delay in passing the Order-in-Original, law is well settled that such unusual delay vitiates the proceedings, on which count alone the appeals can be stated to have merit. Moreover, our attention is drawn to the copy of the letter of DRI dated 17.03.2020 addressed to the Commissioner (AR) CESTAT, Mumbai that clearly indicates that show-cause notice was not received by Appellant Mafatlal R. Mehta, and the same letter of DRI was issued upon perusal of their own records. Further, it also indicates that there was no proof of service of intimation of personal hearing of notices on Appellant Mafatlala R. Mehata. Unfortunately, he has been penalised in gross violation of the principles of natural justice. In respect of Appellant bank, as could be observed during the course of hearing and from the case record, it is a subsequent purchaser of the goods form M/s. Philips India who had allegedly purchased the imported goods imported by Jiten P. Mody and no complacence is noticeable between the Appellant bank and the said Jiten P. Mody except that in the statement of Mr. Ramamrutham, former Philips India employee, it is stated that they considered the possibility of importing ATMs from Philips Holland to Philips India through 3rd party supplier and after obtaining quotation from the said importer Jiten P. Mody, they quoted price of the machine to banks namely Citibank and HSBC bank with 40% profit margin. This being a transaction concerning purchase of an item within India, which is unrelated to its importation and to the importer as the said transaction is confined between the Appellant Citibank and M/s. Philips India, confirmation of penalty under Section 112 of the Customs Act against this Appellant is unsustainable both in law and facts. Appeal allowed.

Summary

Issues:
Confirmation of penalty under Section 112 of the Customs Act after 15 years of issuing show-cause notice against importation of ATMs and Controllers by a third party for alleged mis-declaration of goods' description and value.

Analysis:
1. The case involved the confirmation of penalties against the Appellant, a bank, for the importation of ATMs and Controllers by a third party, alleging mis-declaration of goods' description and value. The show-cause notice was issued in 1992, and penalties were imposed after 15 years in 2007, raising concerns about the delay in proceedings.

2. The Appellant argued that it was merely a purchaser of the goods from a local supplier and had no involvement in the importation process. The Appellant contended that there was no evidence to establish its knowledge of the importation by the third party, questioning the legality of the penalties imposed under Section 112 of the Customs Act.

3. The Appellant also challenged the penalties imposed on a customs broker without prior show-cause notices. The legal representatives cited judicial decisions highlighting the importance of timely proceedings and the need for specific evidence to establish liability under Section 112.

4. The Respondent, supporting the penalties, argued that investigations revealed the Appellants' involvement in importing goods without a license and with mis-declaration. The Respondent claimed that the appeals were time-barred due to delays in filing after the Order-in-Original was issued in 2007.

5. The Tribunal noted the condonation of a delay in filing the appeals and addressed the issue of unusual delay in passing the Order-in-Original, emphasizing that such delays could vitiate proceedings. It was highlighted that the Appellant, suffering from a terminal illness, was penalized without proper notification or opportunity for a de novo adjudication.

6. The Tribunal found that the Appellant bank was a subsequent purchaser of goods from a local supplier, with no direct involvement in the importation process by the third party. The transaction between the bank and the supplier was deemed unrelated to importation, leading to the unsustainability of the penalties under Section 112.

7. Ultimately, the Tribunal allowed the appeals, setting aside the Order-in-Original issued in 2007 by the Commissioner of Customs, emphasizing the lack of evidence linking the bank to the importation process and the unfairness of penalizing the customs broker without due process.

Conclusion:
The judgment highlighted the importance of timely proceedings, the need for specific evidence to establish liability, and the consequences of unusual delays in passing orders. It emphasized the principles of natural justice and relieved the Appellants from unwarranted penalties, considering the circumstances and lack of direct involvement in the importation process.