2023 (7) TMI 72 - AT - Customs

Levy of penalty u/s 114(i), 114(iii) and 114AA of the Customs Act, 1962 - not acting judiciously and with diligence - not directly involved in the smuggling of red sanders - failure to monitor the receipts of their export proceeds in accordance with the RBI circular dated 8.11.2013 - HELD THAT - The authorities below were under an obligation to act judiciously and they are (in particular learned Commissioner) not justified in brushing aside the case laws cited by the appellants in support of their submissions without any discussions by merely terming them as not relevant . It is the first principle that justice need not only be done but must be seen to be done and by his act learned commissioner has not only violated the said basic principle but also the principle of natural justice. Noticing that there is violation of natural justice in the cases, it would not be proper to deal with the matter on merits. Matter remanded back to the learned Commissioner to decide the same afresh after following the principle of natural justice - appeal allowed by way of remand.

Summary

Issues Involved:
The issue involves the liability of the appellant to pay penalties under Sections 114(i), 114(iii), and 114AA of the Customs Act, 1962 for their involvement in a case related to the smuggling of red sanders.

Detailed Judgment:

Issue 1: Liability of the Appellant for Penalties
The case revolved around the appellant, who is an exporter of Sponge Iron, being implicated in a scheme where red sanders were illegally exported in the guise of sponge iron. The Directorate of Revenue Intelligence (DRI) intercepted containers stuffed with red sanders along with sponge iron intended for export. The appellant's role was questioned in failing to monitor their export proceeds, leading to the illegal export of red sanders. The appellant contested their liability, arguing that they were not directly involved in the smuggling and had followed export procedures supervised by customs officers. The appellant highlighted the lack of evidence linking them to the red sanders and challenged the imposition of penalties under Sections 114(i), 114(iii), and 114AA of the Customs Act, 1962.

Issue 2: Judicial Review of Penalty Imposition
Upon review, the Hon'ble Member (Judicial) found that the appellant was a victim of fraud orchestrated by a syndicate involved in the smuggling of red sanders. The appellant's submissions, supported by various case laws, were dismissed by the Commissioner without proper consideration, raising concerns about the violation of natural justice. The Member emphasized the obligation of authorities to act judiciously and address the case laws cited by the appellant. Consequently, the impugned order was set aside, and the matter was remanded to the Commissioner for a fresh decision, ensuring the principles of natural justice were followed.

This judgment highlights the complexities of imposing penalties under the Customs Act, emphasizing the need for a fair and thorough review process to determine liability accurately.