2023 (11) TMI 619 - AT - Customs

Recovery of duty from the Surety - Demand of duty from the appellant to the extent the main noticee fails to pay the duty - Levy of penalty u/s 117 of the Customs Act on director of the company - recovery of dues of the company can be proposed against the present appellant being whole time director of the company as he executed the bond on behalf of the company, or not - HELD THAT - It is not disputed that Laser had imported the goods as a 100% EOU and obtained a Customs bonded warehouse licence for its premises. It is also not in dispute that the duties would have been payable but for the exemption available to the 100% EOUs. It is also not in dispute that the exemption is available to some conditions including the main condition that the importer manufactures and exports goods and thereby achieves the Net Foreign Exchange (NFE) requirement and that Laser failed to achieve it and therefore, requested to de-bond the goods. It is undisputed that in such a case, duties have to be paid as appropriate. Therefore, the duties were recoverable from Laser. It is undisputed that at the time of import of goods, the exemption was allowed subject to execution of bonds on which the appellant signed as the surety. Needless to say, if the main person fails to pay the amounts (duties in this case) due, they can be recovered from surety. The impugned order confirmed the demands only against the importer and the duties were ordered to be recovered from the appellant only to the extent that they could not be recovered from Laser - thus, insofar as the recovery of dues from the appellant is concerned, the order is legally correct and is also fair and balanced and it calls for no interference. Penalty of Rs. 1,00,000/- imposed on the appellant under section 117 of the Customs Act - HELD THAT - Considering the facts recorded in the impugned order, (which are not disputed) that the appellant was the whole time director of Laser and was responsible for its operations and Laser violated section 58 of the Act and the appellant mislead the department, there are no reason to interfere with the penalty imposed on the appellant under section 117. Appeal dismissed.

Summary

Issues:
1. Recovery of duties and penalty against the appellant.
2. Imposition of penalty under section 117 of the Customs Act on the appellant.

Issue 1: Recovery of duties and penalty against the appellant

The appeal was filed to challenge the Order-in-Original passed by the Commissioner confirming demands of Customs duty and Central excise duty against the main noticee. The appellant, a director of the company, was held liable for a penalty under section 117 of the Customs Act and for the recovery of dues if not fully recoverable from the main noticee. The appellant argued that he cannot be held responsible for the duties as he was only a director during the relevant period. The authorized representative contended that the recovery from the appellant was fair as he had signed bonds as a surety for the company. The Tribunal found that the duties were recoverable from the appellant only to the extent they could not be recovered from the main noticee, thus upholding the order.

Issue 2: Imposition of penalty under section 117 of the Customs Act on the appellant

The impugned order recorded that the main noticee violated section 58 of the Customs Act by not renewing the bank guarantee, leading to the removal of goods without payment of duty. It was noted that the appellant, as the whole-time director, was responsible for the affairs of the company and had executed a bond on its behalf. Section 117 of the Customs Act provides for penalties for contraventions not expressly mentioned, with a maximum penalty of four lakh rupees. Considering the facts that the appellant was aware of the violations and misled the department, the Tribunal found no reason to interfere with the penalty imposed under section 117. The appeal was rejected, and the impugned order was upheld.

This detailed summary provides a comprehensive analysis of the judgment, covering all the issues involved and the arguments presented by both parties, leading to the Tribunal's decision.