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2024 (3) TMI 1113 - AT - CustomsAdjustment of Penalties from Refund amount - Smuggling - foreign currencies - On appeal by the appellant, absolute confiscation was set aside by the Commissioner (Appeals) on payment of redemption fine and penalty and directed the respondents to release the confiscated foreign currency to the appellant on payment of the above dues. Accordingly, refund claim was filed by the appellant after payment of the redemption fine and the penalty as per the above order which was accepted by the Revenue. HELD THAT - Section 142 allows to recover the amounts that is due from the appellant from any money that is payable to him provided he is a defaulter but in the present case, the personal penalties of the co-noticees are being recovered as dues deeming the appellant as a defaulter which is beyond the scope of Section 142 of the customs Act 1962 - the penalties being penalty in personam against the individuals, same cannot be adjusted against the refund sanctioned to the appellant. The Hon ble High Court of Kerala in the case E. Abdul Rahiman Versus Union of India 2007 (12) TMI 232 - HIGH COURT OF KERALA AT ERNAKULAM observed The penalty so levied being personal cannot be recovered from the importer or any other person. Therefore, the petitioner is not personally liable for the penalty levied on Shri Yahoo and the amount also cannot be recovered from the petitioner. It is undoubtedly clear that personal penalty levied on the co-noticees cannot be recovered from the amount to be refunded to the appellant - the impugned order set aside - appeal allowed.
Issues Involved:
1. Legality of confiscation of foreign currency and imposition of penalties under Customs Act, 1962 and Foreign Exchange Management Act (FEMA), 1999. 2. Appropriateness of adjusting penalties imposed on co-noticees from the refund amount sanctioned to the appellant under Section 142 of the Customs Act, 1962. Summary: 1. Legality of Confiscation and Penalties: Mr. Afsar Ulla Shariff (appellant) was found carrying foreign currencies valued at Indian Rs.29,37,702/-, which were smuggled out of India in violation of the Customs Act, 1962, and FEMA, 1999. The adjudicating authority ordered confiscation of the foreign currency u/s 113(d), 113(e), and 113(h) of the Customs Act, 1962, and imposed penalties on the appellant and co-noticees under Section 114 and 114AA of the Customs Act, 1962. The Commissioner (A) allowed the appellant to redeem the seized foreign currency on payment of redemption fine and penalty. The appellant complied and filed a refund claim. 2. Adjustment of Penalties from Refund: The original authority sanctioned a refund but adjusted penalties imposed on co-noticees from the refund amount. The Commissioner (A) upheld this adjustment under Section 142 of the Customs Act, 1962. The appellant argued that personal penalties on co-noticees cannot be recovered from his refund. Legal Analysis: Section 142 of the Customs Act, 1962, permits recovery of sums due from any person from money payable to him, provided he is a defaulter. The appellant was not liable for the personal penalties of co-noticees. The Supreme Court in Union of India vs. Mustafa & Najibai Trading Co. and other cases distinguished between penalties in rem (against goods) and in personam (against individuals). Personal penalties cannot be enforced against others or their refunds. Judgment: The Tribunal found no justification for adjusting co-noticees' penalties from the appellant's refund. The Commissioner (A)'s reliance on Section 142 was beyond the scope of the Order-in-Original. The Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the appellant. (Order pronounced in Open Court on 22.03.2024.)
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