2009 (7) TMI 232 - AT - Customs

Selling imported goods in domestic market without fulfilling export obligation goods imported with exemption of duty sold in domestic market immediately upon their import without letting buyers know about export obligation - The very fact that the buyer paid the duty amount also separately on those goods shows that were neither aware of export obligation nor party to violation of condition of import - And there is no evidence to show, nor it was brought to our notice by either of the sides that buyer had got a copy of Bill of Entry filed by importer and their payment to importer mentioned duty separately Since buyer is neither importer nor have played any role in rendering the goods liable to confiscation; no penalty can be imposed on them. - argument that the provisional assessment and finalization of assessment was essential before the goods could be confiscated, cannot be accepted held that act of selling imported goods in domestic market without fulfilling export requirement, rendered them liable to confiscation On a transaction of big volume of imported goods being sold in domestic market, person in-charge of the importing company; cannot claim that he was not aware of it he himself had admitted in his statement and had paid duty; further, immediately after clearance, the goods have been sold which shows that they had no intention of fulfilling the obligation at the time of importation. Under these circumstances, it is quite clear that Section 111(o) is attracted and consequent penalty is imposable

Summary

Issues:
1. Imposition of penalty on parties involved in the import and sale of coal under Notification No. 31/97-Cus.
2. Confiscation of goods under Section 111(o) of the Customs Act, 1962.
3. Application of penalty provisions under Central Excise Rules.
4. Interpretation of provisional assessments and finalization requirements for penalty imposition.

Analysis:

Issue 1: Imposition of Penalty
The case involved the import of Chinese steam coal by a company under Notification No. 31/97-Cus. The company sold the coal domestically, violating the conditions of the notification. The Commissioner imposed penalties on the company, its Chairman, and other parties involved. The appeal challenged the penalties imposed, arguing against their imposition under various legal grounds.

Issue 2: Confiscation of Goods
The goods were found liable for confiscation under Section 111(o) of the Customs Act, 1962, due to misdeclaration and violation of conditions. The argument was made that confiscation could only occur after finalization of provisional assessments. However, the Tribunal upheld the Commissioner's decision, stating that the act of selling the goods domestically rendered them liable for confiscation, irrespective of assessment finalization.

Issue 3: Application of Penalty Provisions
The appellant argued that penalties could not be imposed without mens rea, citing provisions under Central Excise Rules. The Tribunal considered the necessity of knowledge for penalty imposition and found that one of the appellants, SCL, had paid the duty amount separately, indicating lack of awareness regarding the import conditions. This lack of knowledge led to the dismissal of penalties against SCL and its Vice-President.

Issue 4: Provisional Assessments and Penalty
The argument regarding provisional assessments and finalization requirements for penalty imposition was discussed. The Tribunal clarified that the non-fulfillment of conditions under the notification rendered the goods liable for confiscation, regardless of assessment finalization. The penalties imposed on the Chairman of the importing company were upheld due to his admission of violation and involvement in the disposal of goods without fulfilling export obligations.

In conclusion, the Tribunal set aside penalties on certain parties while reducing the penalty on the Chairman of the importing company. The decision highlighted the importance of fulfilling import conditions and knowledge in penalty imposition cases, emphasizing the legal obligations and consequences of non-compliance with import regulations.