2024 (6) TMI 139 - AT - Customs

Confiscation of imported goods - imposition of penalty under Section 112(a) of Customs Act - Nylon Tafeta - Special Import Licenses procured by the importer appellant were forged and are in the nature of bogus licenses - delay in penalty proceedings. Confiscation of goods - HELD THAT - Factual matrix of the case clearly provide that the forgery of the licenses have been undertaken by certain unscrupulous persons, who are other than the importer appellant and CB/CHA appellant. It is a fact that the impugned order had ordered for confiscation of the imported goods for violation of the provisions of sub-sections (d) and (o) of Section 111 of the Customs Act, 1962. However, it is nowhere brought out in the impugned order that the appellants were directly concerned in the forgery of the licenses or their action or inaction have led to such forgery. Penalties - HELD THAT - Penalty cannot be imposed on the appellants under Section 112(a) ibid, unless clear evidences are placed to state that they have acted in a particular manner or they have failed to do any particular act which resulted in the forgery of licenses in the present case, enabling the imported goods for being liable to confiscation under Section 111(d) and 111(o) ibid. Delay in penalty proceedings - HELD THAT - The judgements of the Hon ble High Courts had clearly laid down that the power of imposition of penalty for willful mis-statement or suppression of facts etc. has to be exercised within a reasonable time as prescribed under the statue - reliance can be placed in Neeldhara Weaving Factory 2006 (12) TMI 22 - HIGH COURT, PUNJAB HARYANA where it was held that 'After considering the details penalty were set aside by adjudicating authority'. In State of HP and others v. Rajkumar Brijender Singh and others, 2004 (4) TMI 584 - SUPREME COURT , referring to Section 20 of the HP Ceiling on Land Holdings Act, 1973, conferring suomotu power on Financial Commissioner, interpreting the words at any time , it was held that such power had to be exercised within reasonable time. In Parekh Shipping Corporation s case 1995 (6) TMI 27 - BOMBAY HIGH COURT , show cause notice issued for short landing more than 12 years after the relevant date was set aside - In Wilco and Company s case 2002 (8) TMI 116 - MADRAS HIGH COURT Madras High Court had set aside notice for imposition of penalty issued after six years of cause of action. Thus, there are no justification for levy of penalty after 14 years of the default. The contention of the counsel for the revenue to the effect that the petitioner having committed default cannot be permitted to raise these technical pleas is to be noticed and rejected, being without any merit. Thus, there are no strong grounds for imposition of penalty under Section 112(a) of the Customs Act, 1962 on the appellants. Accordingly, the impugned order dated 24.12.2007 is not legally sustainable to this extent. As the Special Import Licenses have been proved by evidences that they have been forged, it is not considered fit to intervene with the part of the order confiscating the goods and offering the same on redemption fine under Section 125 ibid. Appeal allowed in part.

Summary

Issues Involved:
1. Confiscation of imported goods u/s 111(d) and 111(o) of the Customs Act, 1962.
2. Imposition of penalty u/s 112(a) of the Customs Act, 1962.
3. Timeliness of the show cause notice and penalty imposition.

Summary:

1. Confiscation of Imported Goods:
The importer, M/s San International, imported five consignments of 'Nylon Tafeta' through Mumbai Sea Port using Special Import Licenses procured from the open market. The Department of Revenue Intelligence (DRI) investigation revealed these licenses were forged. Consequently, the Commissioner of Customs confiscated the goods u/s 111(d) and 111(o) of the Customs Act, 1962, and allowed redemption upon payment of Rs. 10,00,000. The Tribunal upheld the confiscation as the licenses were proven to be forged.

2. Imposition of Penalty:
The Commissioner imposed penalties of Rs. 5,00,000 on the importer and Rs. 3,00,000 on the Customs Broker (CB) u/s 112(a) of the Customs Act, 1962, citing non-compliance with investigation summons and lack of proof of payment for the licenses. The Tribunal found no evidence linking the appellants directly to the forgery or any act leading to the forgery. The Tribunal held that penalties u/s 112(a) require clear evidence of involvement in or omission leading to the forgery, which was not established in this case. Thus, the penalties were set aside.

3. Timeliness of Show Cause Notice and Penalty Imposition:
The show cause notice was issued nearly nine and a half years after the import, exceeding the maximum period of 5 years prescribed for duty demands under the Customs Act. The Tribunal referenced judgments from the High Courts of Punjab & Haryana and Bombay, which emphasized that penalty proceedings must be initiated within a reasonable time. The Tribunal concluded that the delay was unjustified and supported the appellants' contention against the imposition of penalties after such a long period.

Conclusion:
The Tribunal partially allowed the appeals by setting aside the penalties imposed on the appellants while upholding the confiscation of goods and the redemption fine. The decision was pronounced in open court on 03.06.2024.