2024 (6) TMI 639 - HC - Customs

Imposition of penalty on the Appellant under Section 112 (a) of the Customs Act, 1962 - cryptic and non-speaking order - Non-consideration of any of the submissions of the Appellant - violation of principles of natural justice - HELD THAT - There are no reason to interfere in the order passed by the CESTAT because the CESTAT as well as the Commissioner have come to a finding of fact that appellants were abettors. It is rather difficult, to accept that a party who is selling 18 metric tons for conversion/coating Ascorbic Acid on capsules does not even know that Suprapti Plastic Limited did not even have electricity connection and it is rather surprising to accept that they brought coated capsules from Suprapti which did not have electricity connection. The Commissioner has also given a finding of fact that Mr. Pradeep Mehta, Managing Director of Vishal Exports Overseas Limited has played active role in perpetrating the fraud, inasmuch as, they also had full knowledge of the scheme and have executed the entire operation right from obtaining LOU fraudulently in contravention of exempted policy until the clearance of import goods through EOU route circumventing payment of customs duty and anti-dumping duty. The Commissioner further has given a finding that Mr. Pradeep Mehta had, in collusion with others, facilitated clearance of Ascorbic Acid in the guise of Ascorbic Acid (feed bread) resulting in substantial loss to Government Revenue. These findings have been confirmed by the CESTAT. The finding arrived at by the Commissioner as well as the Tribunal was on facts that appellant had abetted evasion of duty - no substantial question of law arises - Appeal dismissed.

Summary

Issues involved: Impugning order by CESTAT confirming Commissioner's order, imposition of penalty on appellant, liability for confiscation of imported goods, breach of natural justice.

The appeals were filed challenging an order by the Customs Excise and Service Tax Appellate Tribunal (CESTAT) dated 19th May 2017, which upheld the Commissioner of Central Excise, Thane's decision and dismissed the appellant's appeal.

Appellant in CUAPP No. 11 of 2020, a Director of appellant in CUAPP No. 12 of 2020, contested a common order by CESTAT pronounced on 19th May 2017, regarding the import and sale of Ascorbic Acid to various parties, including Suprapti Plastic Limited, a 100% Export Oriented Unit (EOU).

The department alleged that Suprapti cleared the goods into the domestic tariff area without entitlement to concessional duty rates, leading to confiscation of goods and imposition of penalties on appellants for abetting the evasion of duty.

Mr. Sanghavi argued that the sale was on a principal-to-principal basis, disputing the penalty imposed on the appellant as an abettor. The substantial questions of law raised in the appeal pertained to the imposition of penalty under Section 112(a) of the Customs Act, 1962, liability for confiscation under Section 111 of the Customs Act, 1962, and the breach of natural justice by the Appellate Tribunal.

The Court declined to interfere with the CESTAT's order, as both the CESTAT and the Commissioner found that the appellants had abetted in the evasion of duty. The Court found it implausible that the appellants were unaware of Suprapti's lack of electricity connection while engaging in the sale and purchase of Ascorbic Acid.

The Commissioner's Order-in-Original detailed how the original importer, Vishal Export Overseas Limited, and its Managing Director, Mr. Pradeep Mehta, colluded in manipulating the law to evade duty, resulting in a substantial loss to Government Revenue. These findings were upheld by CESTAT, leading to the dismissal of the appeals based on the established abetment of duty evasion by the appellants.