2024 (6) TMI 853 - AT - Customs

Scope for retention of penalty u/s 112 of Customs Act 1962 once liability to confiscation has been set aside by the Tribunal - goods imported without the certifications prescribed for availing exemption under N/N. 84/1997-Cus dated 11th November 1997 as amended from time to time - HELD THAT - It is settled law that confiscation is qua goods imported or exported while penalty is qua persons whether natural or artificial. There is no scope under Customs Act 1962 for separate confiscation qua persons and to be determined by disaggregation of noticees to the adjudication proceedings. The show cause notice is clear and in no uncertain terms alleged that the goods are liable for confiscation in accordance with the manner provided in section 111(o) of Customs Act 1962. Penalty under section 112 of Customs Act 1962 would follow to the extent that noticees in section 112 of Customs Act 1962 which therefore implies that only to the extent that a person was thus responsible by acts of omission or commission in contributing to the cause that lead to confiscation of the goods penalty could be imposed. In the absence of confiscation of the goods as determined by the Tribunal in the appeals of M/s Rashtriya Chemicals Fertilizers Ltd and M/s ICICI Bank Ltd 2019 (7) TMI 1987 - CESTAT MUMBAI penalty cannot be imposed under section 112 of Customs Act 1962 on any person in relation to the impugned goods. Accordingly nothing survives in the impugned order insofar as these two individuals are concerned - Appeal allowed.

Summary

Issues involved:
The issues involved in this case are related to the confiscation of goods under section 111(o) of the Customs Act, 1962, and the imposition of penalty under section 112(a) for improper importation of goods and abetment.

Confiscation of Goods:
The appeals were filed by individuals in connection with the clearance of goods imported without the required certifications for availing exemption under notification no. 84/1997-Cus. The Commissioner of Customs held that the clearances were permitted against forged certificates, leading to confiscation under section 111(o) of the Customs Act, 1962. The individuals were found liable for penal action u/s 112(a) for their involvement in the fraud. The Tribunal set aside the confiscation order, which had consequences for the penalty imposed on the individuals, as penalty cannot be imposed without goods being liable for confiscation.

Role of Other Parties:
The Tribunal delinked the appeals of other parties involved in the act of obtaining forged certificates, directing them to be considered separately based on their roles. It was emphasized that penalty under section 112 of the Customs Act, 1962 is applicable only when goods are liable for confiscation. The Tribunal clarified that penalty is related to persons responsible for acts leading to confiscation, and in the absence of confiscation as determined in the appeals of other parties, penalty cannot be imposed on any person in relation to the impugned goods.

Decision and Conclusion:
The Tribunal allowed the appeals of the individuals, as the confiscation of goods had been set aside, rendering the penalty unjustified. It was established that penalty under section 112(a) could not be retained once the liability to confiscation had been removed. Therefore, the impugned order did not stand in relation to the individuals, and their appeals were allowed.