2024 (10) TMI 18 - AT - Customs

Levy of penalty on appellant u/s 112(b) of the Customs Act, 1962 as co-noticee to principal violator M/s. Sumira Plastic of the terms of DEEC schemes by diverting imported goods to local market without fulfilment of export obligation - HELD THAT - In view of the relationship, the Appellant was well aware of the fact that the raw materials supplied, for moulding buckets and shutter cones were meant for export and raw materials were imported duty free under DEEC scheme was not based on any reasoning as this observation of the Commissioner, as found from his order is not based on any other corroborative evidence to the effect that such blood relationship had made the Appellant easily accessible to the modus operandi of the manufacturing company namely M/s. Sumira Plastic, who allegedly violated the terms of DEEC scheme. Appellant has demonstratively stated during his examination that after the payment made through cheque was bounced back, he served his relationship with the partnership firm M/s. Sumira Plastic from where her sister herself had resigned long back in 1996. The order passed by the Commissioner of Customs (Adjudication), Mumba is hereby set aside - Appeal allowed.

Summary

Issues:
Penalty imposed on the Appellant under Section 112(b) of the Customs Act, 1962 as a co-noticee to the principal violator of DEEC scheme by diverting imported goods to the local market without fulfilling export obligation.

Analysis:

1. The case involved a penalty of Rs. 1,00,000/- imposed on the Appellant for violating the terms of the DEEC scheme by diverting imported goods to the local market without fulfilling the export obligation. The Appellant, claiming to be a job worker, challenged the penalty under Section 112(b) of the Customs Act, 1962.

2. The Appellant's counsel argued that there were two co-noticees penalized for the same amount for carrying out job work on behalf of the main noticee. The Tribunal had previously absolved another co-noticee of liability in a similar case, setting aside the penalty imposed on him as a job worker. The Appellant sought a similar decision based on this precedent.

3. The Respondent's representative contended that the Appellant, being a relative of the main Appellant-Manufacturer, was fully aware of the violations and therefore rightly penalized. The Appellant's counsel rebutted, stating that mere relationship does not automatically make one liable for another's violations without concrete evidence.

4. Upon reviewing the case record and the judgment regarding the other co-noticee, the Tribunal found that the Commissioner's reasoning for imposing the penalty on the Appellant based on their relationship lacked substantive evidence. The Tribunal's previous finding in a similar case highlighted that mere acquaintance with the main violator does not establish complicity in the violation.

5. Considering the lack of evidence linking the Appellant to the violation and following the precedent set by the Tribunal in a related case, the Tribunal absolved the Appellant of liability and set aside the penalty imposed under Section 112(b) of the Customs Act, 1962. The order passed by the Commissioner was overturned, providing consequential relief to the Appellant.

6. The Tribunal's decision, based on the principle that relationship alone does not establish knowledge or involvement in another's unlawful activities, emphasized the importance of concrete evidence in determining liability. The judgment set a precedent for evaluating liability in cases involving co-noticees based on individual culpability rather than mere association.