2025 (4) TMI 116 - AT - Customs

Levy of penalty u/s 114 (iii) and 117 of the Customs Act 1962 - present appellant not declared as supporting manufacturer in the EPCG licence - failure to discharge of export obligation - HELD THAT - The appellant is only a small time printer working under SSI. He has been given orders by M/s. Print Zone to print Exercise Note Books and was directed to supply the same to M/s. Rup Exports for delivery at their place. As a small time vendor he is not expected to know as to under which scheme the export was undertaken by M/s. Print Zone/Rup Exports. His genuinity gets clarified by the fact that they have cleared the goods on payment of Excise Duty and they are also showing the details of such clearance in their monthly ER-1 Returns. Conclusion - It is not found that the Department has made out specific case of abetment from their side in the alleged contravention indulged by M/s. Print Zone. Penalty set aside. Appeal allowed.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the appellant, a small-time printer, abetted in the contravention of the provisions of Section 113(i) of the Customs Act, 1962, by assisting M/s. Print Zone in fulfilling export obligations fraudulently using an EPCG license.
Whether the penalties imposed under Section 114(iii) and Section 117 of the Customs Act, 1962, on the appellant were justified based on the evidence and circumstances.

ISSUE-WISE DETAILED ANALYSIS

1. Alleged Abetment in Contravention of Section 113(i) of the Customs Act, 1962

Relevant Legal Framework and Precedents: Section 113(i) of the Customs Act, 1962, pertains to the confiscation of goods improperly exported or attempted to be exported. Section 114(iii) deals with penalties for such contraventions.
Court's Interpretation and Reasoning: The Tribunal examined whether the appellant knowingly assisted M/s. Print Zone in exporting goods fraudulently. The Tribunal noted that the appellant, being a small-time printer, was not expected to be aware of the export scheme under which M/s. Print Zone was operating.
Key Evidence and Findings: The Tribunal considered the invoices and excise returns filed by the appellant, which showed that excise duty was paid on the goods. The Tribunal also reviewed the statements and logistics documents presented during the adjudication process.
Application of Law to Facts: The Tribunal found that the appellant's actions, such as issuing invoices and arranging transportation, did not amount to abetment as they were routine business activities. The appellant's compliance with excise duty payments and documentation further supported their lack of involvement in any fraudulent scheme.
Treatment of Competing Arguments: The Revenue argued that the appellant's actions facilitated the misuse of the EPCG license by M/s. Print Zone. However, the Tribunal concluded that the appellant's role was limited to fulfilling orders and did not extend to participating in or being aware of any fraudulent export activities.
Conclusions: The Tribunal concluded that the Department did not establish a specific case of abetment by the appellant. Consequently, the penalties imposed were not justified.

2. Justification of Penalties Imposed under Sections 114(iii) and 117 of the Customs Act, 1962

Relevant Legal Framework and Precedents: Section 114(iii) and Section 117 of the Customs Act, 1962, provide for penalties related to improper export activities.
Court's Interpretation and Reasoning: The Tribunal assessed whether the penalties were appropriate given the appellant's role and the evidence presented.
Key Evidence and Findings: The Tribunal noted that the appellant had complied with excise duty requirements and documented their transactions appropriately.
Application of Law to Facts: The Tribunal determined that the appellant's actions did not warrant the penalties imposed, as there was no evidence of intentional wrongdoing or knowledge of the fraudulent export activities.
Treatment of Competing Arguments: The Revenue's position was that the penalties were justified due to the appellant's involvement in the supply chain. However, the Tribunal found that the evidence did not support this conclusion.
Conclusions: The Tribunal set aside the penalties imposed on the appellant, finding them unjustified based on the circumstances and evidence.

SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: "We do not find that the Department has made out a specific case of abetment from their side in the alleged contravention indulged by M/s. Print Zone."
Core Principles Established: The Tribunal emphasized that mere participation in a supply chain does not automatically imply abetment in fraudulent activities, especially when the party has complied with statutory requirements like excise duty payments.
Final Determinations on Each Issue: The Tribunal allowed the appeal, setting aside the penalties imposed on the appellant and entitling them to consequential relief as per law.