1997 (4) TMI 281 - AT - Customs

Summary

Issues:
1. Imposition of penalty on National Polychem and demand of duty on M/s. Tina Overseas Ltd.
2. Contravention of provisions of the Customs Act by M/s. Tina Overseas Ltd.
3. Adjudication by the Deputy Collector and review petition filed by the Department.
4. Decision of the Collector (Appeals) and appeals filed against the orders.

Analysis:
The judgment involves two appeals against an order passed by the Collector (Appeals) imposing a penalty on National Polychem and directing the proper officer to raise necessary demands of duty on M/s. Tina Overseas Ltd. The case revolves around the recovery of six sets of moulds of foreign origin from National Polychem by Customs officers, leading to a series of events questioning the actions of both companies.

M/s. Tina Overseas Ltd., a 100% export-oriented unit, imported the moulds in question under exemption but faced penal action for allegedly contravening Customs Act provisions by sending the seized goods to National Polychem without proper permission. The Deputy Collector adjudicated the matter, directing confiscation of goods, imposing a penalty on Tina Overseas, and allowing redemption of goods upon payment of a fine. A review petition was filed by the Department, leading to the Collector (Appeals) allowing the petition and imposing a penalty on National Polychem.

During the appeal hearing, the appellants argued against the penalty on National Polychem, claiming lack of knowledge about the moulds' foreign origin or specific terms of use. The Department conceded that no duty was payable by Tina Overseas due to permission granted for transferring the goods to their EOU unit. However, they contended that National Polychem could not claim ignorance given the nature of the goods and Customs Act provisions.

The appellate tribunal, after considering submissions from both sides, found the penalty on National Polychem unsustainable due to lack of evidence implicating them in any contravention. The tribunal highlighted the appellants' disclaimer of knowledge regarding the moulds' origin and the absence of evidence proving otherwise. Consequently, the appeals were allowed, and the impugned order was set aside, absolving National Polychem of the imposed penalty and negating the demand of duty on Tina Overseas.