2012 (10) TMI 143 - AT - Customs

Penalty - non-payment of the cost recovery charges Held that - In the show cause notice no specific provisions has been quoted for imposition of penalty and under Section 117 of the Customs Act, the penalty is imposable for violating any provision of the Customs Act, only in those cases where no specific provisions has been made for imposition of penalty. Non mention of the Section 117 of the Customs Act in show cause notice will not vitiate the imposition of penalty, since Section 117 is a general provisions for imposition of penalty. Hence penalty was rightly imposed by the Commissioner of Customs under Section 117 of the Customs Act - most of the violations were prior to 10-5-2008, penalty is reduced

Summary

Issues:
1. Imposition of penalty under Section 117 of the Customs Act without specific provisions invoked.
2. Allegations of subletting of Customs Area and non-payment of cost recovery charges.
3. Violation of conditions of Board Circular dated 14-12-1995 and Public Notice No. 3/96.
4. Working as custodian without approval after the expiry of the notification.

Analysis:

1. Imposition of Penalty under Section 117:
The appellant contested the penalty imposed under Section 117 of the Customs Act, arguing that the show-cause notice did not specify the provisions invoked for penalty imposition. However, the Commissioner upheld the penalty, stating that Section 117 allows for penalties in cases where specific provisions are not cited. The judgment affirmed the imposition of a penalty of Rs. 10,000, considering the violations occurred before the amendment on 10-5-2008.

2. Subletting of Customs Area and Non-payment of Charges:
The appellant defended against allegations of subletting the Customs Area, claiming the arrangement with their operator was an operations and management contract, not subletting. However, it was noted that no prior approval from the Commissioner of Customs was obtained for this arrangement, violating regulations. Additionally, the appellant failed to pay the cost recovery charges for customs staff, as required by the Board Circular and Public Notice, leading to the sustained findings against the appellant.

3. Violation of Board Circular and Public Notice:
The judgment focused on the appellant's responsibilities as a custodian under the Board Circular and Public Notice. It was established that the appellant had not fulfilled obligations such as bearing the cost of customs staff and obtaining approval for activities within the Customs Area. The Commissioner's findings regarding non-compliance with these regulations were upheld, emphasizing the custodian's failure to adhere to prescribed duties.

4. Working Without Approval After Notification Expiry:
The appellant was found to have continued working as a custodian without approval after the expiry of the notification designating the area as a Customs Area. The lack of evidence or renewal of the notification supported the Commissioner's conclusion of a violation in this regard. The judgment sustained this finding, highlighting the custodian's unauthorized continuation of operations.

In conclusion, the judgment upheld the imposition of a reduced penalty under Section 117, affirmed the findings of subletting and non-payment of charges, and supported the conclusions of violations concerning the Board Circular, Public Notice, and working without approval post-notification expiry. The appeal was disposed of with a penalty reduction to Rs. 10,000 based on the circumstances and timing of the violations.