2015 (2) TMI 379 - AT - Customs

Imposition of penalty u/s 112 - illegal imports of the goods which were diverted into domestic market without payment of duty - Held that - Imports has been made duty free and the goods have been diverted into domestic market which were not required so by the importer. Therefore, it is an admitted case of fraud played by the importers. But we find in this case for the imports made from through ICD, TKD the purchasers of the imported gods approached to the Settlement Commission and settled the case there. We also find that Shri Virender Bansal the appellant also approached to the Settlement Commission but the Settlement Commission passed the following order for the reasons given above the Bench in exercise of Commissions powers under Section 127-I of the Act sends the case with regard to the applicant Shri Virender Bansal back to the proper officer who shall dispose of the same in accordance with the provisions of the Act as if no application under Section 127B of the Act had been made by the said applicant. As the observation of the Settlement Commission is that Shri Bansal had no way approached the Settlement Commission. Therefore the case of Shri Bansal is equated with the other appellants before us. If the case has been settled before the Settlement Commission, the proceedings against all the co noticees come to an end. Therefore, it was held that penalties not imposable under Section 112 of the Customs Act. In these circumstances, following the decision of S.K. Colombowala (2007 (7) TMI 514 - CESTAT, MUMBAI) we hold that for the imports made through ICD, TKD the penalties on the appellants are not imposable. - appellants before us were not the parties to the imports made through Mumbai port. As the appellants were not the parties to the Show Cause Notice, therefore, the question of imposing penalty on the appellants do not arise. - for the imports made through Mumbai port, the appellants are not to be penalised. - Decided in favour of assessee.

Summary

Issues: Penalty imposition under Section 112 of the Customs Act, 1962 on appellants for illegal imports and diversion of goods into the domestic market.

Comprehensive Analysis:

Issue 1: Penalty Imposition on Appellants for Illegal Imports and Diversion of Goods

The judgment involves the appellants challenging the imposition of penalties under Section 112 of the Customs Act, 1962 for their involvement in illegal imports and diversion of goods into the domestic market without payment of duty. The case revolved around the misuse of DEPB scrips for free importation of goods, which were then diverted into the local market instead of being exported after manufacturing. The Directorate of Revenue Intelligence (DRI) investigated the matter and found that the appellants were actively involved in these illegal activities. The penalties imposed on the appellants were challenged on the grounds that for imports made through ICD, TKD, the Settlement Commission had settled the case, and hence penalties were not imposable as per the precedent set in the case of S.K. Colombowala Vs. CC (Import), Mumbai. The appellants also argued that they were not party to the imports made through Mumbai port, and therefore penalties should not be imposed on them.

The Tribunal considered the submissions from both parties and analyzed the facts of the case. It was noted that the Settlement Commission had dealt with the imports made through ICD, TKD, and had sent the case back for further proceedings. The Tribunal referred to the decision in S.K. Colombowala case, where it was held that if a case has been settled before the Settlement Commission, proceedings against all co-noticees come to an end, and penalties are not imposable under Section 112 of the Customs Act. Therefore, the penalties on the appellants for imports made through ICD, TKD were deemed not imposable.

Regarding the imports made through Mumbai port, the Tribunal examined the Show Cause Notice and found that the appellants were not party to those imports. As they were not involved in the transactions through Mumbai port, the Tribunal concluded that penalties should not be imposed on them for those imports. Consequently, the Tribunal set aside the impugned order imposing penalties on the appellants, allowing the appeals in favor of the appellants with consequential relief, if any.

In conclusion, the judgment addressed the issue of penalty imposition under Section 112 of the Customs Act, 1962 on the appellants for their involvement in illegal imports and diversion of goods into the domestic market. The Tribunal considered the Settlement Commission's decision, relevant case law, and the specifics of the imports made through different ports to determine the applicability of penalties on the appellants, ultimately ruling in favor of the appellants and setting aside the penalties imposed on them.