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2016 (5) TMI 1063 - AT - CustomsPenalty under Sec 114 of the Customs Act 1962 - Held that - As observed from case records that Sec 112 (a) of the Customs Act 1962 has been mentioned for imposing penalty in the SCN but Adjudicating authority has imposed penalty under Sec 114 without giving any justification/opportunity to the appellant as to why suddenly penalty under Sec 114 was imposed. A corrigendum was required to be issued to effect the change & principles of natural justice were required to be followed if adjudicating authority was of the opinion that Sec 112 (a) of the CA 1962 is not the correct Section applicable in the instant case. By not giving any such opportunity or following corrective procedure, Adjudicating authority has gone beyond the scope of show cause notice which is not permissible as per case laws relied upon by the appellant, which also include ratios laid down by Apex Court. Nowhere in the records it is coming out that appellant was required to supervise 100% stuffing & examination of the cartoons in the containers. Even if there was some negligence on the part of the appellant the same has been taken care of by departmental proceedings and no penalty could be imposed under the Customs Act 1962 as per the relied upon case laws. There is also no evidence on record that appellant was aware that second hand used clothes are being exported & that quantities actually being exported are much less than the quantities declared in the shipping bill. No statement has been brought on record indicating knowledge/connivance of the appellant regarding misdeclaration in the assessment documents. It is observed from the language of Sec 113 of the Customs Act 1962 and the case records that appellant was not required to make any entry/declaration in the shipping bill. Once he is not required to make any entry/declaration in the shipping bill then appellant cannot be visited with penalty under Sec 114 of the Customs Act 1962. - Decided in favour of assessee.
Issues:
1. Correct imposition of penalty under Sec 114 of the Customs Act 1962. 2. Scope of show cause notice. 3. Duties of the appellant regarding supervision and examination of export consignment. 4. Requirement of declaration/entry in the shipping bill by the appellant. Analysis: Issue 1: Correct Imposition of Penalty under Sec 114 The appellant challenged the penalty imposed under Sec 114 of the Customs Act 1962. The Adjudicating authority had initially mentioned Sec 112 (a) in the show cause notice but imposed the penalty under Sec 114 without justification. The Tribunal found that this action exceeded the scope of the show cause notice, violating principles of natural justice and case laws. The Adjudicating authority should have issued a corrigendum and provided an opportunity for explanation before changing the penalty section. Issue 2: Scope of Show Cause Notice The Tribunal emphasized the importance of adherence to the scope of the show cause notice. It held that the Adjudicating authority's decision to impose a penalty under a different section without proper justification or opportunity for the appellant to respond was impermissible. The Tribunal cited relevant case laws to support this position, emphasizing the need for procedural fairness and adherence to the principles of natural justice. Issue 3: Duties of the Appellant Regarding the appellant's duties in supervising and examining the export consignment, the Tribunal found no evidence that the appellant was required to oversee 100% of the stuffing and examination of the containers. Even if there was negligence, it was addressed through departmental proceedings. The Tribunal noted the lack of evidence implicating the appellant in the misdeclaration of goods or awareness of discrepancies between declared and actual quantities in the shipping bill. Issue 4: Requirement of Declaration/Entry in Shipping Bill The Tribunal analyzed the appellant's obligation to make declarations or entries in the shipping bill. It concluded that since the appellant was not legally required to make such declarations, the goods could not be deemed liable for confiscation under Sec 113, thereby precluding the imposition of a penalty under Sec 114 of the Customs Act 1962. The Tribunal referenced a relevant case law to support this interpretation, highlighting the importance of statutory requirements in determining liability for penalties. In summary, the Tribunal allowed the appeal, emphasizing the need for procedural fairness, adherence to the show cause notice, and clarity regarding the appellant's duties and obligations under the Customs Act 1962. The judgment underscored the significance of legal provisions, case laws, and principles of natural justice in determining the correctness of penalties imposed in customs proceedings.
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