2017 (3) TMI 492 - HC - Customs

Misdeclaration of imported goods - baby diapers - the goods imported were declared as baby diapers but on preliminary examination, it was found that the imported baby diapers were of Pamper brand and not unbranded, as declared in the Bill of Entry - it was found that in the front side of the containers, boxes containing Pamper brand diapers were stacked and behind it, there were other boxes that were found to contain cosmetics and toiletry preparations ie., perfumes, deodorants, soaps, shampoos, talcum powder, hair gel and other goods having origin from France, United Kingdom, Thailand, Germany, USA, etc. - appellant Shri Jayesh Shah contends that he did not file Bill of Entry, and therefore, he cannot be said to be Importer, and hence, no penalty upon him - Held that - the aforesaid contention has no substance. As per Section 112 a of the Customs Act, 1962 even if a concerned person has not submitted Bill of Entry, if he is found to be an abettor in illegal import, penalty u/s 112 (a) of the Act is imposable. So far as appeal preferred by Shri Bipin J Shah, appellant of Tax Appeal No. 817 of 2016 is concerned, it is required to be noted that he has been imposed penalty of ₹ 10 lacs. Both the Adjudicating Authority as well as the learned Tribunal have held Shri Jayesh Shah as master mind/kingpin with respect to the impugned illegal import and the said Shri Jayesh Shah has been imposed penalty of ₹ 5 lacs only. In the facts and circumstances of the case, Shri Bipin J Shah also could have been imposed penalty of ₹ 5 lacs at par with Shri Jayesh Sharad Shah. Decided partly in favor of appellant.

Summary

Issues Involved:
1. Whether the Tribunal was correct in confirming the penalty imposed under Section 112(a) of the Customs Act, 1962.
2. Whether the Tribunal erred in not providing specific findings on the grounds raised in the appeal.
3. Whether the Tribunal correctly imposed the penalty without evidence of acts or omissions rendering the goods liable for confiscation.
4. Whether the Tribunal ignored the limited role of the appellant in confirming the penalty under Section 112(a).
5. Whether the Tribunal erred in holding the appellant as the importer and liable for penalty under Section 112(a).
6. Whether the Tribunal erred in appropriating the custom duty paid by the real importer in the name of the appellant.
7. Whether the Tribunal failed to address material uncontroverted allegations against the real importer.
8. Whether the penalty imposed was disproportionate to the charge levelled against the appellant.

Detailed Analysis:

1. Tribunal's Confirmation of Penalty under Section 112(a) of the Customs Act, 1962:
The Tribunal confirmed the penalty imposed by the Adjudicating Authority on the appellants for mis-declaration of imported goods. The primary responsibility for rendering the goods liable to confiscation was attributed to the importer, M/s. DMP Enterprise, for declaring "Pamper" brand baby diapers as unbranded. The Tribunal upheld the findings that Shri Jayesh Shah was the mastermind behind the import operation, and his involvement was evidenced by financial transactions and statements recorded under Section 108 of the Customs Act.

2. Specific Findings on Grounds Raised in Appeal:
The Tribunal was criticized for not providing specific findings on the grounds raised during the appeal. However, the Tribunal's decision was based on the comprehensive evaluation of evidence and statements, leading to the conclusion that the appellants were involved in the illegal importation scheme.

3. Evidence of Acts or Omissions:
The Tribunal found sufficient evidence of Shri Jayesh Shah's involvement through financial transactions and statements, despite his retraction. The Adjudicating Authority and Tribunal both concluded that the financial assistance provided by Shri Jayesh Shah was integral to the import operation, thus justifying the penalty under Section 112(a).

4. Limited Role of the Appellant:
Shri Jayesh Shah argued that his role was limited to financial help. However, the Tribunal, based on the evidence, concluded that his involvement was more significant, including facilitating the import and clearance of goods, which warranted the penalty under Section 112(a).

5. Appellant as Importer:
Shri Bipin J Shah, proprietor of M/s. DMP Enterprise, was held liable as the importer, despite arguments that Shri Jayesh Shah was the mastermind. The Tribunal found that Shri Bipin J Shah's name was used for the import, and he was aware of the mis-declaration, thus holding him liable under Section 112(a).

6. Appropriation of Custom Duty:
The Tribunal did not find merit in the argument that the custom duty paid by the real importer should affect the penalty imposed on Shri Bipin J Shah. The focus was on the mis-declaration and the role of the appellants in the import operation.

7. Uncontroverted Allegations Against Real Importer:
The Tribunal addressed the allegations against the real importer, concluding that Shri Jayesh Shah and Shri Bipin J Shah were both complicit in the illegal importation. The findings were based on evidence and statements recorded during the investigation.

8. Proportionality of Penalty:
The Tribunal reduced the penalty imposed on Shri Bipin J Shah from ?10 lacs to ?5 lacs, aligning it with the penalty imposed on Shri Jayesh Shah. This adjustment was made considering the relative roles and involvement of both appellants in the import operation.

Conclusion:
The Tribunal's judgment was based on a thorough evaluation of evidence, including financial transactions and statements under Section 108 of the Customs Act. The penalties imposed were justified based on the appellants' involvement in the mis-declaration and import of goods. The Tribunal's decision to reduce the penalty for Shri Bipin J Shah was a recognition of the proportionality principle, ensuring that penalties were commensurate with the roles played by the appellants.