2018 (6) TMI 595 - AT - Customs

Penalty u/s 114 (i) of the CA 1962 as also under 114 AA of the CA 1962 - mis-declaration of export goods - violation of the provisions of Foreign Trade (Development & Regulation) Act, 1992 as also of the Fertilizer Control Order, 1985 - Held that - Admittedly the goods tried to be exported was potassium chloride and not sodium chloride, as declared by the exporter, thus calling for penalty under the provisions of Section 114 (i) of the Customs Act, 1962 - appreciating the appellant s stand that they were not aware of the export restriction and appreciating that the goods have not been redeemed by them, the penalty reduced from ₹ 10.00 Lakhs to ₹ 7.00 Lakhs. Penalty u/s 114AA - Held that - Tribunal in the case of Arya International vs. CC, Kandla 2016 (1) TMI 834 - CESTAT AHMEDABAD laid down that in case of mis-declaration of export goods, penalty is imposable u/s 114 (i) of the CA 1962 and there is no justification of imposition of penalty under Section 114 AA ibid - penalty imposed u/s 114 AA of the CA 1962 set aside. Penalty upon Managing Director, Shri Premkumar Mohan - Held that - The exporter i.e., M/s. Point 2 Point Logistics India Pvt. Ltd., has already been penalized and in the absence of any separate role of the Managing Director, imposition of penalty upon him may not be justified - penalty set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalties under Section 114 (i) and 114 AA of the Customs Act, 1962 on M/S. Point 2 Point Logistics India Pvt. Ltd. and its Managing Director for mis-declaration of exported goods.

Detailed Analysis:
The judgment pertains to the imposition of penalties on M/S. Point 2 Point Logistics India Pvt. Ltd. and its Managing Director for mis-declaration of exported goods. The penalties of ?10.00 Lakhs each were imposed on the company under Section 114 (i) of the Customs Act, 1962, along with an additional penalty of ?1,00,000 on the Managing Director. The company had filed shipping bills for the export of 150 MTS of 'Industrial Salt' but the goods were found to be Potassium Chloride instead of Sodium Chloride upon testing. This led to proceedings being initiated against them for mis-declaration, violating the provisions of the Foreign Trade (Development & Regulation) Act, 1992, and the Fertilizer Control Order, 1985.

Regarding the penalty under Section 114 (i) of the Customs Act, 1962, the goods exported were different from those declared, leading to the penalty imposition. The Managing Director stated that they exported the goods as Sodium Chloride - Industrial Salt, only realizing the mis-declaration upon testing. Despite the lack of awareness about the export restriction, the penalty was reduced from ?10.00 Lakhs to ?7.00 Lakhs considering the circumstances.

In relation to the penalty under Section 114 AA, the Tribunal referred to a previous decision stating that in cases of mis-declaration of export goods, penalties should be imposed under Section 114 (i) of the Customs Act, 1962, rather than under Section 114 AA. Following this precedent, the penalty under Section 114 AA was set aside.

Regarding the penalty on the Managing Director, it was noted that the company had already been penalized, and since there was no separate role established for the Managing Director, the imposition of a penalty on him was deemed unjustified. Consequently, the penalty on the Managing Director was set aside, and his appeal was allowed. Ultimately, both appeals were allowed based on the above considerations.