2019 (12) TMI 792 - AT - Customs

Imposition of penalty u/s 112, 114 117 of Customs Act, 1962 - misdeclaration of export goods - export of metal scrap to fulfill the export obligation by mis-declaring the same as gold jewellery while importing brand new gold jewellery as raw material by mis-declaring the same as old jewellery for repair, remaking and polishing - misusing the facility provided under SEZ scheme. Penalty u/s 112 of CA - improper importation of goods - HELD THAT - The penalty under Section 112 of the Customs Act, 1962 is provided for improper importation of the goods. The finding of the Original Adjudicating Authority in sub para no.ee on page no.349 of Order-in-Original is reproduced in the forgoing paragraphs. The said finding nowhere indicates that the appellant had anything to do with any imports - Therefore, imposition of penalty on the appellant under Section 112 of Customs Act, 1962 is without application of mind by the Original Adjudicating Authority, therefore, the same is set aside. Penalty u/s 114 of CA - omission or commission in respect of export goods - HELD THAT - The proceedings do not establish that the appellant had any knowledge that the documents were having mis-declaration with reference to the actual contents of the consignment to be exported. The reading of the said provisions of act indicate that the person liable to penalty must have knowledge or reason to believe that the goods in which he is dealing are liable to confiscation. Even if it is accepted for the sake of argument that appellant has authorised Shri Ajit Singh to Sign documents on their behalf, still revenue has not established that the appellant had knowledge that the goods which were being presented for export were liable for confiscation and they were different than the goods described in Shipping Bills - Revenue did not find anything irregular, had the goods described were exported. Therefore, appellant was not liable for imposition of penalty under Section 114 of the Customs Act, 1962. Penalty u/s 117 of CA - omission or commission for which no penalty is provided for - HELD THAT - The findings as reproduced in the earlier paragraph does not indicate as to which omission or commission on behalf of the appellant has rendered appellant liable for imposition of penalty under Section 117 of Customs Act, 1962 - In the absence of any such finding by the Original Adjudicating Authority the penalty imposed on the appellant under Section 117 of the Customs Act, 1962 is liable to be set aside. All penalties set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Imposition of penalty under Section 112 of the Customs Act, 1962.
2. Imposition of penalty under Section 114 of the Customs Act, 1962.
3. Imposition of penalty under Section 117 of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Imposition of penalty under Section 112 of the Customs Act, 1962:

The Original Adjudicating Authority imposed a penalty of ?5 crores on the appellant under Section 112 of the Customs Act, 1962. This section pertains to penalties for improper importation of goods. The appellant argued that there was no involvement in any irregular imports, and the memorandum of understanding (MoU) with M/s Ajit Exports did not authorize any illegal activities. The Tribunal noted that the findings of the Original Adjudicating Authority did not indicate the appellant's involvement in any imports. Therefore, the imposition of the penalty under Section 112 was deemed without application of mind and was set aside.

2. Imposition of penalty under Section 114 of the Customs Act, 1962:

A penalty of ?5 crores was also imposed under Section 114 of the Customs Act, 1962, which deals with penalties for improper exportation of goods. The appellant contended that they had not authorized M/s Ajit Exports to export any particular consignment and had not received any consideration for such transactions. The Tribunal observed that even if the appellant had authorized Shri Ajit Singh to sign documents on their behalf, there was no evidence to suggest that the appellant had knowledge of the mis-declaration of goods. The Tribunal held that the appellant was not liable for the penalty under Section 114 as there was no established knowledge or reason to believe that the goods were liable for confiscation. Consequently, the penalty under Section 114 was set aside.

3. Imposition of penalty under Section 117 of the Customs Act, 1962:

The Original Adjudicating Authority imposed a penalty of ?95,000 under Section 117 of the Customs Act, 1962, which provides for penalties for contraventions not expressly mentioned elsewhere in the Act. The appellant argued that the Original Adjudicating Authority did not specify the contravention that warranted this penalty. The Tribunal found that the findings did not indicate any specific omission or commission by the appellant that would attract a penalty under Section 117. Therefore, the penalty under Section 117 was also set aside.

Conclusion:

The Tribunal set aside all the penalties imposed on the appellant under Sections 112, 114, and 117 of the Customs Act, 1962, and allowed the appeal. The judgment emphasized the lack of evidence linking the appellant to the alleged fraudulent activities and the improper application of the relevant legal provisions by the Original Adjudicating Authority.