2020 (1) TMI 905 - AT - Customs

Levy of penalty u/s 112(a) of the Customs Act - Penalty on CEO for abetment - misdeclaration of transaction value as well as retail sales price (RSP) of confectionary items - HELD THAT - The issue of jurisdiction of Customs Act and its application to the appellant is primarily challenged in the present appeal, besides the legality of the Order of the Commissioner. Though the issue appears to be small it has wide ramifications. No Municipal law can ever be extended beyond the territorial boundaries of a country including its continental self and exclusive economic zone, whether or not there is express provision in the Act or statute to stretch the same beyond the country s territory since the same would amount to encroachment upon the territorial authority of other State. It is therefore, defined in the Statute of the country that the said Act has its application within the territorial limits of the country. The principle that whether violation of an act has an adverse effect to the State s interest, the same violation is to be dealt by the State itself and the violator is to be penalised irrespective of his/her nationality or place of residence. It is in this prospective, the jurisdiction of sovereign State is to be understood though the general understanding of jurisdiction is based on the nationality of the perpetrator since nationals of a State remained under the sovereignty and owe their allegiance to it even though they are free to travel and reside outside its territory. It is in this contest that Foreign Exchange Regulation Act 1973 prescribing application of it to all citizens of India residing outside India and to branches, agencies situated outside India is to be understood and also application of section 4 of IP. In the instant case appellants have subjected themselves to the jurisdiction of Customs Act upon notice sent to them under Section 108 of the said Act which would have otherwise ensured through extradiction process Appellant Prerna Singh had also confessed during regarding of her statement as CEO of her company that appellant Seville Products Ltd. used to raise two invoices for same import having law value and high value recorded in those invoices which were despatched through a computer of third party named Prakesh Menon for presentation of the invoices having lower value before the Customs for payment of customs duty and clearance and that the commercial invoice against which payment was received was not shown to the customs. Meaning of word abetment is to help someone in wrong doing - In the instant case such wrong doing had its effect in the Mumbai Customs jurisdiction and appellants had aided the importer in such wrong doing. Therefore, penalty under Section 112 was rightly involved. Further Appellant Prerna had never rescinded from her statement and in view of Section 56 of the Indian Evidence Act, such admission needs no further proof to hold appellants guilty of violation of the Section 112(a) of Customs Act - Penalty upheld - appeal dismissed.

Summary

Issues:
Imposition of penalty under Section 112(a) of the Customs Act on overseas appellants based in Dubai challenged for jurisdiction and legality.

Analysis:
1. The appellants contested the penalty imposed under Section 112(a) of the Customs Act by arguing that the Act's jurisdiction did not extend beyond India prior to the 2018 amendment. Citing legal precedents, they claimed that Indian statutes are ineffective against foreign entities and individuals. They emphasized the lack of permanent establishment in India as a reason for not being penalized under the Customs Act. The absence of provisions similar to other laws for trial of Indian citizens residing abroad was highlighted to support their case.

2. The respondent's representative supported the Commissioner's order but acknowledged the lack of discussion on jurisdictional issues. The Tribunal considered the arguments and reviewed the case record extensively.

3. The Tribunal delved into the issue of jurisdiction and the application of the Customs Act to overseas entities. It emphasized that no municipal law can extend beyond a country's territorial boundaries. The violation of a statute within a country's territory warrants legal consequences, regardless of the violator's nationality or residence. The principle of extra-territorial jurisdiction in criminal laws was discussed, emphasizing the State's authority to penalize violators affecting its interests, irrespective of nationality.

4. The Tribunal analyzed the application of the Customs Act to the appellants, emphasizing that their actions had adverse effects within Mumbai's Customs jurisdiction. The involvement of the appellants in aiding the importer's wrongdoings, as admitted by the CEO, justified the penalty under Section 112(a) of the Customs Act. The CEO's confession, coupled with the evidence, led to the confirmation of the penalty by dismissing the appeals.

5. The Tribunal dismissed both appeals, confirming the Commissioner's order imposing penalties on the appellants. The decision was pronounced in court on 22-01-2020, upholding the penalties under Section 112(a) of the Customs Act.

This detailed analysis covers the jurisdictional and legal aspects of the judgment, highlighting the arguments presented by both parties and the Tribunal's reasoning for dismissing the appeals and confirming the penalties.