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2021 (8) TMI 639 - AT - Customs100% EOU - Levy of penalty u/s 112 of the Customs Act - allegation of of conniving in disposal of imported Ball bearings through a shop situated in Kashmiri Gate - validity of levying penalty when confiscation itself has been set aside - HELD THAT - It is clear from the provisions of section 112 of Customs Act, that confiscation of goods is a necessary and pre-requisite condition for imposition of penalty. The appellant has also submitted that the proceedings against the main accused in the case of M/s Bhagwati International were set aside as far as the confiscation of goods alleged to have been sold through different shops located in New Delhi. The seizure having been vacated, imposition of penalty would not survive, as held in the case of MUNILAL MEHRA VERSUS COMMISSIONER OF CUSTOMS (ADJ.), MUMBAI 2008 (1) TMI 167 - CESTAT MUMBAI . Appeal allowed - decided in favor of appellant.
Issues:
1. Alleged connivance in disposal of imported goods. 2. Imposition of penalty under Sections 112 and 114 of the Customs Act. 3. Confiscation of goods and penalty imposition conditions. 4. Applicability of penalty in absence of confiscation order. Detailed Analysis: 1. The case involved the appellant, a co-noticee in the alleged export of goods by a 100% EOU. The appellant was accused of conniving in the disposal of imported goods. A penalty of ?5 lakhs was imposed on the appellant, leading to the appeal against the order-in-original dated 29/08/2005 passed by the Commissioner of Customs, Tughlakabad, New Delhi. 2. The appellant argued that since the main noticee had been cleared of charges by the CESTAT, and the order of confiscation of seized goods was set aside, the penalty under Sections 112 and 114 of the Customs Act could not be imposed. The appellant relied on legal precedents to support this argument. 3. The Tribunal analyzed the evidence and found that the Customs authorities failed to corroborate the allegations against the appellant with any documentary evidence other than statements. The goods imported had been cleared by Customs without duty payment, and the bonded goods were found to be in order during examination. The Tribunal concluded that there was no tangible evidence linking the goods to the alleged evasion, leading to the decision to set aside the confiscation of goods. 4. The Tribunal further emphasized that under Section 112 of the Customs Act, penalty imposition is contingent upon the confiscation of goods. Referring to legal precedents, the Tribunal highlighted that the absence of an order of confiscation or a finding of liability to confiscation precludes the imposition of penalty. The Tribunal also noted that in cases where the seizure had been vacated, the imposition of penalty would not be justified, as held in previous judgments. In conclusion, the Tribunal set aside the impugned order and allowed the appeal, emphasizing the necessity of confiscation of goods as a precondition for penalty imposition under the Customs Act.
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