2005 (6) TMI 394 - AT - Customs

Tribunal upholds penalties for directors abetting Customs Act violations, requires pre-deposit and personal bonds

The Tribunal ruled on stay applications against penalties imposed by the Commissioner of Customs on directors. Despite arguments of lack of direct ... Stay/Dispensation of pre-deposit - Penalty Issues Involved:Stay applications against penalty imposed by Commissioner of Customs - Financial constraints of directors - Role of directors in violation of Customs Act - Imposition of penalty on directors - Liability for confiscation of goods - Abetment of offence by directors - Waiver of penalty pre-deposit - Financial hardships of directors - Decision on pre-deposit amount and bond requirement.Analysis:1. Stay Applications Against Penalty Imposed by Commissioner of Customs:Three stay applications were filed by the applicants to stay the recovery of penalties of Rs. 10 lakhs each imposed on them based on a common order of the Commissioner of Customs. The applicants sought relief due to financial constraints and challenged the imposition of penalties.2. Role of Directors in Violation of Customs Act and Imposition of Penalty:The advocate for one director argued that his client, a non-working director, was not directly involved in any violation of the Customs Act and hence should not be penalized. Legal precedents were cited to support the argument that penalties should not be imposed without evidence of specific culpability.3. Abetment of Offence by Directors and Liability for Confiscation of Goods:The advocates for other directors argued that their clients were not actively involved in the alleged offences and should not be held liable for abetment. They contended that the activities performed by the directors did not amount to violations of the Customs Act, and penalties should not be imposed on them.4. Waiver of Penalty Pre-deposit and Financial Hardships of Directors:The advocates further argued that the department had to establish the liability for confiscation of goods before imposing penalties. They highlighted the financial hardships faced by the directors and emphasized that they were employees acting under the directions of the company's managing director, not shareholders.5. Decision on Pre-deposit Amount and Bond Requirement:The Tribunal considered the submissions and found that penalties were correctly imposed on the directors for abetting the offences committed by the company. It was ruled that complete waiver of pre-deposit could not be granted, but the directors were directed to pre-deposit a sum of Rs. 50,000 each within a specified period and execute a personal bond for the balance amount for the pending appeals.Conclusion:The Tribunal disposed of the applications by ordering the directors to comply with the pre-deposit requirements and bond execution. The recovery of the balance amount was stayed for hearing the appeals, subject to the specified compliance deadline. The decision was pronounced in open court, providing a detailed analysis of the directors' roles, liabilities, financial constraints, and the Tribunal's ruling on the penalty pre-deposit.