2006 (1) TMI 404 - AT - Customs

Waiver granted for penalty pre-deposit under Customs Act. Managing Director gets relief.

The Tribunal granted waiver of pre-deposit of penalty under Section 112 of the Customs Act, 1962 for the Managing Director of a company accused of ... Waiver of pre-deposit - penalty under Section 112 of the Customs Act - confiscation under Section 111(j) of the Customs Act - prima facie satisfactionWaiver of pre-deposit - penalty under Section 112 of the Customs Act - confiscation under Section 111(j) of the Customs Act - Application for waiver of pre-deposit of penalty imposed under Section 112 of the Customs Act. - HELD THAT: - At the prima facie stage the Tribunal found that the statutory condition for invoking Section 112 was not satisfied because the show cause notice did not propose, nor did the adjudicating authority record any finding, that the goods in question were liable to confiscation under Section 111(j). The Tribunal treated the absence of any proposal or finding of confiscation as fatal to the invocation of Section 112 at this stage and concluded that pre-deposit of the penalty should be waived and recovery stayed pending the appeal.Pre-deposit of the penalty imposed under Section 112 is waived and recovery stayed pending disposal of the appeal.Final Conclusion: The Tribunal granted waiver of the pre-deposit of the penalty imposed under Section 112 of the Customs Act and stayed its recovery, holding that prima facie the requirements for invoking Section 112 were not made out in the notice or by the adjudicating authority. Issues:Waiver of pre-deposit of penalty under Section 112 of the Customs Act, 1962 for the Managing Director of a company accused of violating conditions of industrial license and customs duty regulations.The case involved an application for waiver of pre-deposit of penalty of Rs. 50.00 lakhs imposed on the Managing Director of a company under Section 112 of the Customs Act, 1962. The company, a 100% EOU, was accused of clandestinely removing capital goods duty-free from the Bonded Warehouse, violating conditions stipulated in various notifications. The Show Cause Notice sought recovery of Customs duty and Central Excise duty along with interest and proposed penalties on the company and its Managing Director. The Tribunal noted that the provisions of Section 112 were not attracted as there was no proposal or finding that the goods were liable to confiscation under Section 111(j) of the Act. Consequently, the Tribunal waived the pre-deposit of penalty and stayed the recovery pending the appeal.The Tribunal, comprising Ms. Jyoti Balasundaram and Shri S.S. Sekhon, considered the issue of waiver of pre-deposit of penalty under Section 112 of the Customs Act, 1962. The applicant, the Managing Director of the company, was accused of violating the conditions of the industrial license and customs duty regulations. The Tribunal found that at the prima facie stage, the waiver of pre-deposit was warranted as the provisions of Section 112 were not attracted. It was observed that there was no proposal or finding indicating that the goods in question, though not available, were liable to confiscation under Section 111(j) of the Act. Therefore, the Tribunal decided to waive the pre-deposit of penalty and stayed the recovery pending the appeal, providing relief to the appellant.In a judgment delivered by Jyoti Balasundaram, Vice-President, the Appellate Tribunal CESTAT, Mumbai, addressed the application for waiver of pre-deposit of penalty under Section 112 of the Customs Act, 1962. The case involved the Managing Director of a company accused of clandestinely removing capital goods duty-free from a Bonded Warehouse, leading to a violation of specified conditions. The Tribunal noted that the provisions of Section 112 were not prima facie attracted as there was no proposal or finding that the goods were liable to confiscation under Section 111(j) of the Act. Consequently, the Tribunal granted the waiver of pre-deposit of penalty and stayed the recovery pending the appeal, providing interim relief to the appellant.