2006 (11) TMI 498 - AT - Customs

Tribunal Upholds Customs Act Penalties for Misdeclaration & Overvaluation

The Tribunal upheld penalties imposed under Section 114 of the Customs Act, 1962, on individuals associated with a CHA firm for overvaluation and ... Appeal - Stay/Dispensation of pre-deposit - Statement - Retracted but reaffirmed later on Issues Involved:1. Imposition of penalties under Section 114 of the Customs Act, 1962.2. Allegations of overvaluation and misdeclaration of export goods.3. Violation of principles of natural justice.4. Liability of employees and agents of CHA firms.5. Confiscation of goods under Section 113 of the Customs Act, 1962.6. Procedural propriety in disposing of appeals at the stay stage.Issue-wise Detailed Analysis:1. Imposition of Penalties under Section 114 of the Customs Act, 1962:- Shri Bhagwan Sippy: The appellant contended that he was merely an employee of the CHA firm and not a partner. The Commissioner imposed a penalty of Rs. 3 lacs, which was challenged. The Tribunal found that there was no correlation between the goods stuffed in the container and the shipping bills, leading to the imposition of penalties.- Shri Mukesh Bhanushali: The appellant argued that the Commissioner passed an ex parte order without considering his request for adjournment, violating natural justice principles. The Tribunal noted that the Commissioner recorded that Bhanushali failed to rebut allegations and did not file written submissions.- Shri Jayesh Gala: The appellant claimed no corroborative evidence against him and that the order was passed ex parte. The Tribunal noted that the Commissioner found Gala involved in aiding and abetting the offense.- Shri Govind Sharma: The appellant argued that the order was passed ex parte and that the goods were neither prohibited nor dutiable. The Tribunal recorded that the Commissioner found Sharma liable for penal action under Section 114 for his role in the attempted fraudulent export.2. Allegations of Overvaluation and Misdeclaration of Export Goods:- The Tribunal highlighted the discrepancies in the quantity and quality of goods declared versus those found during re-examination. The goods were overvalued significantly, and the declared value did not match the procurement price, leading to the conclusion of fraudulent intent to obtain undue DEPB benefits.3. Violation of Principles of Natural Justice:- Shri Mukesh Bhanushali and Shri Jayesh Gala: Both appellants argued that the ex parte orders violated natural justice. The Tribunal acknowledged these claims but emphasized the appellants' failure to respond to summons and show cause notices, thereby justifying the ex parte proceedings.4. Liability of Employees and Agents of CHA Firms:- Shri Bhagwan Sippy: The Tribunal noted that Sippy allowed his CHA license to be used by Gala without verifying the exporter, thus abetting the fraudulent export.- Shri Mukesh Bhanushali: Found to be associated with Gala in the clearance business, thereby participating in the fraudulent activities.5. Confiscation of Goods under Section 113 of the Customs Act, 1962:- The Tribunal confirmed that the goods were liable to confiscation due to misdeclaration of value and quantity, as supported by substantial evidence, including statements and re-examinations.6. Procedural Propriety in Disposing of Appeals at the Stay Stage:- Majority Opinion: The Tribunal, by majority, held that disposing of the appeals at the stay stage without notifying the revenue was inappropriate. The appeals should be decided only after proper notice and hearing on merits.- Member (Judicial): Proposed reducing the penalties and disposing of the appeals at the stay stage.- Member (Technical): Argued for pre-deposit of penalties and proper notice to the revenue before final disposal.Final Order:- The Tribunal ordered pre-deposit of Rs. 4 Lakhs each by Shri Jayesh Gala and Shri Govind Sharma, and Rs. 50,000/- each by Shri Bhagwan Sippy and Shri Mukesh Bhanushali within 8 weeks. Compliance would result in a waiver of the balance penalties, failing which the appeals would be dismissed.