Tribunal overturns penalties for Cosmos Trading Co. & Nilesh Bansal in Customs Act case

The Tribunal set aside the personal penalties imposed on M/s Cosmos Trading Co. and Shri Nilesh Bansal under Section 112 of the Customs Act, 1962 for their alleged involvement in the illegal diversion of duty-free goods. The Tribunal found that the appellants acted in compliance with instructions from M/s Systematic Corporation for job work processing, and were not knowingly involved in the illegal activities of the supporting manufacturer. Therefore, the Tribunal extended the benefit of doubt and overturned the penalties imposed on the appellants.

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Issues involved: Imposition of personal penalty under Section 112 of the Customs Act, 1962 on M/s Cosmos Trading Co. and Shri Nilesh Bansal for aiding and abetting in the illegal diversion of duty-free goods.

Summary:
The appeal challenged the imposition of personal penalties on M/s Cosmos Trading Co. and Shri Nilesh Bansal under Section 112 of the Customs Act, 1962. The goods were cleared by M/s Cosmos Trading Co. in the name of M/s Systematic Corporation against advance release order, but were diverted to the open market instead of the supporting manufacturer's premises. The Commissioner confirmed duty against M/s Systematic Corporation and imposed penalties on them, which were not appealed. The appellants argued that they followed instructions from M/s Systematic Corporation to deliver goods to a different location for job work, not knowing about the illegal diversion.

The appellants presented a letter from M/s Systematic Corporation directing them to deliver goods to a specific location for job work, which they complied with. The Commissioner found M/s Systematic Corporation guilty of wrongly availing exemptions and concluded that M/s Cosmos Trading Co. aided in the illegal diversion. The Commissioner imposed penalties based on the actions of the appellants, indicating their active involvement in the illegal trading of duty-free goods. The presence of Shri Nilesh Bansal at the delivery location raised suspicions, leading to the imposition of penalties.

The adjudicating authority upheld the charges of abetment based on the appellants' knowledge of the diversion of goods. However, the Tribunal found that the appellants' actions were in compliance with instructions from M/s Systematic Corporation for job work processing. Referring to a previous case, the Tribunal noted that it was permissible to process imported raw materials through job workers not endorsed on the licenses. The Tribunal concluded that the appellants were not knowingly involved in the illegal activities of M/s Systematic Corporation and extended the benefit of doubt, setting aside the imposed penalties.

In conclusion, the Tribunal allowed the appeals, setting aside the personal penalties imposed on M/s Cosmos Trading Co. and Shri Nilesh Bansal for their alleged involvement in the illegal diversion of duty-free goods.

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