2014 (12) TMI 1223 - AT - Central Excise

Customs Act penalties not applicable due to procedural discrepancies; fresh adjudication ordered. Fraudulent involvement key in penalty determination.

The appeals were allowed as penalties under Section 112 of the Customs Act, 1962, and Rule 209A of the Central Excise Rules were found inapplicable. The ... Imposition of penalties - Section 112 of the Customs Act, 1962 or Rule 26/ Rule 209A of the Central Excise Rules - Personal hearing conducted by one commissioner and order passed by another in Shri Puneet Rungta - Held that:- the practice followed in the case of Shri Puneet Rungta is against the principal of natural justice in view of the settled proposition of law as per various case laws relied upon by this appellant. Accordingly, OIO passed by the Adjudicating authority and the case of Shri Puneet Rungta is remanded to the Adjudicating authority to decide the matter afresh in de-novo adjudication, after affording him an opportunity of personal hearing. In respect of remaining appeals matter is more or less similar to the case of Shri T.S. Makkar vs. CCE, Surat [2012 (10) TMI 981 - CESTAT AHMEDABAD]. As the appellant has not dealt with or transported the goods in any manner. Nor it was established that appellant was aware of the forged/ fake nature of license, then no penalties are invokable under Section 112(b)ibid and or Rule 209A of the erstwhile Central Excise Rules. - Decided in favour of appellant Issues:- Imposition of penalties under Section 112 of the Customs Act, 1962 or Rule 26/ Rule 209A of the Central Excise Rules.- Discrepancy in conducting personal hearing and passing orders by different Commissioners.- Involvement of parties in fraudulent activities.- Applicability of penalties based on the involvement in the fraud.- Comparison of facts in different appeals for penalty imposition.Analysis:1. Imposition of Penalties: The appeals were filed against penalties imposed under Section 112 of the Customs Act, 1962 or Rule 26/ Rule 209A of the Central Excise Rules by the adjudicating authority. The appellants contested the penalties based on the grounds that they did not deal with the goods as no goods were imported against the forged licenses. The argument was that for the fraud committed, penalties cannot be imposed under the Customs Act or Central Excise Rules.2. Discrepancy in Conducting Personal Hearing: In one appeal, it was observed that personal hearing was conducted by one Commissioner, but the orders were passed by another Commissioner. This was deemed against the principles of natural justice, leading to the remand of the case to the adjudicating authority for fresh adjudication after affording the appellant an opportunity of personal hearing. The appeal was allowed based on this discrepancy.3. Involvement in Fraudulent Activities: The Revenue argued that the facts of the appellants, except for one individual, were similar to those already disposed of. It was highlighted that the individual in question actively participated in the fraud by facilitating the opening of bank accounts and clearing payments, receiving a percentage for these activities. The orders-in-original were strongly defended by the Revenue in this regard.4. Applicability of Penalties: After hearing both sides and reviewing the case records, it was found that penalties under Section 112(b) of the Customs Act, 1962, and Rule 209A of the Central Excise Rules were not applicable. This decision was based on the fact that the appellants did not deal with or transport the goods and were not aware of the forged nature of the licenses. The appeals were allowed based on the similarity of facts to a previous case where penalties were not invoked.5. Comparison of Facts in Appeals: A comparison of the facts in the present appeals with a previous case led to the conclusion that the situations were more or less similar. As the appellants were not involved in handling the goods or aware of the fraudulent licenses, penalties were deemed not applicable. The appeals were allowed based on this comparison and the precedent set in the previous case.In conclusion, the judgment addressed issues related to penalty imposition, discrepancies in the adjudication process, involvement in fraudulent activities, and the applicability of penalties based on the circumstances of each case. The decision to allow the appeals was made after a thorough analysis of the facts and legal principles involved.