Tribunal overturns penalty on employee for duty diversion without personal gain

The Tribunal upheld the decision of the Commissioner (Appeals) to set aside the penalty on the employee, ruling that the employee acted under the firm's instructions without personal benefit from the diversion of imported goods to the local market. The Tribunal found that penalties on employees were not warranted in similar circumstances where personal benefit was not established. The Revenue's appeal was rejected due to insufficient evidence showing personal gain by the employee, thus affirming the setting aside of the penalty.

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Issues:
Setting aside of penalty on the respondents by the learned Commissioner (Appeals).

Analysis:
The appeal was filed by the Revenue against the order setting aside the penalty on the respondents. The case revolved around the diversion of imported goods to the local market without discharging duty liability. The authorized signatory admitted to the diversion, and the firm paid the customs duty and interest. The adjudicating authority confirmed the demand of customs duty and imposed penalties on both the firm and the employee under Section 112B of the Customs Act, 1962. The Tribunal offered the firm a reduced penalty under Section 114A. The respondent employee appealed to the Commissioner (Appeals) to set aside the penalty imposed on him separately.

The grounds of appeal by the Revenue included contentions that the Commissioner (Appeals) erred in setting aside the penalty on the authorized signatory despite confirming duty demands and the signatory's involvement in the diversion. The Revenue argued that the penalty under Section 112B should not have been set aside as the signatory confessed to the offense. They also claimed that the penalty was warranted due to the firm's failure to account for raw materials. The Revenue cited legal decisions supporting their position.

The appellant's counsel referenced previous judgments where penalties on employees were not imposed under similar circumstances. The Tribunal considered the arguments and found that the employee was acting under the firm's instructions without personal benefit from the diversion. Citing relevant case law, the Tribunal concluded that the penalty on the employee was not justified. Therefore, the Revenue's appeal was rejected based on the lack of evidence showing personal benefit to the employee from the diversion.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) to set aside the penalty on the employee, emphasizing that the employee was following the firm's instructions without personal gain. The legal precedents and lack of evidence supporting personal benefit led to the rejection of the Revenue's appeal.

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