2013 (8) TMI 434 - AT - Customs

Customs Act Penalties Challenged: Stay Granted for Partial Waiver, Upheld for False Declarations

The judgment consolidated stay petitions challenging penalties imposed under the Customs Act, 1962 and Central Excise Rules, 1944. The appellants, ... Penalty u/s 112, and Rule 209A of the Central Excise Rules - stay - wrong declarations in the export documents by which the goods exported were liable to confiscation - Held that:- Penalties u/s 112 and Rule 209A of the Central Excise Rules were not imposable because the assessees in that case did not deal with the goods - assesseess had made out a prima facie case for complete waiver of the penalties imposed u/s 112 and Rule 209 A/ Rule 26. Penalty u/s 112A and 114 – department contended that assessees had the knowledge that the goods obtained under duty exemption were not utilized for the manufacture of finished goods which were required to be exported thus penalties had been correctly imposed – Held that:- Assessee had made wrong declarations in the export documents by which the goods exported were liable to confiscation – they were liable to penalty u/s 114 – they had not made out a prima facie case for complete waiver of pre-deposit of penalties imposed u/s 114 for handling such goods. stay petition – waiver of pre deposit - Assesses were directed to pay 50% of the penalties imposed upon them u/s 114 - On payment of the pre-deposit - stay on the remaining amounts of penalties would be granted – appeal decided partly in favour of assessee. Issues:- Stay petitions filed against penalties imposed under Customs Act, 1962 and Central Excise Rules, 1944.- Applicability of penalties on appellants who did not handle the offending goods.- Prima facie case for complete waiver of penalties under specific sections of Customs Act and Central Excise Rules.- Imposition of penalties under Section 114 of the Customs Act, 1962 for false declarations in export documents.Issue 1: Stay Petitions Against PenaltiesThe judgment consolidated multiple stay petitions concerning penalties imposed under the Customs Act, 1962 and Central Excise Rules, 1944. The penalties were challenged by Shri Asif Chasmawala and companies like M/s. Al-Amin Exports and M/s. Sunshine Overseas. The penalties were imposed under various sections for violations related to handling goods and export obligations.Issue 2: Applicability of PenaltiesThe appellants argued that penalties should not be imposed as they did not handle the offending goods at any stage. Citing a previous judgment, they contended that penalties under the Customs Act and Central Excise Rules cannot be applied in such cases. The respondent, however, claimed that the appellants were aware of the misuse of duty-exempt goods, justifying the penalties imposed by the adjudicating authority.Issue 3: Prima Facie Case for WaiverThe Bench observed that penalties were imposed under specific sections of the Customs Act and Central Excise Rules. Referring to a previous case, it was noted that penalties were not applicable when the appellants did not handle the goods. Consequently, a prima facie case for complete waiver of penalties under the mentioned sections was established, aligning with the decision of the Bench in a similar case.Issue 4: Imposition of Penalties under Section 114Regarding penalties under Section 114 of the Customs Act, 1962, it was found that false declarations were made in export documents by M/s. Al-Amin Exports and M/s. Sunshine Overseas. These actions led to the diversion of duty-free raw materials to the domestic market, violating export obligations. As a result, the appellants were held liable for penalties under Section 114. They were directed to pay 50% of the penalties within a specified period, with a stay granted on the remaining amounts pending appeal disposal.In conclusion, the judgment addressed the issues raised in the stay petitions comprehensively, distinguishing between penalties imposed under different sections of the Customs Act and Central Excise Rules. It emphasized the importance of compliance with export obligations and accurate declarations in export documents to avoid penalties. The decision provided clarity on the applicability of penalties based on the handling of goods and upheld the penalties under Section 114 while allowing a waiver for penalties imposed under specific sections due to lack of handling involvement.