2014 (1) TMI 970 - AT - Customs

Tribunal allows appeals due to insufficient evidence supporting penalties under Customs Act, 1962

The tribunal allowed the appeals filed by the appellants, emphasizing the insufficiency of evidence to support the penalties imposed for procedural ... Penalty u/s 114(i) - Whether penalties are required to be imposed upon them for violating the procedural violations prescribed under Section 11(1) of the Foreign Trade Development Regulation Act, 1992 - Held that:- that nowhere it was required on the part of the appellant to follow a prescribed customs procedure and that CTPL had no knowledge of the contraband nature of Caster Oil making these goods liable to confiscation under Section 113(d) of the Customs Act, 1962. It had not been brought out by the adjudicating authority as to what violation has been committed by CTPL by storing Caster Oil received from DTA units and SEZ Units and whether CTPL was under some procedural obligation to store Caster Oil received from DTA units and SEZ units. There is no allegation of any diversion of Caster Oil stored in the tank of CTPL. There is no direct evidence to indicate that CTPL was aware that exporter of Caster Oil of SEZ units were not following the prescribed procedure. In view of these observations penalty upon CTPL cannot be imposed under Section 114 of the Customs Act, 1962 as no evidence has been brought on record suggesting any act or omission committed by CTPL which will make the goods liable to confiscation or that he knowingly abetted in the offence - Decided in favour assessee. Issues:Penalties imposed under Section 114(i) of the Customs Act, 1962 for procedural violations - Whether penalties are required to be imposed upon appellants for violating procedural violations prescribed under Section 11(1) of the Foreign Trade Development Regulation Act, 1992 read with para 18(c) of the Appendix14II of Export and Import Policy, 2002-07 and Section 34 of the Customs Act, 1962.Analysis:Issue 1: Penalties on TCIL and its Director- The appeal was filed against the penalties imposed on the appellants under Section 114(i) of the Customs Act, 1962.- The argument presented was that the exported Caster Oil was the appellants' own manufactured product and not outsourced from any DTA unit.- It was contended that no investigation was conducted to establish that the exported Caster Oil was procured from DTA units and directly exported, violating regulations.- The case emphasized the lack of evidence to suggest that the exported goods were liable to confiscation under the Customs Act, 1962.- The judgment highlighted the distinction in facts from previous cases and the absence of proof to support penalties on TCIL and its director.Issue 2: Penalty on CTPL- The appellant, CTPL, faced a penalty under Section 114(i) of the Customs Act, 1962 for storing Caster Oil without knowledge of its confiscable nature.- The argument centered on the absence of evidence indicating any violation committed by CTPL in storing the goods from DTA and SEZ units.- It was emphasized that there was no proof of CTPL's awareness of any procedural violations by the exporters.- The judgment noted the lack of direct evidence implicating CTPL in any offense or abetment, leading to the conclusion that penalties could not be imposed on CTPL.Conclusion:- The tribunal allowed the appeals filed by the appellants, emphasizing the insufficiency of evidence to support the penalties imposed for procedural violations under the Customs Act, 1962.- The decision highlighted the importance of establishing concrete evidence of violations before imposing penalties, ultimately leading to the allowance of the appeals.