2014 (5) TMI 165 - AT - Customs

Appellants Liable for Aiding in Goods Diversion: Reduced Penalty Imposed

The Tribunal found the appellants liable for aiding in the diversion of imported goods, resulting in the imposition of a reduced penalty under Sec. 112 ... Aid and abetment - Diversion of goods – Liability to confiscate goods - No High Seas Sales agreement - Non-existent unit - Goods sold without receiving payment - No High Seas Sales agreement – Reduction in Penalty - Held that:- Appellants knew the activities of M/s. Resham Exports that the goods will be diverted in the open market – It is held that appellants have aided and abetted in the activities of M/s. Resham Exports relating to diversion of the goods - The goods are liable to confiscation and appellants are liable to penalty - However, value of the goods sold is Rs.9.14 lakhs and duty involved is approximately Rs. 6 lakhs, the penalty imposed is on the higher side and therefore, penalty is reduced to Rs. 2 lakhs (Rupees Two lakhs only) – Decided partly in favour of assesse. Issues:1. Ex-parte decision without personal hearing2. Alleged aiding and abetting in diversion of imported goods3. Imposition of penalty under Sec. 112 (a) of the Customs Act, 1962Analysis:Issue 1: Ex-parte decision without personal hearingThe appellants contended that the case was decided ex-parte without granting them a personal hearing. The counsel mentioned that they missed the hearings due to unavoidable circumstances, such as seeking adjournment and natural calamities. Despite this, the counsel did not press this point strongly as they believed they had a strong case on merits.Issue 2: Alleged aiding and abetting in diversion of imported goodsThe Revenue alleged that the appellants aided and abetted in the illegal diversion of imported goods meant for a 100% EOU, which were instead diverted to the open market. The department argued that the appellants were fully aware of the non-existence of the EOU and the intended diversion of goods. The Tribunal concluded that the appellants were aware of the diversion activities, leading to the imposition of a penalty under Sec. 112 (a) of the Customs Act, 1962.Issue 3: Imposition of penalty under Sec. 112 (a) of the Customs Act, 1962The Tribunal acknowledged that the appellants were aware of the diversion scheme involving the non-existent EOU. While upholding the penalty, the Tribunal found the initial penalty amount of Rs.20 lakhs excessive, considering the value of goods and duty involved. Consequently, the penalty was reduced to Rs.2 lakhs, aligning it more proportionately with the financial aspects of the case. The Tribunal dismissed the appeal with the modified penalty amount.In summary, the Tribunal found the appellants liable for aiding in the diversion of imported goods, leading to the imposition of a reduced penalty under Sec. 112 (a) of the Customs Act, 1962. The decision highlighted the importance of being vigilant in business transactions to avoid unintentional involvement in illegal activities.