2015 (2) TMI 1003 - AT - Customs

Tribunal orders penalty deposit due to lack of prima facie case

Debesh Prasad Nanda Versus Commissioner of Central Excise, Delhi-I

The Tribunal ruled against the appellant, directing the deposit of the entire penalty amount within a specified timeframe due to the lack of a prima facie ... Pre-deposit of penalty - Import of the capital goods by 100% EOUs, free of duty - Company floated with malafide intention;short span of the lease period - Held that:- The company itself was floated with a malafide intention, which is clear from the fact that the premises were rented only for a period of 8-9 months. The short span of the lease period for a company which is to be run as a call centre, is itself indicative of the fact that there was no intention to conduct the business of running a call centre for a longer period. All the three Directors including the appellant and the NRI Director joined hands for duty free imports, which were to be cleared subsequently to the domestic market. We also note that the evidence procured on record by the Revenue reveals the fact that the company was closed and the premises were vacated in May 2006 itself and the subsequent resigning of the present Director in May, 2006 and leaving India in July, 2006 i.e. subsequent to the completion of the fraud was by a malafide design. In view of the above, we find that appellant has no prima facie case. Decided against the appellant. Issues involved:Application to dispense with pre-deposit of penalty under Customs Act, 1962; Confirmation of duty demand and penalty imposition on appellant as a Director of a call centre; Allegations of fraud in duty-free imports and subsequent disposal of capital goods; Director's liability in fraudulent activities; Evidence of Director's involvement in fraudulent practices; Legal precedent on Director's liability in fraud cases.Analysis:1. The judgment revolves around an application seeking to waive the pre-deposit condition of a penalty imposed under Section 112(b) of the Customs Act, 1962, in conjunction with Section 72(1) of the same Act. The case involves the confirmation of a duty demand of approximately Rs. 44.71 crores against a company, M/s Infocall Solutions Private Limited, and the imposition of penalties on its Directors, including the appellant.2. The appellant, a Director of the call centre company, was implicated in a case where investigations revealed discrepancies regarding the operation and whereabouts of duty-free imported capital goods. The appellant's defense centered on his limited involvement in the company's operations, citing resignation and departure from India shortly after the alleged fraudulent activities took place.3. The Revenue's argument focused on establishing the company's fraudulent intentions, evidenced by the swift closure of operations, disposal of goods in the domestic market, and the Directors' disappearance to evade scrutiny. The Revenue contended that the appellant's role as a Director during the critical period implicated him in the fraudulent scheme.4. The appellant's counsel emphasized the lack of direct evidence implicating the appellant in the fraud, citing legal precedents to support the argument that mere directorship does not warrant penal action without active involvement in fraudulent activities.5. The Tribunal, after considering the facts and circumstances of the case, concluded that the company was established with malafide intentions, evident from the short-term lease of premises and subsequent disposal of goods. The Tribunal found the appellant's actions, including resignation post-fraud and departure from India, as part of a calculated design to evade accountability.6. Ultimately, the Tribunal ruled against the appellant, directing the deposit of the entire penalty amount within a specified timeframe due to the lack of a prima facie case, absence of appeals from other involved parties, and the overall circumstances indicating complicity in the fraudulent activities. The judgment underscores the importance of considering the specific facts of each case in determining liability, particularly in instances of suspected fraudulent conduct by company Directors.