2016 (1) TMI 1051 - AT - Customs

Tribunal remands duty issues, penalties set aside for sellers, reduced for broker. Appeals remanded for fresh adjudication.

Bhuwaneshwar Refineries Pvt. Ltd. And Another Versus Commissioner Of Customs (Export) Nhava Sheva

Bhuwaneshwar Refineries Pvt. Ltd. And Another Versus Commissioner Of Customs (Export) Nhava Sheva - TMI Issues Involved:1. Confiscation of goods and duty liability on exporters and importers.2. Imposition of penalties on High Sea Sellers.3. Imposition of penalties on Indigenous Suppliers.4. Imposition of penalties on Central Excise Officers.5. Imposition of penalties on Brokers.6. Departmental appeals regarding penalties and duty confirmation.Comprehensive, Issue-Wise Detailed Analysis:1. Confiscation of Goods and Duty Liability on Exporters and Importers:The Tribunal addressed the issue of confiscation of goods exported and imported by DEPB holders and the joint and several duty liabilities on exporters and importers. The Tribunal agreed with the contention that duty liability cannot be fixed jointly and severally on both parties, citing previous cases (Rajesh Kumar Agarwal vs CCE and Golden Tobacco Ltd. vs CCE). Consequently, the Tribunal remanded the cases for fresh adjudication by the Commissioner to fix the duty liability appropriately, ensuring the principles of natural justice are followed. The Tribunal also noted that goods not available cannot be confiscated and redeemed and that the applicability of the extended time period under Section 28 (1) of the Customs Act should be considered by the Commissioner after fixing the duty liability.2. Imposition of Penalties on High Sea Sellers:The Tribunal examined the imposition of penalties under Rule 26 of the Central Excise Rules on High Sea Sellers. The contention was that the goods sold on high seas were imported and not excisable, thus beyond the purview of Rule 26. The Tribunal found that the goods on high seas cannot be held liable to confiscation under Rule 25 of the Central Excise Rules, as they were not yet imported under the Customs Act. Therefore, the question of imposing penalties under Rule 26 on High Sea Sellers did not arise, and the penalties were set aside.3. Imposition of Penalties on Indigenous Suppliers:The Tribunal upheld the penalties imposed on indigenous suppliers who sent only duty-paying documents while selling raw materials in the open market, facilitating fraudulent Cenvat credit claims. The Tribunal found substantial evidence and confessions indicating the suppliers' awareness of the fraudulent activities. The Tribunal denied the contention of the suppliers that they were unaware of the misuse of invoices and concluded that the suppliers did not take reasonable steps to ensure the goods were consigned to the appellants' addresses. The penalties under Rule 26 were upheld, except for M/s Mini Sarvodyog, whose case was remanded due to non-receipt of the SCN or the impugned order.4. Imposition of Penalties on Central Excise Officers:The Tribunal considered the charges against Central Excise Officers for allegedly allowing the substitution of samples, facilitating fraudulent DEPB claims. It found that the evidence against the officers was insufficient to sustain the charges, as only one officer admitted to the misconduct, and there was no concrete evidence against the others. The Tribunal noted that the officers followed the correct sampling procedure, and the complicity of the officers was not established beyond doubt. Additionally, the Tribunal upheld the legal protection under Section 155 (2) of the Customs Act and Section 40 of the Central Excise Act, which was not adhered to by the Revenue. Consequently, the penalties against the officers were set aside.5. Imposition of Penalties on Brokers:The Tribunal reviewed the penalty imposed on a broker for his involvement in transactions where goods were not delivered to the consignees but sold in the open market. The broker had confessed to receiving brokerage for such deals. However, the Tribunal found that in some cases, the transactions were conducted through another broker, and no confession was made by the appellant. The Tribunal concluded that the penalty of Rs. 11 lakhs was excessive and reduced it to Rs. 4 lakhs.6. Departmental Appeals Regarding Penalties and Duty Confirmation:The Tribunal addressed the departmental appeals concerning non-imposition of penalties under Section 114A on DEPB holders, non-confirmation of duty against M/s Corporate Chemicals and Intermediates, and incorrect duty confirmation against M/s Cosmos Chemicals and Intermediates. These appeals were remanded to the Commissioner for fresh adjudication. Additionally, the Tribunal ordered the increase of the mandatory penalty on M/s Advance Packaging Pvt. Ltd. to Rs. 10,000.Final Order:1. Confiscation and duty demand issues remanded to the Commissioner for fresh adjudication.2. Penalties against High Sea Sellers set aside.3. Penalties against Indigenous Suppliers upheld, except for M/s Mini Sarvodyog, whose case was remanded.4. Penalties against Central Excise Officers set aside.5. Penalty against the broker reduced from Rs. 11 lakhs to Rs. 4 lakhs.6. Departmental appeals remanded for fresh adjudication.Conclusion:The Tribunal provided a detailed and structured judgment addressing the fraudulent claims of export incentive schemes and the associated penalties, ensuring adherence to legal principles and natural justice.