2016 (5) TMI 438 - AT - Customs

Unjust Penalty Reversed: Upholding Natural Justice in Customs Appeals

The appellant appealed against a penalty imposed under Section 112 of the Customs Act due to lack of statement and violation of natural justice ... Imposition of penalty - Appellant submitted that he has resigned from M/s. Infocall Solutions Pvt. Ltd. on 4-7-2006 and is no way concerned with the activity of said company, therefore, penalty on the appellant is not imposable in the absence of any statement of appellant is recorded and moreover, no examination of the witnesses has been given to the appellant to impose penalty. - Section 112 of the Customs Act - Period of dispute is 8-2-2006 to 11-3-2006 Held that:- appellant has resigned from the assessee-company on 4-7-2006 although import took place before that date but no statement of the appellant has been recorded for imposition of penalty. Moreover, if statement of other persons have been relied upon, the cross-examination was required to be given to the appellant which is also not given. Hence, principle of natural justice has been violated by the adjudicating authority. Therefore, in the absence of any inculpatory statement of the appellant, penalty on the appellant is not imposable. Impugned order qua imposing penalty is set aside. - Decided in favour of appellant Issues Involved:Appeal against penalty imposed under Section 112 of the Customs Act - Resignation of the appellant from the company - Lack of statement from the appellant - Violation of principles of natural justice.Analysis:The appellant appealed against the penalty of Rs. 5 lakh imposed under Section 112 of the Customs Act. The appellant, who was the Director of a company, resigned on 4-7-2006 and later went abroad. Customs Authority conducted an investigation at the company's premises and issued a show cause notice to the appellant. The appellant argued that since they had resigned and were not involved in the company's activities, the penalty should not apply without their statement and witness examination.The appellant's counsel contended that as the appellant had resigned before the disputed period, the penalty was unjustified. On the contrary, the AR argued that during the relevant time, the appellant was still the Director, justifying the penalty imposition. After hearing both parties, the Member found that although the import occurred before the appellant's resignation, no statement from the appellant was recorded, and no cross-examination was provided based on other statements. This lack of due process violated the principles of natural justice.Consequently, the Member held that without any incriminating statement from the appellant and the absence of cross-examination, the penalty on the appellant was not justified. Therefore, the impugned order imposing the penalty was set aside, allowing the appeal in favor of the appellant. The judgment emphasized the importance of following natural justice principles in adjudication proceedings, ensuring fairness and procedural integrity.