2016 (12) TMI 200 - AT - Customs

Tribunal Upholds Customs Penalties, Overturns for Middleman, Considers Settlement Commission Order

The Tribunal upheld the penalties imposed on M/s.G. Devasai International and Shri T.R. Bhoopalan under the Customs Act, 1962. However, it overturned the ... Levy of penalty on co-noticee - Rejection of transaction value - demand of differential duty of ₹ 5,60,481/- - imposition of penalties on Shri Uttam Chand Sawal Chand Jain, M/s.Devasai International, Shri M.Ritesh, Shri T.R. Bhoopalan and M/s.Santon Shipping Services - import of 'Glass Chatons' - Held that: - The Tribunal's decision in the case of S.K. Colombolowala Vs CC [2007 (7) TMI 514 - CESTAT, MUMBAI] relied upon by learned advocate has put forth the ratio that proceeding against the co-noticeee comes to an end once the matter concerning the main person has been settled by Hon’ble Settlement Commission. However, in the instant case, the Hon’ble Settlement Commission themselves have, in its order, clearly elucidated that adjudicating authority was free to proceed against other co-noticees in the SCN. This part of the order of Settlement Commission has attained finality since the same has not been challenged or stay thereof was obtained from the competent forum - Coming to the appeal of M/s.G. Devasai International and T.R. Bhoopalan, I note that in the impugned order Commissioner (Appeals) has already reduced the penalties to considerable extent as indicated herein above. I do not find any reason for further interference in respect of the penalties imposed on M/s.Devasai International and Shri T.R. Bhoopalan. They are fair and just with respect to the roles played out by them in the entire matter and also the findings with regard to the said persons. With respect to the penalties under Section 112 (a) and Section 114AA imposed on Shri M.Ritesh, I find that the same requires a revisit. The role of Shri Ritesh, is only as a middleman. While the said paragraph does mention that he has also involved himself in the clearance of the goods, there is no allegation that the said appellant has in any way put his hand or signed any of the Customs documents. This being the case, and especially, considering that the main player in the entire matter has already settled his case with the Settlement Commission. The other penalties on M/s.G.Devasai International and Shri T.R. Bhoopalan have also been considerably reduced by the lower appellate authority. The department has also not filed appeal either against the order of the original authority or against the impugned order. In these circumstances, I set aside penalties under Section 112 (a) and Section 114AA of the Customs Act imposed on Shri M.Ritesh. Appeal filed by M/s.G.Devasai International and Shri T.R. Bhoopalan are dismissed - Appeal filed by Shri M.Ritesh is allowed - appeal disposed off - decided partly in favor of appellant. Issues:- Reduction of penalties imposed on individuals under various sections of the Customs Act, 1962.- Interpretation of Settlement Commission's order and its impact on co-noticees.- Assessment of roles played by co-noticees in the offense committed by the main person.- Justifiability of penalties imposed on co-noticees.Analysis:The judgment involves three appeals connected with the same impugned order, where penalties were imposed on individuals for their involvement in the offense related to the import of 'Glass Chatons' as Artificial Stones for 'Imitation Jewellery.' The Settlement Commission had settled the case of one individual, but ruled that the adjudicating authority could proceed against other co-noticees. The Adjudicating Authority then imposed penalties on the appellants under various sections of the Customs Act, 1962. The Commissioner (Appeals) later reduced the penalties imposed on the individuals.During the hearing, the appellant's advocate cited a Tribunal decision highlighting that cases of co-noticees usually end once the main person's case is settled by the Settlement Commission. However, since the Settlement Commission's order allowed proceedings against other co-noticees, the penalties on the appellants were deemed justifiable. The Tribunal found no legal imbalance in adjudicating the matter concerning the co-noticees.The roles of the co-noticees were assessed, with arguments made for and against the reduction of penalties. While the penalties on M/s.G. Devasai International and Shri T.R. Bhoopalan were considered fair and just by the Tribunal, a revisit was required for the penalties imposed on Shri M.Ritesh. The Tribunal noted that Shri M.Ritesh's role was that of a middleman without direct involvement in signing Customs documents. Considering the main player had settled the case and other penalties were reduced, the Tribunal set aside the penalties imposed on Shri M.Ritesh under certain sections of the Customs Act.Ultimately, the Tribunal dismissed the appeals filed by M/s.G. Devasai International and Shri T.R. Bhoopalan while allowing the appeal filed by Shri M.Ritesh. The judgment highlighted the importance of assessing individual roles in offenses and the impact of Settlement Commission orders on co-noticees in customs cases.