2016 (12) TMI 964 - AT - Customs

Successful appeal in Customs Act penalty case highlights importance of procedural fairness and access to evidence

The appeal by M/s. Ambica Industries against the penalty imposed under Section 112(a) of the Customs Act, 1962 was successful. The Tribunal remanded the ... Imposition of penalty u/s 112(a) of the Customs Act, 1962 - whether import of 352.245 MT of Zinc Flux Skimmings was ordered by the Appellant? - Held that: - It is observed from the findings portion of Order-in-Original dated 25.01.2006 that Adjudicating authority has heavily relied upon this statement dated 19.08.2003 of Shri Mustafa Seikh which was not a relied upon document in the show cause notice. Ld.AR appearing on behalf of the Revenue also could not indicate whether a copy of this statement, relied upon in the Adjudication order, was provided to the Appellant - matter is remanded to the Adjudicating authority with the direction to supply copies of statement dated 19.08.2003 of Shri Mustafa Seikh to the Appellant and also all other documents relied upon in the adjudication order dated 25.01.2006 which were not relied upon in the show cause notice - appeal allowed by way of remand. Issues:1. Imposition of penalty under Section 112(a) of the Customs Act, 1962.2. Whether the import of 352.245 MT of Zinc Flux Skimmings was ordered by the Appellant.Analysis:Issue 1: Imposition of penalty under Section 112(a) of the Customs Act, 1962The Appellant, M/s. Ambica Industries, filed an appeal against the Order-in-Original dated 25.01.2006, where a penalty of Rs. 14,00,000 was imposed under Section 112(a) of the Customs Act, 1962. The Advocate for the Appellant argued that the Appellant had necessary permission from the Ministry of Environment and Forest for processing Zinc Flux Skimmings. It was contended that while previous consignments were properly authorized and signed by the Appellant, in the present case, no authorization was given to the Customs House Agent (CHA) and the documents were not signed by the Appellant. The Advocate highlighted that there was no evidence linking the Appellant to the import of the Zinc Flux Skimmings in question. The Adjudicating authority's reliance on a statement by a CHA employee, not mentioned in the show cause notice, was also challenged. The Revenue argued that the Appellant lacked valid permission for processing the goods and that circumstantial evidence indicated the Appellant's involvement in ordering the imports.Issue 2: Import of 352.245 MT of Zinc Flux SkimmingsThe main issue was whether the Appellant had ordered the import of 352.245 MT of Zinc Flux Skimmings and if the penalty was correctly imposed. The Adjudicating authority heavily relied on a statement by a CHA employee, Shri Mustafa Seikh, which was not part of the show cause notice. The Tribunal observed that the Adjudicating authority's reliance on this statement without providing a copy to the Appellant raised concerns of procedural fairness. In the interest of justice, the matter was remanded to the Adjudicating authority with directions to provide copies of the statement and all other relevant documents not included in the show cause notice to the Appellant. A personal hearing was also ordered before a final decision. The appeal was allowed by remanding the case to the Adjudicating authority, keeping all issues open for further deliberation during the remand proceedings.This judgment highlights the importance of procedural fairness and the need for authorities to rely on evidence presented within the show cause notice. The Tribunal emphasized the right of the Appellant to access all documents relied upon in the adjudication order and to present their case effectively. The decision to remand the case ensures a fair opportunity for the Appellant to address the allegations and for the Adjudicating authority to reconsider the imposition of the penalty based on all relevant information.