Customs Act penalties reduced to Rs. 50,000 for appellants. Impugned order upheld with modifications.

The penalties imposed under Section 112(a) of the Customs Act, 1962 on the appellants were reduced to Rs. 50,000 each. The appeals were disposed of accordingly, with the impugned order upheld with modifications. The judgment was pronounced on 23/02/2017.

---

---

Issues:
Imposition of penalties under Section 112 of the Customs Act, 1962 on the appellants.

Analysis:
The judgment pertains to two appeals challenging the Order-in-Original passed by the Commissioner of Central Excise, Thane - I, imposing penalties on the appellants under Section 112 of the Customs Act, 1962. The issue revolves around the alleged purchase of imported fabrics by the appellants, which were diverted from an EOU intended for actual consumption by the said EOU. The adjudicating authority found that the appellants were aware of the diversion and applied the relevant provisions of the Customs Act, 1962. The appellants contended that they had visited a warehouse within India and purchased the fabrics from there, unaware of any diversion from an EOU. They argued that the notice lacked specificity regarding the quantity procured and questioned the excessive penalty imposed compared to a co-noticee.

Upon reviewing the submissions and records, it was established that the appellants indeed procured materials from an EOU that had been diverted. Despite the appellants' claim of ignorance, statements from co-noticees indicated their involvement in purchasing goods without proper documentation. The appellants' defense of being unaware of the goods' status was deemed meritless. However, considering the doubt regarding their awareness of the diversion, especially after visiting the warehouse, the excessive penalties of Rs. 2 lakhs each were deemed unwarranted. The penalty reduction to Rs. 50,000 each was deemed sufficient to serve the ends of justice. The penalty imposed on the Chartered Accountant involved in issuing a solvency certificate without verification was also noted to be lower, further justifying the reduction in penalties for the appellants.

In conclusion, the penalties imposed under Section 112(a) of the Customs Act, 1962 on the appellants were reduced to Rs. 50,000 each, and the appeals were disposed of accordingly. The impugned order was upheld with the mentioned modifications, and the judgment was pronounced in court on 23/02/2017.

---