2017 (8) TMI 256 - AT - Customs

Tribunal Rehears Case, Reduces Penalty for Appellant's Role in Fraudulent Sale

Haren Choksey Versus Commissioner of Customs, Chennai

The Tribunal concluded that the first docket order was withdrawn due to lack of support by reasons. The jurisdiction objection was dismissed, and the case ... Broker arranging mortgage - whether transaction was actual sale or was only a mortgage? - Held that: - All the evidences, which have not been retracted or disproved by the appellant, only serve to establish the intricate web of transactions woven to facilitate the sale and purchase of vehicle even though the same continued to be registered in the name of the importer. Evidently, all these has been done to get around the condition of no sale of the imported vehicle for a period of two years after import. However, the agreement dated 1.11.2003 entered into between Shri Saleem Mohammed and Shri Namit Malhotra together with the fact that Namit Malhotra as a co-applicant along with Shri Saleem Mohammed for applying a loan in the ICICI Bank establishes that the vehicle has been sold to Namit Malhotra as well as the fact that the vehicle has been delivered to Namit Malhotra thereby completing the sale. The appellant used the mortgage to camouflage the transaction of sale. Penalty u/s 112 (a) of Customs Act - Held that: - Shri Haren Choksey had actively aided and abetted the importer in the effort to dispose of the vehicle to Namit Malhotra within two years of its importation into India in violation of the provisions of EXIM Policy, had arranged for the sale/purchase of the said vehicle and has made himself liable for penal action and therefore ordering penalty under section 112(a) of the CA, 1962 - However, the penalty of ₹ 8 lakhs imposed by the adjudicating authority is on the higher side - penalty of ₹ 2,00,000/- would be more commensurate with the acts and omissions of the appellant Shri Haren Choksey. Appeal allowed - decided partly in favor of appellant. Issues Involved:1. Validity of the first docket order.2. Jurisdiction of the Registrar of CESTAT, New Delhi.3. Merits of the case concerning the penalty imposed on the appellant.Issue-wise Detailed Analysis:1. Validity of the First Docket Order:The Tribunal initially passed a docket order on 3.6.2009, reducing penalties for three appellants. This order was followed by a request for rehearing by the Member (Technical), which led to a series of communications and ultimately a decision that the first order was not supported by reasons and thus withdrawn. The High Court remanded the case to verify the validity of this first docket order. Upon review, the Tribunal found no evidence that the first docket order was ever signed or approved by any Member, concluding that it was not a speaking order and therefore withdrawn.2. Jurisdiction of the Registrar of CESTAT, New Delhi:The appellant raised a preliminary objection regarding the jurisdiction of the Registrar of CESTAT, New Delhi, to declare the docket order lapsed or withdrawn. The Tribunal clarified that the decision to rehear the case was not made by the Registrar but was communicated by the Hon’ble President of CESTAT, New Delhi. The Tribunal found no merit in the appellant's preliminary objections, emphasizing that the High Court had set aside the second order and the peculiar situation necessitated rehearing the case on merits.3. Merits of the Case Concerning the Penalty Imposed on the Appellant:The Tribunal examined the role of the appellant, Shri Haren Choksey, in the fraudulent import and subsequent sale of a vehicle. The appellant was found to have played a significant role beyond that of a mere broker, involving himself in various stages of the transaction, including arranging loans, encashing cheques, and registering the vehicle with false addresses. The Tribunal noted that the appellant's actions facilitated the sale of the vehicle within two years of its import, violating EXIM Policy provisions. Despite the appellant's argument that the transaction was a mortgage and not a sale, the Tribunal found sufficient evidence to conclude otherwise. The penalty of Rs. 8 lakhs imposed by the adjudicating authority was deemed excessive, and the Tribunal reduced it to Rs. 2 lakhs, considering it more commensurate with the appellant's actions.Conclusion:The Tribunal concluded that the first docket order was not supported by reasons and was withdrawn. The preliminary objections regarding jurisdiction were dismissed, and the case was reheard on merits. The Tribunal found that the appellant had actively facilitated the fraudulent sale of the vehicle, justifying a penalty under section 112(a) of the Customs Act, 1962, but reduced the penalty to Rs. 2 lakhs.