2009 (2) TMI 181 - AT - Customs

Penalty set aside under Customs Act for alleged abetment - Lack of evidence led to appeal success

The Tribunal set aside the penalty imposed on the appellant under Section 112 of the Customs Act for alleged abetment in the illicit diversion of goods. ... Diversion of goods - it was found that one Shri Ram Gupta in connivance with the importer was the person responsible for diversion of the goods on way to ICD Garhi Harsaru and accordingly, a SCN dt. 12-8-05 was issued to the importer, Shri Ram Gupta, the shipping line M/s. PIL Mumbai Pvt. Ltd. and also the present Appellant for demand of duty on the goods illicitly diverted and also imposition of penalty on them – held that - Because of the evidence against Shri Ram Gupta, the duty has been demanded from him instead of from the custodian - Addl. Commissioner while imposing penalty of Rs. 2 lakhs on the Appellant mentioned that the penalty is being imposed u/s 112 for the Appellant’s abetment in the doings and omission of the act which have rendered the imported goods liable for confiscation, the order does not discuss as to in what manner the Appellant have abetted the illicit diversion of the goods. Even the SCN does not discuss any evidence or contain even the allegation that the Appellant had connived with Ram Gupta or any other person by illicit diversion – penalty set aside Issues:- Penalty imposed under Section 112 of the Customs Act on the appellant for abetment in the illicit diversion of goods.Analysis:The case involved the imposition of a penalty under Section 112 of the Customs Act on the appellant, who was the custodian of goods at ICD Garhi Harsaru, Gurgaon. The goods imported by M/s. S.P. Enterprises were found to be illicitly diverted from EVA Resin to Calcium Carbonate. The appellant was penalized for their alleged abetment in the diversion of goods. The appellant argued that they were not involved in the diversion and immediately informed the Customs Authorities when the containers arrived empty. The appellant contended that the show cause notice did not implicate them in the illicit diversion, and no evidence was presented to prove their involvement. The Department defended the penalty, citing regulations on transit bonds and a previous Tribunal judgment. However, the Tribunal found that the show cause notice did not allege the appellant's abetment in the diversion of goods. The Tribunal concluded that the penalty imposed on the appellant was not sustainable as there was no evidence or allegation of their involvement in the illicit diversion. Therefore, the penalty under Section 112 of the Customs Act was set aside, and the appeal was allowed.