2018 (2) TMI 957 - AT - Customs

Tribunal Reduces Penalty for Involvement in Duty-Free Silk Yarn Diversion

The Tribunal reduced the penalty imposed on Shri Radheshyam Rander from Rs. 10,00,000 to Rs. 1,00,000 for his involvement in the illegal diversion of ... Penalty on Shri Radheshyam Rander u/s 112 (a) and 112 (b) of the Customs Act, 1962 - 100% EOU - violation of import condition - detailed investigations carried out revealed that M/s. STC had diverted the raw silk imported duty free illegally into the domestic market in gross violation of the provisions of the EOU scheme - Held that: - the detailed and timely investigation carried out by DRI has unearthed the illegal activities of M/s. STC. It was found that M/s. STC has diverted the duty-free imported silk goods in total violation of the EOU Regulations - investigations further clearly established the role played by Shri Radheshyam Rander in abetting such diversion by procuring the goods from M/s. STC and disposed of the same for a commission of 3.5%. Considering the role played by Shri Radheshyam Rander, he is liable for penalty under Section 112 (a) and 112 (b) of the Customs Act, 1962 - quantum of penalty reduced. Appeal allowed in part. Issues:Illegal diversion of duty-free imported silk goods in violation of EOU Regulations, Role of Shri Radheshyam Rander in abetting the diversion, Penalty imposed on Shri Radheshyam Rander.Analysis:The appeal was filed against an Order-in-Original pertaining to the illegal diversion of duty-free raw silk yarn by M/s. Sansri Trading Corporation (STC), a 100% Export Oriented Unit (EOU), into the domestic market in violation of EOU scheme provisions. The investigations revealed that Shri Radheshyam Rander played a significant role in this diversion by procuring and selling the goods for a commission. The appellant claimed innocence, stating he was a bona fide purchaser without knowledge of the contravention. The Special Counsel defended the penalty imposed on Shri Radheshyam Rander, citing his involvement in the illegal diversion. The Tribunal acknowledged the illegal activities of M/s. STC and the role of Shri Radheshyam Rander in abetting the diversion, resulting in liability for penalty under Sections 112 (a) and 112 (b) of the Customs Act, 1962.The Tribunal recognized Shri Radheshyam Rander as a peripheral player in the misuse of the EOU scheme and decided to reduce the penalty imposed on him from Rs. 10,00,000 to Rs. 1,00,000. This reduction was deemed appropriate considering his role in the larger scheme of diversion. The judgment highlighted the importance of upholding customs regulations and penalizing individuals involved in illegal activities while also taking into account the level of involvement of each party. The decision was made after careful consideration of the evidence and submissions from both sides, ultimately resulting in the disposal of the appeal.In conclusion, the Tribunal's decision to reduce the penalty on Shri Radheshyam Rander showcases a balance between penalizing wrongdoing and considering the extent of individual involvement in the violation of customs regulations. The judgment serves as a reminder of the consequences individuals face for participating in illegal activities, even if their role is deemed peripheral in comparison to the main perpetrators.