2019 (9) TMI 126 - AT - Customs

CESTAT ALLAHABAD: Penalties overturned for lack of evidence in Customs Act case

HEMANT GOGIA Versus COMMR. OF C. EX. & S.T., ALLAHABAD

The Appellate Tribunal CESTAT ALLAHABAD set aside the penalties imposed on Shri Hemant Gogia and Shri Vimal Kalra under Sections 112 and 114 of the ... Imposition of penalty u/s 112 and 114 of CA - import of second-hand photocopiers - Violation of import condition - non-fulfillment of export obligation - no authorization for DTA clearances - penalty on Shri Hemant Gogia - HELD THAT:- He was made Director of M/s. PTLPL on 30-7-2003 and resigned on 30-8-2003 i.e. within a period of one month. However, the imports were made by M/s. PTLPL in the year 2004-2005. Appellant was not even the Director of the said importer company. Even while discussing his role, the Commissioner has not attributed any role to him or show that he was an abettor to the violations committed by M/s. PTLPL - the imposition of any penalty upon him is neither justified nor warranted - penalty set aside. Penalty imposed on Shri Vimal Kalra - HELD THAT:- In spite of the fact that he was one of the Director of the importing firm, Revenue has not shown his active involvement in the import of the goods. The appellant has submitted that he was running a photocopier shop in Kanpur and he was lured to become the Director of the firm. He was not associated with the day to day work of the firm and is not connected with the import of the photocopiers and subsequent fraud by M/s. PTLPL. M/s. PTLPL had already been imposed penalty equivalent to the duty confirmed - except the fact that the appellant was director of the importing firm, there is neither any allegation nor any evidence to the effect that he was the one who was managing all the affairs of the company. As such being a sleeping director by itself, when the importing firm has already been penalized, it would not invite any penal action against them - penalty set aside. Appeal allowed - decided in favor of appellant. Issues:Penalty imposed under Section 112 of the Customs Act, 1962 on Shri Hemant Gogia and Shri Vimal Kalra for import-related violations.Analysis:The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved the disposal of two appeals arising from a common impugned order passed by the Commissioner, imposing penalties on Shri Hemant Gogia and Shri Vimal Kalra under Sections 112 and 114 of the Customs Act, 1962. The dispute centered around the import of second-hand photocopiers by M/s. Paramount Trade Links (P) Ltd. (M/s. PTLPL), with allegations that the goods were diverted in the local market instead of fulfilling export obligations, leading to penalties on the individuals. However, the appeal related to M/s. PTLPL was not before the Tribunal, focusing solely on the penalties imposed on the appellants.In the case of Shri Hemant Gogia, it was noted that he was a Director of M/s. PTLPL for a brief period in 2003, resigning before the imports in question were made in 2004-2005. The Tribunal observed that the Commissioner did not attribute any role to Gogia or establish his involvement in the violations committed by M/s. PTLPL. Consequently, the Tribunal found the penalty imposed on Gogia unjustified and unwarranted, setting it aside.Regarding the penalty on Shri Vimal Kalra, despite being a Director of the importing firm, the Tribunal found no evidence of his active involvement in the import activities or the subsequent fraudulent actions of M/s. PTLPL. Kalra claimed he was lured into becoming a Director and was not engaged in the firm's daily operations. The Tribunal emphasized that being a 'sleeping director' without managerial responsibilities, especially when the importing firm had already been penalized, did not justify imposing penalties on Kalra. Therefore, the Tribunal overturned the penalty imposed on Kalra.In conclusion, the Appellate Tribunal CESTAT ALLAHABAD set aside the penalties imposed on both appellants, Shri Hemant Gogia and Shri Vimal Kalra, as there was insufficient evidence to establish their active involvement in the import violations. The appeals were allowed with consequential relief, emphasizing the lack of justifiable reasons to penalize the individuals based solely on their directorial roles without proven culpability in the import-related offenses.