2019 (10) TMI 457 - AT - Customs

Appeals partly allowed, penalties reduced, confiscation upheld. Procedural error corrected. Order pronounced 10.10.2019.

M/s. Peacock Industries Ltd. and Shri Daud A. Dawood Versus Commr. of Customs (EP), Mumbai

M/s. Peacock Industries Ltd. and Shri Daud A. Dawood Versus Commr. of Customs (EP), Mumbai - [2019] 10 G S.T.R. - OL 616 (CESTAT–Mum) Issues Involved:1. Liability for duty and interest.2. Confiscation of goods under Section 111(o) of the Customs Act, 1962.3. Imposition of penalties under Section 112(a) of the Customs Act, 1962.4. Validity of statements recorded under Section 108 of the Customs Act, 1962.5. Enhancement of penalties during remand proceedings.Detailed Analysis:1. Liability for Duty and Interest:The Commissioner held that M/s PIL were the importers, confirming a duty of Rs. 47,62,720 along with applicable interest. The goods were imported and sold on high seas to M/s Taneja Exports, who cleared the goods duty-free using a fraudulently manipulated license and DEEC book. The Commissioner found that M/s PIL, despite claiming a high seas sale, were intricately involved in the clearance and subsequent reclamation of the goods, thereby making them liable for the duty.2. Confiscation of Goods Under Section 111(o) of the Customs Act, 1962:The Commissioner confiscated the goods valued at Rs. 36,80,016 under Section 111(o) and imposed a redemption fine of Rs. 15 lakhs under Section 125. The goods were cleared duty-free under a fraudulent license, and M/s PIL reclaimed part of the goods post-clearance, violating the actual use condition of the notification 204/92-Cus. This led to the conclusion that the goods were liable for confiscation.3. Imposition of Penalties Under Section 112(a) of the Customs Act, 1962:Penalties of Rs. 50 lakhs on M/s PIL and Rs. 25 lakhs on Shri Daud A Dawood were imposed. The Commissioner justified the penalties based on the involvement of M/s PIL and Shri Dawood in the fraudulent clearance and reclamation of the goods. The Tribunal, however, noted that in the initial proceedings, penalties were Rs. 20 lakhs and Rs. 10 lakhs respectively, and enhanced penalties in remand proceedings were not permissible as per precedents set in Goenka Impex Pvt Ltd and Maestro Motors Ltd. Thus, the penalties were reduced to the original amounts.4. Validity of Statements Recorded Under Section 108 of the Customs Act, 1962:The appellants argued that statements from individuals who were not cross-examined should not be relied upon. The Commissioner, however, found that the statements recorded under Section 108 of the Customs Act had evidentiary value and were not retracted. The Tribunal upheld this view, citing the Supreme Court's rulings in cases like Surjeet Singh Chabbra and K I Pavunny, which affirmed the admissibility of such statements as substantive evidence.5. Enhancement of Penalties During Remand Proceedings:The Tribunal found that the Commissioner erred in enhancing the penalties during remand proceedings, as it placed the appellants in a more precarious position than in the original adjudication. This was contrary to the principles laid down in the cases of Goenka Impex Pvt Ltd and Maestro Motors Ltd. Consequently, the penalties were reduced to Rs. 20 lakhs for M/s PIL and Rs. 10 lakhs for Shri Daud A Dawood, aligning with the penalties imposed in the initial proceedings.Conclusion:The appeals were partly allowed, with penalties reduced to the amounts imposed in the initial proceedings. The Tribunal emphasized the holistic examination of evidence and upheld the confiscation and duty liability while correcting the procedural error regarding penalty enhancement. The order was pronounced in open court on 10.10.2019.