2021 (10) TMI 856 - AT - Customs

Tribunal upholds duty liability, annuls personal penalty for Director due to lack of evidence.

The Tribunal upheld duty liability but set aside confiscation and redemption fine. The personal penalty on the Director was annulled due to insufficient ... Manufacturing process taking place or not - aluminium alloy ingots - affixation of brand name - exemption under N/N. 93/2004-Cus dated 10th September 2004 - HELD THAT:- The scheme has been designed in furtherance of export promotion strategy and require compliance with ‘actual user condition’ with any sale or transfer of the imported goods or the goods manufactured therefrom permissible only after completion of the ‘export obligation’ prescribed in the licence issued by the Director General of Foreign Trade. It is on record that the said obligations have not been fulfilled with and the sole issue pending before the licensing authority is the clubbing of the licences. Hence, by the clearance of the goods, the condition in N/N. 93/2004-Cus dated 10th September 2004 has been complied with in its breach for which the duty liability is the logical corollary as found in the adjudication order. Entitlement to adjust the duty discharged on clearance of the goods against the duty liability arising from the impugned order - HELD THAT:- No doubt, the proposition sounds attractive and equitable but, nonetheless duty liability had been discharged under Central Excise Act, 1944 whereas the duty confirmed in the impugned order, including additional duties, are leviable under Customs Act, 1962 and Customs Tariff Act, 1975. In accordance with the provisions of Central Excise Act, 1944, any adjustment of duties paid thereunder is allowable only upon sanction of refund of the same It is not on record that such refund has been sanctioned. There is, therefore, no reason to heed this particular submission. Confiscation of goods - HELD THAT:- Though the goods are liable for confiscation under section 111(o) of Customs Act, 1962 for breach of post-importation condition, confiscation itself is not tenable in law. The finding in the impugned order that the decision in WESTON COMPONENTS LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [2000 (1) TMI 45 - SC ORDER] would apply owing to the execution of bond does not find favour as the security therein was an earnest of the assurance of the goods being made available for confiscation during the adjudication proceedings; the bond security offered in the present instance is in relation to the conditions of import generally - even in the face of records of clearance on payment of duties of central excise, the suppression insofar as Customs Act, 1962 is concerned cannot be detracted from. Consequently, the penal liability under section 114A of Customs Act, 1962 is sustained. Penalty on the Director of the company, Mr Hitesh Shah - HELD THAT:- The finding in the impugned order is deficient in ascertaining the exact role of the appellant-Director in the diversion, other than by his position in the company, is concerned - the decision in JAYAKRISHNA ALUMINIUM LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [2005 (4) TMI 379 - CESTAT, CHENNAI] would require an adjudicating authority to render a clear finding of the specific role of the individuals against whom penalty is imposed and the lack thereof in the impugned order renders the imposition of penalty on the Director to be inconsistent with law - the personal penalty on Mr Hitesh Shah is set aside. Appeal disposed off. Issues Involved:1. Classification and manufacturing process of the goods.2. Compliance with the conditions of the advance authorization scheme.3. Adjustment of central excise duty against customs duty liability.4. Imposition of redemption fine and penalties.Issue-wise Detailed Analysis:1. Classification and Manufacturing Process of the Goods:The appellant claimed that the impugned goods, 'aluminium alloy ingots,' were manufactured from 'aluminium ingots' and bore the brand 'PANKAJ.' The Revenue contended that the goods were cleared without undergoing any manufacturing process. The test certificates indicated that the aluminium content did not differ from the time of import, challenging the appellant's claim of manufacturing. The Tribunal concluded that the appellant's assertion of manufacturing was not credible due to the consistent aluminium content and lack of material evidence supporting the affixing of the brand.2. Compliance with the Conditions of the Advance Authorization Scheme:The dispute arose from the import of 'aluminium ingots' under the advance authorization scheme, which allowed duty exemption subject to certain conditions aimed at promoting exports. The appellant argued that the clearances were recorded, and duties were paid, thus not violating the scheme. However, the Tribunal found that the scheme required compliance with the 'actual user condition,' and the sale of goods before fulfilling the export obligation constituted a breach of the notification conditions. Consequently, the duty liability was upheld.3. Adjustment of Central Excise Duty Against Customs Duty Liability:The appellant sought to adjust the central excise duty paid against the customs duty liability. The Tribunal noted that while the proposition seemed equitable, the duties were discharged under different Acts (Central Excise Act, 1944, and Customs Act, 1962). Adjustment could only be allowed upon sanction of a refund, which was not on record. Therefore, the Tribunal did not accept this submission.4. Imposition of Redemption Fine and Penalties:The Tribunal addressed the imposition of a redemption fine and penalties. It was noted that the goods were not available for confiscation, making the imposition of a redemption fine untenable, as established by the Bombay High Court's decision in Finesse Creation Inc. Consequently, the confiscation was set aside. However, the duty liability under section 114A of the Customs Act, 1962, was sustained due to suppression of facts.Penalty on the Director:The penalty on the Director, Mr. Hitesh Shah, was examined. The Tribunal found that the impugned order lacked specific findings on the Director's role in the diversion of goods, beyond his position in the company. Referring to the decision in Jayakrishna Aluminium Ltd, the Tribunal set aside the personal penalty on Mr. Hitesh Shah due to insufficient evidence of his direct involvement.Conclusion:The appeals were disposed of with the duty liability upheld, the confiscation and redemption fine set aside, and the personal penalty on the Director annulled. The order was pronounced in the open court on 13/10/2021.