2023 (7) TMI 1174 - AT - Customs

Penalties set aside in Customs Act appeal due to insufficient evidence and lack of involvement in duty evasion

Tejinder Singh Makkar Versus C.C.E. & S.T. -Surat-II

The Tribunal set aside penalties imposed on the appellant under Section 112(b) of the Customs Act, 1962, and Rule 209A of the Central Excise Rules, 1944, ... Levy of penalty u/s 112 (b) of Customs Act, 1962 and Rule 209 A of Central Excise Rules, 1944 - penalty imposed on appellant being mediator acting as a broker in dealing with all trading of advance licence which was forged or obtained fraudulently. HELD THAT:- The appellant has acted as broker between the seller of advance licence which are either forged or obtained fraudulently. Under the identical set of facts there were many cases made out. In one of the case decided by this Tribunal’s majority decision, the appellant having the same alleged role, the penalty was set aside. In this case of the appellant himself T.S. MAKKAR VERSUS COMMISSIONER OF CENTRAL EXCISE, SURAT [2012 (10) TMI 981 - CESTAT AHMEDABAD], in the said decision there were difference of opinion between the Member (Judicial) and Member (Technical) thereafter on the basis of the third Member’s view, the matter was finally decided by the majority order - The third member held that Since, none of the acts referred to in Section 112(b) of Customs Act, 1962 are proved against the appellant, imposition of penalty under Section 112(b) also cannot sustain. From the above decision it can be seen that the present appellant involved in the above case was similarly placed broker for advance licence and by the majority decision, the penalties were set aside - since same facts and issue were involved, following the aforesaid decision in the present case also the penalties are not sustainable. Appeal allowed. Issues Involved:1. Validity of penalties imposed under Section 112(b) of the Customs Act, 1962, and Rule 209A of the Central Excise Rules, 1944.2. Awareness of the appellant regarding the fake, forged, or fictitious nature of the licenses.3. Adequacy of the investigation conducted by the Directorate of Revenue Intelligence (DRI) concerning other involved parties.4. Appellant's knowledge of misuse of licenses and involvement in aiding and abetting duty evasion.5. Appellant's liability for penalty under Rule 209A for dealing with goods.Summary:1. Validity of Penalties:The appeal challenges the order-in-original dated 31.01.2014, which imposed penalties on the appellant under Section 112(b) of the Customs Act, 1962, and Rule 209A of the Central Excise Rules, 1944, for acting as a broker in trading advance licenses that were forged or obtained fraudulently.2. Awareness of Fake Licenses:The Tribunal previously decided in a similar case (T.S. Makkar Vs. Commissioner of Central Excise, Surat - 2014) that there was no direct evidence proving the appellant's awareness of the fake, forged, or fictitious nature of the licenses. The third member concluded that 'the circumstances may raise grave suspicion, but I am unable to hold that the appellant was aware that the licences were fake, forged or fictitious.'3. Adequacy of DRI Investigation:The Tribunal found that the DRI did not make serious efforts to trace Shri R.K. Gupta, a key figure in the fraudulent activities. The third member noted, 'No evidence of further sincere investigations on all these evidences by DRI is forthcoming,' thus supporting the view that the investigation was inadequate.4. Knowledge of Misuse and Aiding Duty Evasion:The Tribunal found no evidence implicating the appellant in the misuse of licenses or aiding and abetting duty evasion. The third member stated, 'None of these oral statements implicated the appellant by any direct or indirect reference to the appellant's role in either misuse of the licenses or fictitious export/sales of yarn.'5. Liability for Penalty:The Tribunal held that the appellant did not deal with any goods and thus was not liable for penalties under Rule 209A. The third member emphasized, 'Even if the present appellant dealt with the licences, he has not dealt with any goods in any manner nor is there any such allegation.'Conclusion:The Tribunal, following the majority decision in the previous case, set aside the penalties imposed on the appellant, stating, 'Considering the above decisions, I am of the view that since same facts and issue were involved, following the aforesaid decision in the present case also the penalties are not sustainable.' The appeal was allowed, and the impugned order was modified accordingly.Pronouncement:The judgment was pronounced in the open court on 28.07.2023.