Duty-free shop licensee liable for duty under Section 72 when procedures violated, passengers not responsible for payment

CESTAT Bangalore held that duty-free shop licensee is liable to pay duty under Section 72 when provisions and procedures are violated, rejecting appellant's argument that passengers should pay duty instead. The Tribunal upheld duty demand with interest, citing precedent from Alpha Future Airport Retail case confirmed by SC. However, penalty was set aside as there was no intention to evade duty and customs officers had verified and countersigned sale vouchers, indicating their awareness. Appeal allowed partially with duty and interest upheld but penalty removed.

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Issues involved: Violation of provisions of Section 72 of the Customs Act, 1962 and Trade Facility No.50/2005 regarding a promotional offer for sale of liquor at a duty-free shop.

Summary:
1. The appellant, a Private Bonded Warehouse operator, violated Trade Facility No.50/2005 by launching a promotional offer without informing Customs Authorities, leading to a demand for customs duty. The appellant accepted the lapse and paid the demanded amount. The Original Authority confirmed the demand, interest, and imposed a penalty. The Commissioner (Appeals) upheld this decision, prompting the appellant's appeal against the order.

2. The appellant argued that duty should have been demanded from passengers under Section 28, not from them under Section 72. They cited relevant sections of the Customs Act and previous case laws to support their claim. The appellant emphasized that there was no intention to evade customs duty, hence no penalty should be imposed.

3. The Authorized Representative supported the Commissioner (Appeals) findings, citing a Tribunal case where a licensee was held liable for customs duty due to violations of bond conditions.

4. After examining relevant sections of the Customs Act and Trade Facility No.50/2005, it was found that the appellant failed to comply with statutory requirements regarding the promotional offer. The appellant's obligation to account for bonded goods to customs satisfaction was not met. The duty was upheld to be paid by the appellant, not the passengers. However, the penalty was set aside due to lack of intention to evade duty and the involvement of customs officers in verifying sales vouchers.

5. The duty demanded along with interest was upheld, while the penalty was set aside.

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