2004 (8) TMI 243 - AT - Customs

Tribunal Overturns Rs. 15,000 Penalty Due to Lack of Evidence Under Customs Act Section 112(b); Grants Relief.

The Tribunal allowed the appeal, concluding that the penalty of Rs. 15,000 imposed on the appellant under Section 112(b) of the Customs Act was ... Penalty - forged duty payment endorsements - Confiscation (Customs) - whether the penalty imposed on the appellant under Section 112(b) of the Customs Act is sustainable on facts and in law - HELD THAT:- Admittedly, no duty was paid on the goods. At the time of clearance, it was not known to the proper officer that the duty payment endorsements in the Bills of Entry were forged. Later on, in the course of investigation, it turned out that those endorsements were forged and that there was no actual payment of duty. This forgery, which is not in dispute, rendered the clearance of the goods illegal inasmuch as law did not permit the goods to be cleared for home consumption without payment of duty, there being no exemption from payment of such duty. The permission for clearance, granted by the proper officer, was subject to payment of duty. As there was no payment of duty, there was no valid permission either. In the result, the clearance of the goods was unauthorised and illegal and this very fact rendered the goods liable for confiscation under Clause (j) of Section 111 of the Customs Act. The confiscation ordered by the Commissioner is not to be faulted. However, whether the above penalty was liable to be imposed on the appellant would depend on whether his conduct satisfied the requirement of Clause (b) of Section 112 of the Act. According to the doctrine of 'ejusdem generis', the meaning of the expression 'in any other manner of dealing with' should be understood in a sense similar or comparable to how the preceding words viz. carrying, removing, depositing etc. are understood. In other words, 'any other manner of dealing' with the goods is also some physical manner of dealing with the goods. In the impugned order, there is no finding that the appellant physically dealt with the goods in question, nor was any allegation to this effect raised against him in the relevant show cause notice. Therefore, the provisions of Section 112(b) were not applicable to the case. It would follow that the penalty imposed on the appellant is not sustainable on facts or in law. In the result, we set aside the penalty and allow the appeal with consequential relief. Issues involved: Penalty imposed under Section 112(b) of the Customs Act, Allegations of forged duty payment endorsements, Confiscation of goods under Section 111(j) of the Customs Act, Applicability of penalty on the appellant.Summary:The appeal challenged a penalty of Rs. 15,000 imposed on the appellants under Section 112(b) of the Customs Act. The penalty was related to the clearance of imported goods by a Custom House Agent, involving allegations of forged duty payment endorsements. The Commissioner of Customs imposed the penalty on the appellant, brother of the CHA, under Section 112(b), along with confiscation of goods and penalties on the importer and the CHA.In the appeal, it was contended that the penalty on the appellant was unjust as there was no evidence of his involvement in the alleged activities. The appellant argued that the goods were not liable for confiscation under Section 111(j) as permission for clearance was granted by the proper officer of Customs. The appellant's counsel emphasized that the goods did not attract Section 111(j) and, therefore, Section 112(b) was not applicable.The Departmental Representative argued that since no duty was paid on the goods, they were liable for confiscation under Section 111(j). The DR supported the penalty imposed on the appellant by the adjudicating authority.The Tribunal found that the penalty imposed under Section 112(b) was unsustainable due to a lack of evidence connecting the appellant to the goods liable for confiscation. The Tribunal highlighted the requirement under Section 112(b) that the person must be involved in dealing with goods known to be liable for confiscation. It was concluded that the penalty on the appellant was not justified, and the appeal was allowed with consequential relief.