Appellate Tribunal grants waiver of penalty amount, stays recovery in penalty imposition appeals

The Appellate Tribunal CESTAT, New Delhi, granted a waiver of the penalty amount pre-deposit and stayed recovery in multiple appeals concerning penalty imposition on appellants for abetting importers under invalid DEPB licenses. The Tribunal set aside the penalties imposed on the appellants, as no penalties were imposed on the importers and only duty was demanded. The appeals were allowed with any consequential relief permissible under the law, resolving the issues of penalty imposition and abetment in importing goods under invalid licenses.

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Issues: Stay applications for penalty amount waiver and recovery stayed, validity of penalty imposition on appellants for abetting importers under invalid DEPB licenses.

In this judgment by the Appellate Tribunal CESTAT, New Delhi, the Member (J) considered multiple appeals with common facts and laws, deciding to address them collectively along with the stay applications filed by the applicants/appellants. The Member found it appropriate to grant a waiver of the pre-deposit of the penalty amount involved in all the appeals and stayed the recovery. The learned counsel argued the appeals on merits, focusing on the issue of law involved. The case revolved around the appellants obtaining DEPB licenses from the Office of the DGFT, Ludhiana, exporting goods under those licenses, and transferring them to another entity, M/s. Vallabh Design Products, for import. Subsequently, the licenses were canceled due to forgery, leading to a show cause notice proposing penalty imposition and duty demand from the importers. The Commissioner confirmed the duty demand against the importers only, without imposing penalties on them.

The Commissioner's basis for penalizing the appellants was their alleged abetment of importers in importing goods under invalid DEPB licenses under Section 112(b) of the Act. However, since no penalties were imposed on the importers and only duty was demanded, the appellants argued against being penalized. They contended that at the time of import, the licenses were valid, and the subsequent cancellation did not justify penalizing them, citing a precedent from the Bombay High Court. The Tribunal, after deliberation, set aside the impugned orders against the appellants, allowing their appeals with any consequential relief permissible under the law. The judgment was dictated and pronounced in the open court, providing a resolution to the issues raised in the appeals regarding penalty imposition and abetment in importing goods under invalid licenses.

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