Cigarettes concealed in HDPE granules confiscated, penalties under sections 111f 112 114AA upheld for smuggling

CESTAT New Delhi upheld confiscation of cigarettes concealed in HDPE granules containers and penalties under sections 111(f), (l), (m), 112, and 114AA. The cigarettes were undeclared in Bill of Entry and Import General Manifest, constituting smuggling of prohibited goods. HDPE granules used for concealment were confiscated under section 119 with redemption option. Penalties of Rs. 15 lakh each on three importers and Rs. 5 lakh each on CHA and employee were deemed proportionate to offense gravity. All appeals dismissed as appellants knowingly made false declarations and facilitated smuggling through benami transactions.

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Issues Involved:
1. Confiscation of smuggled cigarettes and HDPE granules.
2. Imposition of penalties u/s 112 and 114AA of the Customs Act, 1962.
3. Legitimacy of the Show Cause Notice (SCN) issued by the Directorate General of Revenue Intelligence (DRI).
4. Disposition of seized goods.
5. Role of the Custom House Agent (CHA) and its employee in the smuggling activity.

Summary:

1. Confiscation of Smuggled Cigarettes and HDPE Granules:
The Principal Commissioner confiscated 53.8 lakh cigarettes smuggled in four containers concealed in HDPE granules. The HDPE granules used for concealment were also confiscated but allowed to be redeemed on payment of a fine of Rs. 10,00,000/-.

2. Imposition of Penalties u/s 112 and 114AA of the Customs Act, 1962:
Penalties were imposed on the appellants as follows:
- Ajay: Rs. 15,00,000/- u/s 112 (a) & (b) and Rs. 20,00,000/- u/s 114AA.
- Parshottam: Rs. 15,00,000/- u/s 112 (a) & (b) and Rs. 20,00,000/- u/s 114AA.
- Gagan: Rs. 15,00,000/- u/s 112 (a) & (b) and Rs. 20,00,000/- u/s 114AA.
- M/s. Guha Sarkar: Rs. 5,00,000/- u/s 112 (a) & (b) and Rs. 5,00,000/- u/s 114AA.
- Sunil: Rs. 5,00,000/- u/s 112 (a) & (b) and Rs. 5,00,000/- u/s 114AA.

3. Legitimacy of the SCN Issued by the DRI:
The appellants argued that the SCN was not issued by the 'proper officer' as per the Supreme Court judgment in Canon India Pvt. Ltd. vs. Commissioner of Customs. However, it was held that the SCN in this case was issued u/s 124 for confiscation and imposition of penalties, not u/s 28 for demanding duty, making the Canon India judgment inapplicable.

4. Disposition of Seized Goods:
The appellants contended that the seized goods were disposed of illegally. The Commissioner recorded that the goods were available and provided the option to redeem the HDPE granules on payment of fine. The High Court of Delhi dismissed the appellant's Writ Petition on this issue as withdrawn, rendering the matter final.

5. Role of the CHA and Its Employee:
M/s. Guha Sarkar & Co. and its employee Sunil Dixit were found complicit in filing a benami Bill of Entry for Ajay, Parshottam, and Gagan, thus facilitating the smuggling of cigarettes. Penalties imposed on them were upheld as proportionate to their involvement.

Conclusion:
The Tribunal upheld the impugned order, confirming the confiscation of goods and the penalties imposed on the appellants. All five appeals were dismissed.

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