TaxTMI 
TaxTMI 
2010 (2) TMI 533
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....On the completion of the investigation, it was found by the authorities that M/s. Alpha Rich Granites (P) Ltd. (hereinafter as EOU) had imported many items by availing benefit of exemption of Customs Notification No. 52/2003-Cus., dated 31-3-2003 and Central Excise Notification No. 22/2003-C.E., dated 31-3-2003. The said 100% EOU had subsequently cleared all the said machineries, without payment of duty from the 100% EOU, without seeking any permission from the authorities. On completion of investigation, lower authorities issued a show cause notice to the said EOU directing them to show cause as to why duty be not been demanded on the capital goods and other goods cleared from the factory premises without payment of duty and also issued the show cause notice to the current appellant for imposition of penalty under Section 112(a) of the Customs Act, 1962. The current appellant contested the show cause notice before the Adjudicating Authority on various grounds and also contested that he had procured these goods from M/s. A.K. Trade Links and produced bills for such purchases. The Adjudicating Authority did not accept the contentions raised by the appellant. He confirmed the demand ....
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....ainted nature. It is his submission that the said findings are incorrect as it is on record that the appellant had procured the goods from M/s. A.K. Trade Links, who is a local seller. It is his submission that the confiscation of the said goods was ordered by the lower authorities without considering the fact that the appellant is a bona fide purchaser and has purchased the same after inspecting the said goods in a stock yard in Bangalore city. It is his submission that the learned Commissioner (Appeals) has erred in confirming the penalty imposed under Section 112(b) of the Act. He would submit that the show cause notice clearly indicates imposition of penalty under Section 112(a) of the Customs Act, 1962. It is his submission, as an alternative submission that even if duty has to be paid on the goods which were in the hands of the appellant, than the goods being old goods, the benefit of depreciation as per the law needs to be given. It is his submission that both the lower authorities have not given this benefit of depreciation from the value, for the purpose of demand of the duty. Finally, it is his submission that if the original imports are legal, the duty liability in respe....
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.....) has upheld by the Hon'ble High Court of Mumbai and Supreme Court clearly laid down the principle that duty has to be demanded only from the importer of the goods, and resorting the provisions of Section 125(2) of the Customs Act demanding duty from a person other than importer, would not be proper. 6. We have considered the submissions made at length by both sides and perused the records. 7.1 The issue involved in this case is regarding the liability to duty on goods, which were purchased by the appellant from M/s. A.K. Trade Links. On perusal of the record, we find that the appellant had undisputedly purchased the machinery from M/s. A.K. Trade Links, Bangalore. The invoices issued by M/s. A.K. Trade Links clearly indicate the CST No. and K.S.T. No. of the said seller. It is also on record that the appellant before purchasing these machineries had visited the stockyard where these goods are stored and inspected the same. On this factual matrix, we find that the issue now decided whether- (i) The duty liability on the goods has to be discharged by a person, who is in possession of the goods or the importer; (ii) Whether the mac....
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....cordance with law. For this limited purpose of re-quantification of the duty liability, we remand issue back to the Adjudicating Authority. As regards the confiscation of the goods under Section 125 of the Customs Act, 1962, we find that the show cause notice which is issued to the EOU directed them to show cause as to : "(i) Why the capital goods/machinery and consumables imported duty free valued at Rs. 2,24,27,186/- removed without payment of duty and without following any procedure should not be confiscated under the provisions of Section 111(o) of the Customs Act, 1962? (ii) Why the duty amounting to Rs. 89,88,730/ on the capital goods/machinery and consumables imported duty free should not be demanded under the provisions of Section 72 of the Customs Act, 1962 read with provision of Notification No. 52/2003-Cus., dated 31-3-2003? (iii) Why the capital goods/machinery procured duty free valued at Rs. 3,80,000/- removed without payment of duty and without following any procedure should not be confiscated under the provisions of rule 25 of the Central Excise Rules, 2002? (iv) Why the duty amountin....
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.... any penalty on any person shall be made under this Chapter unless the owner of the goods or such person - (a) is given a notice in [writing with the prior approval of the officer of Customs not below the rank of a Deputy Commissioner of Customs, informing] him of the grounds on which it is proposed to confiscate the goods or to impose a penalty; (b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c) is given a reasonable opportunity of being heard in the matter : Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the person concerned be oral.'' It can be seen from the above reproduced Section that no order of the confiscation can be made unless the owner or such person is given a notice, indicating the grounds on which there is proposal to confiscate the goods. From the entire reading of the show cause notice, we do not find any such notice has been issued to appellant in this....
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....oth under clauses (i) and (iii), to a penalty [not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest.]" It can be seen from the provision of Section 112(a) that penalty can be imposed on any person for improper import of the goods for a commission and omission, which would under the goods liable for confiscation under Section 111. Admittedly, the goods were not imported by the current appellant and were imported by the EOU. It is very clear that the provisions of Section 112(a) are not applicable in this case. Coming to the provision 112(b), we find that the appellant herein has demonstrated that he was not aware or had no reason to believe that the goods are liable for confiscation under Section 111. This flows from the fact that the appellant had purchased the said goods/machineries from a stockyard wh....