TaxTMI 
TaxTMI 
2025 (11) TMI 1738
X X X X Extracts X X X X
X X X X Extracts X X X X
....ensor Tamil Weekly Magazine, Chennai (hereinafter referred to as "the importer") is the main Noticee against whom the show cause notice was issued. The importer is stated to have accepted the allegations proposed therein and has not preferred any appeal before this Tribunal. The importer had purchased a consignment of LWC paper in rolls up to 70 GSM on a High Sea Sale basis from High Sea Sellers, which also included the Appellants. Consequently, the importer, being the High Sea Sales buyer, filed a Bill of Entry for clearance of the goods, declaring the same as Light Weight Coated (LWC) paper rolls up to 70 GSM. The importer claimed exemption from Basic Customs Duty under Customs Notification No. 12/2012 (Sl. No. 267) and from Additional Duty under Central Excise Notification No. 12/2012 (Sl. No. 168) on the strength of a certificate issued by the Office of the Registrar of Newspapers for India, Ministry of Information and Broadcasting, Government of India, New Delhi. The importer also claimed to be an actual user for printing the Tamil weekly magazine "CENSOR", as the exemption under the aforesaid notifications is available to LWC paper weighing up to 70 GSM if imported by an actu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the exemption by diverting the imported goods to their own premises, which allegedly resulted in substantial revenue loss to the exchequer. 5. The Appellants had filed their reply before the Adjudicating Authority stating as follows: - i. that for imposing personal penalty under Section 112(b) of the Customs Act, 1962, it is essential that the person concerned has acquired possession of, or is in any manner involved in carrying, removing, depositing, harboring, keeping, concealing, or selling any goods, with knowledge or reason to believe that such goods are liable to confiscation under the provisions of the Act. In the present case, the Appellants had taken temporary possession of the imported goods only in the capacity of a job worker, and had stored the same at their premises subsequent to clearance of the goods by the importer. There was no act of diversion as alleged, and hence, the Appellants cannot be held responsible for or connected with the alleged duty evasion by the importer. ii. That the provisions of Section 112(b) of the Customs Act, 1962 cannot be invoked against the Appellants in the present case, as the goods in question had already been sold ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Appellants in any manner had knowledge as to mis- declaration of goods or clandestine diversion. The Department had not discharged any proof to establish that the essential ingredients of Sec. 112(b) of the Customs Act, 1962 is invocable to impose penalty under the same and therefore the allegations proposed against the Appellants herein are prima facie made out against the Appellants. vii. That at the time of allowing somebody to store the goods at their godown, for the purpose of their satisfaction, verification of the legal import of the goods can be done on basis of available document, as it was done on verifying and accepting the of Bill of Entry filed with the department. However, it cannot be expected that a Job Worker should verify the goods with reference to correctness of the declaration and other details in relation to the imported goods and hence Appellants cannot be inflicted with penalty. viii. That the Appellants is in no way a gainer of the alleged misdemeanor of importer besides the fact that he had no knowledge what so ever on either on the mis- declaration at the time of import or clandestine diversion thereof by the importer. That there ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... notice had not alleged that the Appellants had knowledge or any reason to believe that the goods in dispute would be liable to confiscation for any reason. The Adjudicating Authority ought to have seen whether the notice had charged the Appellants with any of the elements of Section 112(b) for imposition of penalty. The adjudicating authority has proceeded on the basis that such element is present in the case on hand, when neither the Appellants themselves, nor the importer or any other person had implicated the Appellants in the commission of the offence by the importer in relation to the goods imported availing the benefit of exemption under Notifications mentioned supra. 9. The Ld. Counsel submitted that for imposition of penalty under Section 112 (b) of the Customs Act, 1962, there should be sufficient ground to establish that the Appellants had knowledge or had reasons to believe that the goods sold by them on high sea sales to the importer would be liable to confiscation. Further, when notice also is silent in establishing the fact that Appellants had knowledge of the intention the Importer was holding which is to evade duty, the impugned order confirming penalty under Se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d therein. It was further prayed that the appeals filed by the Appellants be dismissed as devoid of merit. 14. Heard both sides and carefully considered the submissions, appeal records and the cases cited therein. 15. As the present appeal has been preferred by the Appellants, who are the High Sea Sales Sellers, against whom penalty under Section 112(b) alone was proposed in the Show Cause Notice and confirmed in the impugned order referred to above, and since no appeal has been filed by the importer, as confirmed by the Appellants, the present proceedings are therefore confined to the issue pertaining to the Appellants alone. It is accordingly observed that the findings against the importer stand concluded, as the importer has accepted the charges framed against them and it appears, the importer has chosen not to come in appeal before this forum. 16. The Appellants had filed the present appeals challenging the imposition of penalty under Section 112(b) of the Customs Act, 1962. Section 112 is extracted below for ease of reference: - "Section 112. Penalty for improper importation of goods, etc. (a) who, in relation to any goods, does or omits to do any ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m undue benefit under the Customs and Central Excise Notification referred supra. Further, it is seen the High Sea Sale Sellers (Appellants), had also been engaged as Job Workers for which the imported goods had been sent to the premises of the Appellants from the Customs area and been sent back to importer on completion of the process of cutting. In support of the same, the Appellants had produced sample copies of delivery challan and other documents which were presented before the Adjudicating Authority also. However, the Adjudicating Authority had not arrived at any decision that the documents produced were faulty/deficient but had given only finding to the effect saying that it is an afterthought. It appears that the facts indicate that the appellants are involved in selling paper of varieties to purchases and not only to the owner of 'Censor' Magazine. Evidence has been produced by the appellants that the importer has moved the importer paper to the appellants for conversion and the charges were collected for the job work. 18. In view of the above facts, it is seen that the Appellants cannot be expected to know in advance as to Importer's fraudulent intention when effec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is evident that positive knowledge or mens rea is an active ingredient for imposition of penalty under Section 112(b). 3.6 Even while granting complete waiver of pre-deposit, the Tribunal has observed as follows :- "6.1 From the statement recorded under Section 108 of the Customs Act, it is clearly evident that the appellant did not know that the plastic granules supplied to him for job work purpose was imported under DEEC scheme by M/s. Sumira Plastics. After completing the job-work, the goods were returned back to M/s. Samira Plastics or as per their directions. Further, it is noted that the job-work activity of the appellant is covered under small scale exemption under the Central Excise laws since his turnover was less than the exemption limit and, therefore, he was not required to maintain the records or to get registered with the department. From the evidence available on record, we do not find any reason to come to a conclusion that the appellant herein knew about the import of the raw material under DEEC scheme and the supplier had violated the provisions of DEEC scheme. Accordingly, we are prima facie of the view that the appellant has made out a strong c....