TaxTMI 
TaxTMI 
2026 (2) TMI 1032
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....nvolved in both the appeals being the same, they are being heard together and are being disposed of by this common order. 3. Briefly stated, the facts of the present appeal are that the Respondents imported "mulberry raw silk" for use in the manufacture and export of 100% Natural Silk Fabrics, made-ups, sarees, and garments under the Advance Licence Scheme, by availing the benefit of Notification No. 93/2004Cus dated 10.09.2004. The imports were effected under advance licences through High Sea Sellers (HSS). The total customs duty foregone in respect of the said imports amounted to Rs.2,08,38,473/- and Rs.2,29,44,706/- respectively. 4. Based on specific intelligence alleging that the importer had diverted duty- free mulberry raw silk yarn imported under the Advance Authorisation/Licence Scheme into the local market, and had also made false declarations regarding its factory and supporting manufacturers, who allegedly did not possess any manufacturing facilities to process the impugned goods, the Directorate of Revenue Intelligence (DRI) initiated an investigation and intercepted the consignments imported by the Respondent. In continuation of the investigation, searches were c....
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....r. Sanjay Kakkar has averred that the facts of the case make it clear that it is a case of fraud, collusion and willful suppression in obtaining the license, as well as one of diversion of goods. He pointed out that LAA has recorded that the perpetrators worked like a syndicate and multiple cases involving duty evasion of crores of Rupees has been occasioned by a closely-coordinated nefarious effort by the various persons involved including the importer and LAA came to the following conclusions in his findings in the Order - i. Factory premises was mis-declared; ii. False Chartered Accountant Certificate was produced; iii. Generation of fake KYC documents; iv. Imported goods were diverted to domestic market; v. Lack of explanation as to how High Sea Sale Agreements were prepared and as to how the title of goods shifted from HSS Sellers to importers; vi. No goods were exported, as required for the compliance of conditions of notification claimed; vii. Illicit routing of funds; viii. Grave lapses of the Customs Brokers; ix. Preparation of fake/fabricated records by transporters; x. Lack of coope....
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....962 in a case involving willful suppression of facts. and misdeclaration of material particulars with deliberate misuse of the Advance Authorization with intent to evade payment of appropriate Customs duty. It is contended that once the demand of duty, determined by reason of suppression of facts, stands confirmed under Section 28 of the Customs Act, 1962, the imposition of penalty necessarily follows. 14. We find that the Adjudicating Authority had not imposed the penalty under Section 114A of the Customs Act, 1962, holding that the penalty imposed under Section 112(a) would meet the ends of justice. 15. The Department (Appellant) has vehemently contended that the Respondents had wilfully suppressed material facts by mis-declaring the supporting manufacturer as well as the branch address and had deliberately misused the Advance Authorisation with the intent to evade payment of the applicable Customs duty. On this basis, the appellant argues that the ingredients for invocation of Section 114A of the Customs Act, 1962 stood fully satisfied and, therefore, penalty under the said provision was rightly attracted and imposable on the importers. 16. Further, the issue of whether....
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....or of M/s. Goyal Impex. (iv) I impose a penalty of Rs.26,00,000/- (Rupees twenty lakhs only) imposed on each on a) Shri Kalpesh Patel, Proprietor of M/s. Kalp Impex and b) Shri Ramanandh Surekha, Proprietor of M/s. Goyal Enterprise under section 112(a) of the Customs Act, 1962. As in my view, under the facts and circumstances of the case, the penalty imposed under sec. 112(a) would meet the ends of justice, I refrain from imposing any penalty under sec. 114A of the Customs Act, 1962 on the aforesaid persons. (emphasis added) 6. Section 114A of the CA 1962 is extracted below for ease of reference. Penalty for short-levy or non-levy of duty in certain cases. 114A. Where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (8) of section 28 shall also be liable to pay a penalty equal to the duty or interest so determined: Provided that where such d....
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....d deals with non-levy or short levy of customs duty arising on account of the reason of collusion or any willful mis-statement or suppression of facts. From the language of the said Section, it is seen that the penalty leviable under the said provision is a statutory penalty. The phrase used is "shall also be liable to pay a penalty equal to the duty or interest so determined". The moment it is found that a person who by reason of collusion or any wilful misstatement or suppression of facts is liable to pay the duty or interest as determined under sub-section (8) of section 28, he shall also be liable to pay a penalty. The penalty is automatic, and deterrence is the main theme of object behind the imposition of the said penalty so that the parties committing a blame worthy act are deterred from securing a dishonest advantage or perpetuating an unjust gain. Further, there is no discretion with the assessing officer either to levy or not to levy and/or to levy any penalty lesser than what is prescribed/mentioned in Section 28(8). 6.2 The Hon'ble Supreme Court in the case of UOI Vs Dharmendra Textile Processors [2008 (231) ELT-3], after referring to the decision of the Apex C....