Customs - Maximum penalty u/s 117 of Customs Act, 1962 is only Rs one lakh - DRI deliberately chose not to invoke Section 114: CESTAT
By TIOL News Service
CHENNAI, JUNE 03, 2015: BASED on a specific intelligence export container was detained and found 197.1 Kgs. of 'Ketamine Hydrochloride' valued at Rs. 70,00,000/-, was concealed in the guise of 'Onions'. They were stuffed in plastic packets resembling onion in size. DRI issued show cause notice to main exporter and to other co-noticees including to the appellants for confiscation and imposition of penalty under Section 117 of Central Excise Act for the acts of omission and commission.
The Commissioner of Customs (Export), Chennai in his order dated 18.11.2009 absolutely confiscated the goods and imposed penalty on the exporter of Rs. 10,00,000/-, Rs.10,00,000/- on the CHA firm M/s. Manohar Enterprises, Rs.5,00,000/- on Shri Muthuramalingam, partner of CHA and Rs.1,00,000/- on Shri Sivakumar, clerk of M/s. Manohar Enterprises.
The representatives of the appellants submitted inter alia that the DRI after seizure and completing investigation issued show cause notice to the appellant under Section 117 of the Customs Act. Under this section the maximum penalty is Rs.1,00,000/- whereas the adjudicating authority has imposed Rs.10,00,000/- and Rs.5,00,000/-.
After hearing both sides, the Tribunal held:
In the show cause notice Section 117 of the Customs Act has been invoked for imposition of penalty on the CHA firm and the partner and the adjudicating authority in the impugned order also imposed penalty under Section 117 of the Customs Act. Whereas, Section 114 was invoked for imposition of penalty on the proprietor of the firm Shri R.Viswanathan. Since the department invoked only Section 117 of the Customs Act for imposition of penalty on CHA and on the partner of the CHA firm, and this section relates to imposition of penalty not expressively provided elsewhere and the maximum penalty is not exceeding Rs.1,00,000/-.
Therefore, by virtue of limitation provided under Section 117 adjudicating authority has no power to impose more than the limit specified under the section 117 of the Act, Therefore, imposition of penalty of Rs. 10,00,000/- and Rs.5,00,000/- on the appellants exceeding Rs.1,00,000/- is beyond the powers vested under Section 117 of the Customs Act.
If any person is colluded, abetted, or any contravention in connection with smuggling of goods in the case of smuggling out detract goods liable for confiscation under Section 113 of the Customs Act and penalty under Section 114 of the Customs Act. I find that on these two appellants, the investigating agency deliberately invoked penal provisions under Section 117 of the Customs Act and not invoked Section 114, and the same was upheld by the adjudicating authority. The reason for not invoking Section 114 or any other section is best known to the investigating agency who issued the show cause notice and to the adjudicating authority. I have no hesitation to hold that the lower authorities having chosen to invoke only Section 117 penalty on the appellant and the adjudicating authority can impose maximum penalty of Rs.1,00,000/-
I hold that the appellants are liable for penalty under Section 117 of the Customs Act, maximum of Rs.1,00,000/- on each appellant. The penalty imposed by the adjudicating authority in excess of Rs.1,00,000/- is liable to be set aside on both the appellants. Accordingly, I hold that the penalty imposed is restricted to Rs.1,00,000/- each. The impugned order is modified to that extent of reduction in penalty. Both the appeals are allowed partially.
(See 2015-TIOL-1014-CESTAT-MAD)
