By TIOL News Service

MUMBAI, JUNE 04, 2016: ASCN dt. 28.8.1991 was issued to M/s. Orient Arts and Crafts, wherein the appellant, among others, was also one of the noticees. The charge in the SCN was that M/s. Orient Art and Crafts in collusion with the present appellant imported duty free goods under Import Passbook Scheme and diverted the same to local market thus defrauding the Government of its legitimate revenue of Customs duty to the tune of Rs.39,99,930/- and conspired by preparing bogus transport documents to show dispatch to factory at Bhadohi, but in fact goods were sold in the local market by the appellant Shri Pravinchandra B. Shah, in contravention of the provisions of Import Export Policy 1988-91 and also in violation of provisions of Customs Act, 1962.

The SCN was adjudicated on 4.8.1992; inter alia goods were confiscated, duty demand was confirmed and penalty of Rs.4 lakhs was imposed on the appellant.

After two rounds of appeal in the Tribunal in the years 1993 and 2005, the matter is again before the CESTAT.

It is submitted that pursuant to the Commissioner (A) order quashing the SCN dated 28.08.1991, a fresh SCN dated 04.04.1994 was issued to the main noticee but not to the appellant and, therefore, on the said ground the appeal should be allowed. Alternatively, it is also submitted that even in respect of the fresh SCN the Tribunal had dropped the duty, penalty and confiscation and the Revenue appeal was dismissed by the Bombay High Court and, therefore, the penalty on the appellant cannot survive. It is also stated that the SCN is without jurisdiction in view of apex court decision in Sayed Ali - 2011-TIOL-20-SC-CUS.

The AR reiterated the findings of the impugned order.

The Bench extracted the order of the Tribunal and inter alia observed -

++ from the above decision, it can be seen that even after issuance of the second show cause notice, the show cause notice was held invalid; accordingly demand of duty, penalty and confiscation was set aside.

++ since in the present proceeding the only issue is of penalty under Section 112 of the Customs Act, 1962 which can be imposed only for confiscation of goods and dealing with goods which are liable for confiscation, that means the penalty is consequential to demand of duty and confiscation of goods.

++ in the present case, the proceeding of demand of duty and confiscation was made against the main party M/s. Orient Arts & Crafts, wherein finally the demand of duty and confiscation was dropped, accordingly, the present appellant is also not liable for penalty under Section 112 of the Customs Act, 1962.

Holding that the appellant is not liable for penalty u/s 112 of the Customs Act, 1962, the same was set aside and the appeal was allowed.

(See 2016-TIOL-1335-CESTAT-MUM)