2002 (5) TMI 678 - AT - Customs

Issues Involved:
1. Jurisdiction and applicability of Section 112(a) of the Customs Act.
2. Legitimacy of confiscation of CDs and imposition of penalties.
3. Involvement and penalty imposition on Beer Sain.
4. Involvement and penalty imposition on L.N. Bhardwaj and M/s. PPL.

Issue-wise Detailed Analysis:

1. Jurisdiction and Applicability of Section 112(a) of the Customs Act:
The appellants contended that Section 112(a) of the Customs Act was not applicable as the CDs removed from the NEPZ area could not be treated as imported goods, arguing that only central excise duty could be claimed. They cited the Larger Bench decision in Vikram Ispat v. CCE, Mumbai-III, which held that goods cleared by 100% EOUs to any place in India are subject to central excise duty, not customs duty. However, the tribunal found that M/s. World Digital Sound Ltd. was located in the NEPZ, a customs bonded area, and thus subject to customs duty. The tribunal concluded that the principles laid out in Vikram Ispat and similar cases were not applicable here, as those cases involved units outside customs bonded areas.

2. Legitimacy of Confiscation of CDs and Imposition of Penalties:
The tribunal upheld the Commissioner's order of confiscating the CDs under Section 111(j) of the Customs Act and imposing penalties under Section 112. The correctness of the Commissioner's findings regarding the removal of CDs without payment of duty was unchallenged. The tribunal confirmed that the CDs were rightly confiscated and penalties imposed for their clandestine removal from the customs bonded area.

3. Involvement and Penalty Imposition on Beer Sain:
Beer Sain contended that he was not on duty at the NEPZ gate during the seizure and was penalized for past actions. However, the tribunal noted that Beer Sain was implicated by statements from the Managing Director and Manager of M/s. World Digital Sound Ltd., who testified to paying him for facilitating the removal of goods without duty. Despite not being on duty during the truck's interception, evidence showed his involvement in abetting the clandestine removal of CDs. The tribunal upheld the penalty under Section 112(a) and (b) of the Customs Act.

4. Involvement and Penalty Imposition on L.N. Bhardwaj and M/s. PPL:
L.N. Bhardwaj argued that as an employee, he should not be penalized, and M/s. PPL contended that the detention of CDs from its premises was lifted. The tribunal found that Bhardwaj, as the manager, was actively involved in the company's operations and present during the seizure, justifying the penalty under Section 112(a). For M/s. PPL, despite the lifted detention, evidence showed the company knowingly received goods cleared without duty. The tribunal upheld penalties on M/s. PPL and its CMD, Vivek Nagpal, based on the involvement in receiving duty-evaded goods.

Modification of Penalty Amounts:
The tribunal found the penalties imposed to be excessive and reduced them as follows:
- L.N. Bhardwaj: Reduced from Rs. 2,00,000/- to Rs. 50,000/-
- Beer Sain: Reduced from Rs. 2,00,000/- to Rs. 30,000/-
- M/s. PPL: Reduced from Rs. 25,00,000/- to Rs. 5,00,000/-
- Vivek Nagpal: Reduced from Rs. 5,00,000/- to Rs. 20,000/-

Except for these modifications in penalty amounts, the tribunal confirmed the Commissioner's order. The appeals were disposed of with these terms, providing consequential relief if permissible under the law.

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