2022 (12) TMI 1476 - AT - Customs

Waiver of penalty - penalties on other co-noticees when main assessee s case is settled by the Settlement Commission - HELD THAT - It is found that the matter was referred to a larger bench by another learned member in RAJESH VERSUS COMMISSIONER OF CUSTOMS TUTICORIN 2014 (1) TMI 1390 - CESTAT CHENNAI . The question was referred to the larger bench in two cases by the learned members. The reason for referring the matter is that there are conflicting views expressed by different benches. Cases in which it is held by the Tribunal that penalties against co-noticees do not survive if the main appellant has settled the matter - HIM LOGISTICS PVT. LTD. VERSUS CC NEW DELHI 2016 (4) TMI 1153 - CESTAT NEW DELHI - COMMISSIONER OF CUSTOMS (EXPORT) MUMBAI VERSUS MAHENDRA KUMAR DAREWALA 2016 (9) TMI 1011 - CESTAT MUMBAI - RADIANT SILK MILLS (P) LTD. VERSUS COMMISSIONER OF CUS. CEN. EX. JAIPUR 2013 (9) TMI 582 - CESTAT NEW DELHI . Cases in which it is held by the Tribunal that penalties against co-noticees survive even if the main appellant has settled the matter - KI. INTERNATIONAL LTD. VERSUS COMMISSIONER OF CUSTOMS CHENNAI 2013 (5) TMI 383 - CESTAT CHENNAI - MAMTA GARG VERSUS COMMISSIONER OF CUS. AND C. EX. NOIDA 2017 (2) TMI 1317 - CESTAT NEW DELHI - M/S. AV AGRO PRODUCTS LTD. M/S. GENEX FOODS PVT. LTD. SHRI ROHIT AGGARWAL DIRECTOR VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE CENTRAL GST NEW DELHI 2020 (3) TMI 490 - CESTAT NEW DELHI . Thus both views were taken by different single member benches division benches and also in cases where the two members of the bench differed and the difference was settled by a third member. In view of these legal precedents it is found appropriate to direct the Registry to relist the matter after the decision of the larger bench. Both sides are free to mention as and when the decision of the larger bench is available.

Summary

Issues:
1. Appeal against penalty imposed under sections 112(a) and 114AA of the Customs Act, 1962.
2. Interpretation of whether penalties on co-noticees survive if the main noticee settles the matter before the Settlement Commission.

Analysis:
1. The appellant challenged the penalty of Rs.2,00,000 imposed by the Additional Commissioner of Customs under section 112(a) in relation to undervaluation of imported timber. The importer settled the matter before the Settlement Commission, leading to the confirmation of duty and interest but dropping other proceedings. The appellant argued that penalties on co-noticees should not survive once the main noticee settles the issue. The Tribunal noted conflicting views on this issue and referred the matter to a larger bench for clarification, directing a relisting after the larger bench's decision.

2. The Tribunal considered various precedents where different benches held conflicting views on whether penalties against co-noticees should be imposed if the main noticee settles the matter before the Settlement Commission. Cases were cited where penalties were waived for co-noticees and others where penalties were upheld even after settlement by the main noticee. The Tribunal acknowledged the need for clarity on this issue due to the divergent opinions expressed by different benches and directed the matter to be relisted after the larger bench's decision for further consideration and appropriate action.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by both parties, the conflicting views in legal precedents, and the Tribunal's decision to refer the matter to a larger bench for resolution.