2022 (5) TMI 1320 - AT - Customs

Levy of penalty u/s 112(a) and 114AA of the Customs Act - detention of yacht - allegation is that yacht was declared as TP Cargo and simultaneously filing another IGM for the same yacht being filed raised the suspicion of foul play - evasion of Customs Duty - HELD THAT - The final order of Settlement Commission leads us to an irrefutable conclusion that there was indeed an attempt to improperly import certain goods (Yacht here) which ultimately was confiscated within the meaning of Customs Act. It is a single transaction and all the notices are a part of the same transaction may be of different sides of the same coin. In its order the Settlement Commission had also imposed fine as well as penalty on the applicants/co-applicants before it which have been paid by them. Hence clearly the improper importation stands established we only have to look into the magnitude of active/passive contribution by each of the appellants before us in assisting the main culprit in the activity of improper importation. It has been brought on record that Shri Gautama Dutta was instrument in instructing the other appellants Shri Sohel Kazani of M/s. Assar Lines and M/s. Interport Impex Pvt. Ltd. based on which an email was sent by Shri Sohel Kazani to Link Shipping Management System. Shri Kiran Kamat MD of Link Shipping Management System has also admitted that they had acted as agents of the vessel MVA during its call at the port of Mumbai and carried out all acts and things for discharge of cargo (i.e. Yacht Tian) at Bombay Port which action was based on the instructions of their principal. Shri Kiran Kamat MD has also specifically admitted that it was based on the request of M/s. Assar Lines that the cargo in question was declared as transhipment cargo. The initial burden to prove proper importation under Section 123 ibid. was on the notices some of whom have accepted the liability and thereby resulting in the non-discharge of the burden. The natural consequence which flows from the above is that the burden cast on the notices remained un-discharged and hence they have to suffer consequence namely the penalties in this case. This is because they have all been identified to be part of different sides but of the same transaction. Thus revenue has made out a case for the levy of penalty on the appellants - the impugned order modified to the limited extent by sustaining penalty to the extent of 15% of penalty imposed on them by the adjudicating authority.

Summary

Issues Involved:
1. Imposition of penalties under Section 112(a) and Section 114AA of the Customs Act, 1962.
2. Determination of the role and liability of each appellant in the improper importation of the yacht.
3. Applicability of the Settlement Commission's order to the appellants.
4. Quantum of penalties imposed on the appellants.

Issue-wise Detailed Analysis:

1. Imposition of Penalties under Section 112(a) and Section 114AA of the Customs Act, 1962:
The Commissioner of Customs imposed various penalties on the appellants under Section 112(a) and Section 114AA of the Customs Act, 1962, for their involvement in the improper importation of the yacht. The penalties ranged from Rs. 1,00,000/- to Rs. 25,00,000/-. The appellants were penalized for acts or omissions that rendered the goods liable to confiscation and for using false or incorrect material in the transaction of business under the Customs Act.

2. Determination of the Role and Liability of Each Appellant:
The Tribunal analyzed the role of each appellant in the importation process. It was established that Shri Gautama Dutta, Shri Sohel Kazani, and M/s. Assar Lines were instrumental in instructing and facilitating the importation of the yacht. Shri Kiran Kamat, MD of Link Shipping & Management System, admitted acting as agents for the vessel and declared the cargo as transhipment cargo based on instructions. The Tribunal concluded that the appellants actively participated in the improper importation, thereby justifying the penalties imposed.

3. Applicability of the Settlement Commission's Order to the Appellants:
The Settlement Commission's order, which settled the customs duty, interest, fine, and penalties for the main applicants and co-applicants, did not apply to the appellants who did not approach the Settlement Commission. The Tribunal noted that the Settlement Commission's order explicitly mentioned that it did not cover the other co-noticees, including the appellants. Therefore, the penalties imposed by the Commissioner of Customs on the appellants were upheld.

4. Quantum of Penalties Imposed on the Appellants:
The Tribunal observed that the penalties imposed on the appellants were high and not proportionate to their roles. It was noted that the Settlement Commission had imposed lower penalties on co-applicants who did not gain personally from the evasion of duty. The Tribunal concluded that the appellants, being agents, CHA, and shipping lines, did not benefit directly from the duty evasion. Consequently, the Tribunal modified the penalties, reducing them to 15% of the original amount imposed by the adjudicating authority.

Conclusion:
The Tribunal upheld the imposition of penalties on the appellants under Section 112(a) and Section 114AA of the Customs Act, 1962, for their involvement in the improper importation of the yacht. However, the quantum of penalties was reduced to 15% of the original amount, considering the appellants' roles and the lack of direct benefit from the duty evasion. The appeals were partially allowed to this extent.