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2024 (2) TMI 515 - AT - CustomsLevy of penalty u/s 114AA of Customs Act, 1962 - Smuggling - Red Sanders - prohibited goods or not - it is revealed that both the containers that were stuffed with sanitary ware and self sealed in the factory of M/s. Sanyo were taken to a plot enroute Mundra port and declared goods were substituted by red sanders logs - HELD THAT:- In the absence of any admission and knowledge about the offending goods penalties under Section 114(i) and 114AA cannot be imposed and that too on the basis of incomplete investigation. There is total lack of investigation on the aspects of who broke the seals on the plot enroute and how they got substituted and where have the substituted goods gone. Main culprits are still at large. Exporters earning precious foreign exchange cannot be allowed to be victimised and still further penalised. The lack of knowledge brought on record by the Commissioner (Appeals) in his findings is supported in evidence not only by various statements but also circumstantial evidence. The incomplete investigation coupled with all above narrative does not justify imputation of malafide and penalties under Section 114 (i) and Section 114AA. The reasoning of the Commissioner to that extent is not well founded for the imposition of penalties which require malafide and unconditional knowledge of offending goods. Department has failed to point out as to how sealing process was found to be lacking and that engaging of any transportation is not an option available to exporter of goods in sealed container. A onetime engagement of a transporter does not make him an employee, even otherwise. Employer cannot be held responsible for penalty under Section 117, as held in SHRI AMIT RAJKUMAR SINGHANIA, SHRI JITU SHARAD SHIRSAT, ANJANA NILESH JADHAV, SHRI MANISH DHIRAJLAL BAROT, M/S. CHITALIA LOGISTICS P. LTD., SHRI HARSHWARDHAN THAKUR VERSUS COMMISSIONER OF CUS. (ACC) , MUMBAI [2019 (8) TMI 1791 - CESTAT MUMBAI]. The penalty under Section 114 (i) and under 114AA as imposed by the Commissioner is liable to be set aside - even penalty under Section 117 too cannot imposed on the firm, as required by the department in its appeal as same requires existence of a provision in the Customs Act, 1962, the violation of which has been committed and for which no specific penalty exists. The show cause notice of the department seeking imposition of penalty under other section, defies such situation - Penalty thus under Section 117 cannot be imposed as rightly held by Commissioner (Appeals). The appellant party’s appeals are allowed and the department’s appeals are dismissed.
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