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Issues:
1. Imposition of penalty on licensed Custom House agents without issuing a show-cause notice. 2. Applicability of Section 112(a) of the Customs Act for penalty imposition. 3. Lack of factual findings in the impugned order. Issue 1: Imposition of Penalty Without Show-Cause Notice The appellants, licensed Custom House agents, filed a Bill of Entry on behalf of importers declaring goods as "Software for making our MTS system Y2K compliance." However, upon physical examination, it was discovered that the goods were computer hardware with software. The Customs Commissionerate seized the goods under Section 110 of the Customs Act and assessed the total value at Rs. 13,53,200, with customs duty at Rs. 5,23,800. The importers admitted the offense, leading to an order against them and the appellants without a show-cause notice being issued to the latter. The Commissioner imposed penalties without providing an opportunity of hearing to the appellants, which was deemed a procedural irregularity. Issue 2: Application of Section 112(a) of the Customs Act The Commissioner imposed a penalty of Rs. 25,000 on the appellants under Section 112(a) of the Customs Act. However, it was observed that this penalty should be based on findings of facts related to any commission, omission, or abetment as per Clause (a) of Section 112. The order lacked the necessary factual findings to support the penalty imposed on the appellants under this provision. The absence of a proper basis for invoking Section 112(a) raised concerns about the legality of the penalty imposed. Issue 3: Lack of Factual Findings in the Order Upon review, it was noted that the Commissioner's order did not contain factual findings to justify the penalty imposed on the appellants. Despite a representative being present at a hearing, the legal obligation to issue a show-cause notice before penalizing under Section 112(a) of the Customs Act remained unfulfilled. The absence of a proper show-cause notice and factual findings in the order rendered it unsustainable. In conclusion, the appellate tribunal set aside the impugned order and allowed the appeal due to the procedural irregularities and lack of factual findings. The decision highlighted the importance of issuing show-cause notices and ensuring factual bases for penalties imposed under relevant provisions of the Customs Act. The ruling clarified that the order did not prevent competent customs authorities from initiating proceedings against the appellants with proper show-cause notices in accordance with the law.
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