whether penalty on director not involved in export related work imposable under Sec. 117 of the Customs Act, 1962?

PJ/Case Law/2016-17/3354

Case:-SUSHIL KUMAR HALWAI Versus COMMISSIONER OF CUSTOMS (P), W.B.

Citation:-2016 (342) E.L.T. 240 (Tri. - Kolkata)

Brief facts:- This appeal was filed by the appellant against OIO No. 21/CUS/CC(P)/WB/2007, dated 20-8-2007 passed by CC (P) Kolkata, as adjudicating authority, under which a penalty of Rs. 10,000/- was imposed upon the appellant under Sec. 117 of the Customs Act, 1962.

Appellant’s contention: -Sh. R.N. Bandopadhyay (Consultant) appearing for theappellant submitted that his client was the one of the Directors of M/s. Promising Exports Ltd., Kolkata-20. That appellant filed a joint reply along with the exporter as per letter dated 21-11-2006. Learned Consultant made the bench go through the said reply. It was his case that role of the appellant was mentioned in Para 14 of OIO dated 20-8-2003. That work of Customs related clearances were looked after by the other Director who was not show caused at all.

Respondent’s contention: - Sh. K.K. Jena, ADC (AR) appearing on behalf of theRevenue made the bench go through Para 14 of the OIO dated 20-8-2007, to argue that appellant on 24-4-2006 was asked to explain the difference in the quantities of 8, 48,000 PCS mentioned in two shipping bills against which a procurement of 3, 29,000/- PCS of bill during the period April, 2002 to September, 2002 was shown. That appellant desired to check it up and promised to comeback within seven days but did not turn up thereafter. Learned AR further submitted that goods have actually not been exported to Bangladesh & huge amounts have been taken by the appellant and his company as Drawback. That only argument given in reply to show cause notice by the appellant was that no specific role has been indicated in the show cause notice against appellant Sh. Sushil Halwai and penalty was not imposed under Sec. 114 of the Customs Act, 1962.

Reasoning of judgement:-Heard both sides& perused the case records. The issue involved in these proceeding is whether penalty has been correctly imposed upon the appellant under Sec. 117 of the Customs Act, 1962. Appellant took an argument that no specific role has been assigned on the part of this appellant. It was observed from the case records that this appellant, along with the main exporter M/s. Promising Export Ltd., Kolkata, filed only a joint reply dated 21-11-2006. Appellant was one of the directors of M/s. Promising Export Ltd. which meant appellant was closely & intimately involved in the activities undertaken by the exporter. As per Para 14 of the OIO dated 28-8-2007 appellant was summoned to explain the quantity of 8, 48,000 Pcs. declared in two shipping bill as against 3, 29,000 Pcs. of bill pen procured. Appellant proposed to check up and comeback within one week but did not turn up appellant was thus not co-operative during the investigation. Appellant also did not say that another Director was looking after the Customs related work. As per Para 7 of the OIO dated 28-8-2007 also appellant in his statement dated 10-2-2005 could not re-collect the exact number of consignments of pens those were exported to Bangladesh and also stated that they have already received drawback incentives with respect to some of the Bills of Export and promised to submit procurement details shortly. By a letter dated 16-2-2005 appellant sought further time to give the details. In these communications also appellant had never said that he was not the person monitoring the exports and someone else was doing the export related work. Though these details were not discussed by the adjudicating authority while imposing penalty upon the appellant but the above facts were available on record. Appellant was playing the lead role in explaining the case of the exporter during the investigation.
In view of the above observations appellant hadplayed prominent role in export related activities of the exporter M/s. Promising Exports Ltd. and has been correctly visited with penalty of Rs. 10,000/-.
Appeal filed by the appellant was dismissed.

Decision:-Appeal dismissed

Comment:- The analogy of case is that as the Appellant was one of the directors of M/s. Promising Export Ltd. he was closely & intimately involved in the activities undertaken by the exporter. Also from facts of the case it was clear that he was looking after the Customs related work and never in his statements prior to appeal had he stated that he was not involved in export related work. Hence as appellant was involved in disputed case of export penalty was correctly imposed upon the director under Sec. 117 of the Customs Act, 1962.

PREPARED BY – RAKSHAY TATER

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PJ/Case Law/2016-17/3354

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