Custom, Excise & Service Tax Tribunal
Natwar Dalmia vs Commissioner Of Customs, Central ... on 5 August, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No. C/350/98 & C/688/99
(Arising out of Order-in-appeal No. 22/97-COMMR date 22/11/97 Passed by the Commissioner of Customs (Port), Kolkata.
FOR APPROVAL AND SIGNATURE
HONBLE SHRI H.K.THAKUR, MEMBER (TECHNICAL)
HONBLE SHRI P. K. CHOUDHARY MEMBER (JUDICIAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
1. Natwar Dalmia
2. LA Grande Projects
Applicant (s)/Appellant (s)
Vs.
Commissioner of Customs, Central Excise, Goa
Respondent (s)
Appearance:
Shri K.K. Anand, Advocate for the Appellant (s) Shri K. C. Jena, ADC (AR) for the Respondent (s) CORAM:
HONBLE SHRI H.K.THAKUR, MEMBER (TECHNICAL) HONBLE SHRI P. K. CHOUDHARY MEMBER (JUDICIAL) Date of Hearing/Decision: 05.08.16 ORDER No.FO/A/75786-75787/16 Per Shri H.K.Thakur Appeal NO. C/350/1998 has been filed by appellant La Grande Projects Ltd (La Grande) and appeal No. C/688/1999 has been filed by appellant Sh. Natwar Dalmia who is the father of Sh. Aditya Dalmia, one of the Director of appellant La Grande Projects Ltd. Both these appeals have been filed with respect to OIO No. 22/99-COMMR dt 22/11/97 passed by Commissioner of Customs & Central Excise Goa as Adjudicating authority.
2. Sh. K. K. Anand (Advocate) Appearing for appellant La Grande Projects Ltd argued that no adverse order has been passed by the Adjudicating authority against this appellant and appeal filed by this client may be allowed to be withdrawn.
3. Learned Advocate Sh. K. K. Anand appearing for the appellant Sh. Natwar Dalmia argued that his client has been visited with a penalty of Rs. 105 lakh under Sec 112(a) of the Customs Act 1962. That no statement of the appellant was recorded by the investigation and has been implicated only on the basis of statements of Directors of Appellant La Grande. That appellant La Grande imported 1620 Diesel engines at Marmagoa Port and filed requisite bills of entry as capital goods meant for their 100% EOU at Partapura, Tikamgarh M.P. That though the imported engines were required for the said 100% EOU but appellant La Grande paid Rs. 35,90,782/- (Basic Custom) & Rs 17,39,840/- (CVD). That 20 containers of the consignments were physically examined by the Customs shed staff & were found to be in conformity with the declarations made in the bills of entry. That subsequently it was investigated by the department that the said engines were car diesel Engines and no re-warehousing certificate was produced as per the ITC Bond undertaking given to the department.
3.1 That similar cases were booked against Appellant La Grande at Mumbai & Indore as per Para-23 of the OIO dt 22/11/1997. That the case made at Mumbai for the same goods and on the same issue was adjudicated by Commissioner of Customs-II, Mumbai under OIO CAO/ No. 155/96 CAC/ CCI dt 18/12/96. That under OIO dt 18/12/96 no penalty was imposed upon any of the noticees including Natwar Dalmia and only a penalty of Rs. 5 lakh was imposed on La Grande. That Revenue filed appeal with CESTAT Mumbai, interalia , on the grounds that penalty on Ritu Dalmia and Natwar Dalmia was required to be imposed. That appeal of the Revenue was dismissed against Natwar Dalmia under final order No. C-II/2268-72/WZB/2002 dt 5/8/2002. Learned Advocate made the bench go through Para- 8 of final order dt 5/8/2002 where appeal of the Revenue proposing imposition of penalty against Natwar Dalmia was dismissed. That Revenue filed WP No. 1514 of 2005 in Bombay High Court against the said order dt 5/8/2002 passed by CESTAT. Mumbai High Court Bombay remanded the case to CESTAT by order dt 13/6/2005. That vide final order No. A/850 to 853/ WZB/05/CI dt 18/7/2008 dt 18/7/2005 CESTAT dismissed the appeal of the Revenue asking for interalia, imposition of penalty upon Natwar Dalmia. That the case against the appellant decided by CC Indore was finally disposed by CESTAT Delhi as per case law La Grande Projects Ltd Vs CC Indore [2005 (192) ELT 874 (Tri-Del)] where no penalty upon Sh. Natwar Dalmia was imposed by the Adjudicating authority. That facts & evidences in all the three cases at Mumbai, Indore & Goa are identical.
3.2 Learned Advocate appearing for this appellant also argued that penal liability has to be borne by the importer company only as per following case laws:-
(i) Abhay Oswal Vs CCE, Ludhiana [2007 (217) ELT 318 (Tri-Del.)] upheld by P & H High Court as per 2013 (287) ELT A18 (P&H)].
(ii) Well weave Fabrics Pvt. Ltd. Vs CC, Jaipur [2009 (245) ELT 291 (Tri-Del)]. That penalty if any could have been imposed upon the importer company or ITC bond could have been enforced.
4. Sh. K. C. Jana, ADC (AR) appearing on behalf of the Revenue argued that imported goods were cleared under ITC bond and re-warehousing certificate was not produced by La Grande. That Natwar Dalmia was the brain behind the entire fraud as stated by Sh. Aditya Dalmia & Sh. B.D. Ghosh both Directors of La Grande. Learned AR made the bench go through Pares 6 & 7, on internal pages 3 to 10 of the OIO dt 22/11/97, to argue that final decisions in the imports of impugned good, were taken by Natwar Dalmia. That Adjudicating authority has considered these aspects while imposing exemplary higher penalty of Rs. 105 lakh as the imported goods were not available for confiscation. Learned AR strongly defended the order passed by the Adjudicating authority.
5. Heard both sides & perused the case records. The issue involved in Appeal No. C/ 688/1999 is whether penalty has been correctly imposed upon appellant Natwar Dalmia by the Adjudicating authority under Sec 112 (a) of the Customs Act 1962 which is reproduced below:-
SECTION 112. Penalty for improper importation of goods, etc,- Any person,-
(a) Who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or..
5.1. It is the case of this appellant that similar proceedings for the import of diesel engines imported by appellant La Grande were initiated by the department at Mumbai & Indore and both these proceedings culminated under Final order No. A/850 to 853/ WZB/05/CI/ dt 18/07/2005 and order No. A/834-835/WZB/ CI/ dated 4/9/2006 and it was, interalia, held that no penalty was imposable upon Sh. Natwar Dalmia. It is observed from Para-3 & 4 of order dt 18/7/05 passed by CESTAT Mumbai that Revenues appeal regarding imposition of penalties upon Sh. Natwar Dalmia & Ms. Ritu Dalmia was dismissed. On identical facts in the case decided by CC Indore matter the appeal was finally decided by CESTAT Delhi as per case law La Grande Projects Ltd. Vs. Commissioner of Customs, Indore [2005 (192) ELT 874 (Tri-Del)]. Learned Advocate made the bench go through the case records as mentined in Para- 3.1 above of this order.
5.2. In the case of Abhay Oswal vs. CCE, Ludhiana (Supra), up held by P&H High Court, following observations have been made by CESTAT Delhi in Para-6 6. It is well settled that the rights and obligations of a limited company are the rights and obligations of that legal person and not of Managers of share holder. In such a case, the liability of a shareholder would be limited to his shareholding, be he a promoter of not. In the present case, the findings are that the company failed to carry out its export obligation. Therefore, the liabilities will have to be borne only by the Company. There is no finding of fraud, or misappropriation against the present appellant. In such a case, penalty on the officer of the company is not permissible. Section 112 of the Customs Act speaks of any person, who in relation to any goods, does or omits to de any act. In the present case, that person is the public limited company and not the individual person (appellant). Therefore, person who attracted the penalty is the limited company. 5.2.1 Similar view was expressed by CESTAT Delhi in Para 6.6 of case law Well Weave Fabrics Pvt. Ltd. Vs. CC, Jaipur (Supra).
5.3. In the present case appellant Natwar Dalmia is not any office bearer of La Grande and has not signed any Customs documents. His statement has also not been recorded by the department. The findings given by the Adjudicating authority, on internal page- 40 of OIO dt 22/11/1997 is that Shri Natwar Dalmia & his family have orchestrated the whole fraud with the sole intention of selling the good. No findings have been given by the Adjudicating authority as to what role specifically Sh. Natwar Lal played which could be penalized under Sec 112 (a) of the Customs Act 1962. Advocate appearing on behalf of the appellant correctly argued that penalty if any could have been imposed upon the importer company as per the relied upon case laws.
6. In view of the above observations, relied upon case laws and principles of equity penalty imposed upon Sh. Natwar Lal under Sec 112 (a) of the Customs Act 1962 is not sustainable & is set aside. Appeal No. C/688/1999 filed by the appellant is allowed.
7. Appeal No. C/350/1998 is disposed of as withdrawn.
(Operative part of the order was pronounced in the open court.)
(P.K. CHOUDHARY) (H.K. THAKUR)
JUDICIAL MEMBER TECHNICAL MEMBER
T.K
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Appeal No.C/350/98 & C/688/99