Custom, Excise & Service Tax Tribunal
M/S. Manohar Enterprises vs Cc (Seaport-Export), Chennai on 23 March, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
C/94-95/2010
(Arising out of Order-in-Original No. 10066/2009 dated 18.11.2009, passed by the Commissioner of Customs (Seaport- export), Chennai).
For approval and signature
Honble Shri R. PERIASAMI, Technical Member
1. M/s. Manohar Enterprises : Applicant
2. Shri R. Muthuramalingam
Vs.
CC (Seaport-Export), Chennai : Respondent
Appearance Shri Shiv Shankar (Co. Associate) Shri A. Mohd. Ismail, Adv., for the applicants Ms. Indira Sisupal, AC (AR), for the respondent CORAM Honble Shri R. PERIASAMI, Technical Member Date of Hearing/Decision: 23.03.2015 FINAL ORDER No. 40349-40350 / 2015 Both the appeals are arising out of a common order against the imposition of penalty. Hence both are taken up together for disposal.
2. The brief facts of the case are that based on a specific intelligence export container was detained and found 197.1 Kgs. of Ketamine Hydrochloride valued at Rs. 70,00,000/-, was concealed in the guise of Onions. They were stuffed in plastic packets resembling onion in size. DRI issued show cause notice dated 12.05.2009 to main exporter and to other co-noticees including to the appellants for confiscation and imposition of penalty under Section 117 of Central Excise Act for the acts of omission and commission.
3. The Commissioner of Customs (Export), Chennai in his order dated 18.11.2009 absolutely confiscated Ketamine Hydrochloride and imposed penalty on the exporter of Rs. 10,00,000/-, Rs.10,00,000/- on the CHA firm M/s. Manohar Enterprises, Rs.5,00,000/- on Shri Muthuramalingam, partner of CHA and Rs.1,00,000/- on Shri Sivakumar, clerk of M/s. Manohar Enterprises. Only V. Manohar of M/s. Manohar Enterprises and Shri R. Muthuramalingam filed appeals against the penalty imposed on them.
4. The representative for M/s. Manohar Enterprises and Shri Mohd. Ismail, Ld. Advocate representing Shri Muthuramalingam submits that the DRI after seizure and completing investigation issued show cause notice to the appellant under Section 117 of the Customs Act. Under this section the maximum penalty is Rs.1,00,000/- whereas the adjudicating authority has imposed Rs.10,00,000/- and Rs.5,00,000/-. He further relied para-24 of the order-in-original wherein it was clearly brought out that the entire modus operandi was carried out between the exporter R. Viswanathan and Shri Sivakumar, the clerk of the CHA company. The clerk had deliberately connived with the exporter and signed all the documents and also MOT. The CHA was not involved and the Shipping Bills were filed in their name. They have co-operated with the investigating agency and customs. He also submits that no action intiated under CHALR by the department. Regarding imposition of penalty on the CHA firm as well as on the partner they relied the decision of the Honble High Court of Gujarat in the case of Pravin.N.Shah Vs. Cestat 2014 (305) ELT 480 (Guj.) and submits that once penalty is imposed on the CHA firm no separate penalty can be imposed on the partner of the firm.
5. On the other hand, the Ld. AR reiterated the findings of the adjudicating authority. She submits a copy of the letter dated 05.03.2014 and the reply from the Commissioner of Customs dated 10.04.2014. She relied on the decision of the Honble Supreme Court in the case Saini Consultants Vs. Cestat 2013 (293) ELT A25 (S.C.).
6. Heard both sides.
7. On perusal of the records, I find that the short issue involved relates to imposition of penalties on the appellants ie., CHA in connection with smuggling of Ketamine Hydrochloride concealed in the export consignment as Onions vide shipping bill No. 3201809 dated 10.11.2008. On perusal of the show cause notice dated 12.05.2009 and the impugned order dated 18.11.2009, wherein modus operandi involved in exporting the banned item Ketamine Hydrochloride in the guise of onions was discussed elaborately and the role played by Shri Sivakumar, the clerk, CHA and also CHA firm and the personnel. I find that in the show cause notice Section 117 of the Customs Act has been invoked for imposition of penalty on the CHA firm and the partner and the adjudicating authority in the impugned order also imposed penalty under Section 117 of the Customs Act. Whereas, Section 114 was invoked for imposition of penalty on the proprietor of the firm Shri R.Viswanathan. Since the department invoked only Section 117 of the Customs Act for imposition of penalty on CHA and on the partner of the CHA firm, and this section relates to imposition of penalty not expressively provided elsewhere and the maximum penalty is not exceeding Rs.1,00,000/-.
8. Prima facie, I find that under adjudicating authority has imposed penalty of Rs.10,00,000/- on M/s. Manohar Enterprises and Rs. 5,00,000/- on Shri.R. Muthuramalingam, under Section 117 of the Customs Act. Therefore, by virtue of limitation provided under Section 117 adjudicating authority has no power to impose more than the limit specified under the section 117 of the Act, Therefore, imposition of penalty of Rs. 10,00,000/- and Rs.5,00,000/- on the appellants exceeding Rs.1,00,000/- is beyond the powers vested under Section 117 of the Customs Act.
9. As regards the appellants contention that they have not played any role and only their clerk has connived with the exporter and they are not liable for any penalty is not acceptable for the simple reason that any act of their employee, CHA cannot absolve from their liability. Further as already discussed above, this is not the case where the penalty has been imposed on the appellants under Section 114 of the Customs Act, in their case penalty is imposed under Section 117 of the Customs Act and this section envisages penalty for any contravention which is not covered in any other section ie., Sections 28, 112, 114 of the Customs Act. If any person is colluded, abetted, or any contravention in connection with smuggling of goods in the case of smuggling out detract goods liable for confiscation under Section 113 of the Customs Act and penalty under Section 114 of the Customs Act. I find that on these two appellants, the investigating agency deliberately invoked penal provisions under Section 117 of the Customs Act and not invoked Section 114, and the same was upheld by the adjudicating authority. The reason for not invoking Section 114 or any other section is best known to the investigating agency who issued the show cause notice and to the adjudicating authority. I have ho hesitation to hold that the lower authorities having chosen to invoke only Section 117 penalty on the appellant and the adjudicating authority can impose maximum penalty of Rs.1,00,000/.
10. As regards the second appellants contention that penalty is already imposed on their CHA firm, and no penalty can be imposed again on the partner of the CHA firm. They relied on the decision of the Honble High Court of Gujarat in the case of Pravin.N.Shah Vs. Cestat (supra). The above Honble High Court order relates to Section 11AC penalty under the Central Excise Act and the same is not applicable to their case. The very fact that Section 117 has been invoked, each notice is liable for penalty or it is a residual nature for any contravention not specified. Therefore, I hold that the impugned order imposing penalty of Rs. 10,00,000/- on M/s. Manohar Enterprises and Rs.5,00,000/- on Shri R. Muthuramalingam, partner of the CHA firm, is beyond the penalty amount limit stipulated under Section 117 of the Act. I hold that the appellants are liable for penalty under Section 117 of the Customs Act, maximum of Rs.1,00,000/- on each appellant. The penalty imposed by the adjudicating authority in excess of Rs.1,00,000/- is liable to be set aside on both the appellants. Accordingly, I hold that the penalty imposed is restricted to Rs.1,00,000/- each. The impugned order is modified to that extent of reduction in penalty. Both the appeals are allowed partially.
(Order pronounced and dictated in the open Court) (R. PERIASAMI) TECHNICAL MEMBER BB 1