Delhi HC upholds Penalty Imposed on Overseas Entity Seville Products Limited for Customs Duty Evasion [Read Order]

A Division Bench of the High Court of Delhi upheld the penalty imposed on M/s Seville Products Limited for its involvement in customs duty evasion. The court dismissed the appeals filed by the appellant against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

M/S Seville Products Limited, represented by Mr. Karan Sachdev, Mr. Kunal Kapoor, and Mr. Agrim Arora, had challenged the common order dated 07.12.2021 passed by the Tribunal.

On the other hand, the Commissioner of Customs Exports, ICD-Tughlakabad, New Delhi, was represented by Mr. Satish Kumar, Senior Standing Counsel, along with Mr. Dhruv and Mr. Atri Mandal.

The main issue in the case was the imposition of penalties under Section 112(a) of the Customs Act, 1962. The appellant argued that as an overseas supplier, it could not be subject to penalties under the Customs Act since it does not have extraterritorial jurisdiction. They contended that the proceedings against the importers and other co-noticees were dropped after approaching the Settlement Commission, and therefore, no proceedings for abetment and evasion of customs duty could be maintained against the appellant.

Additionally, they challenged the jurisdiction of the Directorate of Revenue Intelligence (DRI) in issuing show cause notices, arguing that DRI officers are not "proper officers" under the Customs Act.

The court rejected these contentions and upheld the penalty imposed on M/S Seville Products Limited. It held that the Customs Act does have territorial jurisdiction, and the appellant's involvement in the clearance of goods through false invoices and collection of part of the consideration in India warranted the imposition of penalties. The court also affirmed the jurisdiction of the DRI in issuing show cause notices, stating that the DRI officers are indeed "proper officers" under the Customs Act.

During the proceedings, the appellant's counsel relied on several case precedents, including A.M. Ahamed & Co. v. Commissioner of Customs, Custom House & Anr., S.K. Colombowala v. Commissioner of Customs (Import), Mumbai, and Union of India & Ors. v. Onkar S. Kanwar & Ors., to support their arguments.

However, the Bench of Justices Vibhu Bakhru and Amit Mahajan found these precedents to be inapplicable to the present case and dismissed the appeals.

The High Court of Delhi upheld the penalty imposed on M/S Seville Products Limited for customs duty evasion. The court, in result, affirmed the application of jurisdiction under Customs Act, rejected the appellant's arguments against the proceedings, and upheld the findings of the Appellate Authority and the Tribunal. This decision serves as a reminder that overseas entities can be held liable under the Customs Act for their involvement in customs duty evasion within the territory of India.

To Read the full text of the Order CLICK HERE

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