The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has held that the levy of penalty on the sole proprietor of a firm along with the concerned firm would amount to double jeopardy under the provisions of the Customs Act, 1962.
The customs department imposed penalty on the appellant, a sole proprietor and his firm alleging forgery, misrepresentation, undervaluation of goods (food supplements) to the extent of more than 50 percent of the actual invoice values by suppressing the actual invoices and submitting forged / bogus invoices before the assessing Authorities. On conclusion of the investigation and further proceedings, the department issued an order demanding duty along with interest and the proportionate penalties upon the firms and their proprietors.
The appellants approached the Tribunal contending that the Original Adjudicating Authority has wrongly imposed penalties on the importing firm/ proprietorship firms as well as / proprietor thereof under section 112 and 114AA of the Customs Act, 1962 which amounts to double jeopardising the appellant.
The two-member bench of the Tribunal comprising Accountant Member Mr. Raju and Judicial Member Ms. Rachna Gupta relied on a catena of decisions and observed that the imposition of the penalty was illegal.
“The adjudicating authority has imposed penalty on the importing firm as well as the proprietor thereof, we are of the opinion that the same rather amounts to the double jeopardy. The penalty cannot be imposed against the sole proprietor of proprietor ship firm along with the penalty upon said firm,” the Tribunal said.
The Tribunal also relied on the judgement of Delhi High Court in the case of Anil Kumar Mahensaria vs. Commisioner of Customs wherein it was held that only one set of penalty can be imposed either on the appellant or upon his proprietorship firm.
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