No Automatic Immunity from Penalty to Co-Noticees that main Noticee has been settled: CESTAT [Read Order]

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The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi held that there is no automatic immunity from Penalty for improper importation to co-noticees that main noticee has been settled.

The appellant herein is involved in the import of Crude Palm Oil at the concessional rate of Customs Duty while availing the benefit as amended by notification. The said notification extends the concessional rate of customs duty of 20% ad valorem provided the imported CPO is meant for use in the manufacture of soap.

The Department, however, gathered intelligence that M/s. Pioneer that Soap and Chemicals are misusing the exemption extended vide the said notification by violating the condition thereof as they are diverting the CPO to the open market instead of using the same for the given purpose.

During the investigation, Department observed that the appellant obtained the Central Excise Registration on 28.12.2004 and thereafter under six BOEs imported 1371.878 MTs of CPO from January 2005 to August 2005 against the concessional rate of duty of 20% ad valorem availing thereby total exemption of customs duty of Rs.1,27,72,140/-.

However, the said imported CPO was never used by them for manufacturing soaps as was prescribed under the said notification but was sold in the open market. Thus alleging the evasion of the aforesaid amount of customs duty that a show-cause notice no. 1061/24 dated 24.4.2007 was served upon the appellant firm i.e. M/s. Pioneer Soap & Chemical, proposing the recovery of the aforesaid amount of duty along with interest at an appropriate rate and the proportionate penalty.

The show-cause notice was also served upon the proprietor of the aforesaid firm, Sh. Lalit Goyal, alleging that he has fabricated various other documents by making false entries therein. Those fabricated documents are alleged to have been submitted to the Assistant Commissioner for obtaining the order of release of imported CPO. Alleging that the order of release after furnishing bonds and security as obtained by way of fraud, suppression and wilful misstatement that the penalty was proposed upon Mr. Lalit Goyal.

The show-cause notice was also served upon M/s. Genex Consultant Pvt. Ltd., M/s. A V Agro Products Pvt. Ltd.

The Judicial Member, Rachna Gupta of appellate tribunal pronounced the order based on an appeal filed by M/s. A V Agro Products Ltd. penalty has been imposed upon three of the appellants herein under Section 112 B of the Customs Act.

The Tribunal observed that for transporting CPO to Delhi the bills of M/s.Venkuth Sales Corporation, Trinagar Delhi as well as of GRS of M/s. Jaspreet Road Lines of Punjabi Bagh, New Delhi were used and that of M/s. NC Traders, Mayur Vihar, Delhi were used.

The Judicial Member also observed that the statements on the record are in due corroboration of the documents which sufficiently establishes that appellants were knowingly dealing with CPO imported by M/s. Pioneer Soap and Chemicals in a clandestine and illegal manner, thereby making the said imported CPO liable for confiscation.

While dismissing the appeal Tribunal said that the investigation revealed that no such firm was found existing at the given address except that address of M/s. Jaspreet Road Lines were found to be that of M/s. HG Oil carriers. GR 3 was handed over by M/s. Pioneer Soap and Chemical establishes the clear nexus between all the co-noticees for the alleged violation of the impugned notification including the appellant.

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