Penalty for Improper Export: CESTAT deletes Order since DRI was not ‘Proper Officer’ to initiate Proceedings during the Period of Dispute [Read Order]

DRI - CESTAT - Taxscan

The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) while deleting a penalty order issued under Section 114(i) of the Customs Act, 1962 for the abetment of falsely signed the invoices used for improper export, held that the notice issued by the DRI in the said case was without jurisdiction since the Officers were not “proper officers” to issue such a notice during the period of the dispute.

In the instant case, the officers of DRI, Regional Unit, Mangalore had received specific intelligence that five export containers cleared from ICD, Hassan on 20/21.01.2010 to Malaysia through Mangalore Port were not containing bentonite powder as declared by exporter M/s Pacific Impex, Bangalore but contained Muriate of Potash. MOP is a fertilizer, the export of which is restricted under the prevalent Foreign Trade Policy.

The appellant contended before the Tribunal that the impugned proceedings were initiated on the basis of an SCN issued by the DRI Officers and the DRI Officers were not the proper officers during the relevant period of dispute and hence, the proceedings initiated by the DRI Officers was invalid.

Allowing the contentions of the appellant, Judicial Member S S Garg noted that “though the appellant has submitted that he has a good case on merit and submitted that Department has not been able to establish abetment of the appellant in the illegal export but he, during the course of argument, has relied upon the judgment of the Hon’ble Apex Court in the case of Canon India Pvt. Ltd. Vs Commissioner of Customs and Commissioner of Customs Vs Sayed Ali cited supra to buttress his argument that the SCN issued by the DRI is without jurisdiction because DRI Officers are not proper officers during the period of dispute and therefore, the SCN itself is bad in law.”

“Further, I find that the imposition of penalty for abetment is also hit by principles res judicata as the appellant has been issued with SCN dated 13.01.2011 for the same offense by Mysore Customs Commissionerate, and the same was finally decided by this Tribunal vide Final Order No.22738-22741/2017 dated 24.10.2017 by reducing the penalty to Rs.2,50,000/- each under Section 114(i) and Section 114AA of the Customs Act, 1962. Since on these two legal grounds, the SCN issued to the appellant as well as the imposition of penalty on him is not sustainable in law and therefore I set aside the penalty by relying upon the decision of the Hon’ble Apex Court in the case of Canon India Pvt. Ltd. Vs Commissioner of Customs cited supra. Hence, the present appeal is allowed by setting aside the impugned order,” the Tribunal said.

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