Penalty can’t be Imposed If Some of the Goods lacks Inscription as per Invoice: CESTAT [Read Order]

The Central Excise and Service Tax Appellate Tribunal(CESTAT), Kolkata held that penalty cannot be imposed if some of the goods have no inscription as per invoice.

The facts of the case are that on 29.06.2015, the Customs Officer apprehended one Shri Amol Deshmukh with 20 pieces of Gold Biscuits including two cut pieces with silver beads. The gold pieces were found weighing 2331.420 grams and the silver metal beads 08.720 grams collectively.

The gold and silver beads were seized under Section 110 of the Customs Act, 1962 on the reasonable belief that the goods were illegally imported into India through unauthorized route without any valid documents and are liable to confiscation under  Section 111(b) & 111(d) of the Customs Act, 1962.

The person was arrested and produced before the Judicial Magistrate where he was released on bail. Shri Santosh Kumar Poddar, Director of M/s. Anjani Gold Private Limited claimed ownership of the seized goods on behalf of the Company and submitted that the gold and silver beads were part of their stock-in-trade.

In his statement, Shri Ganesh Haridas Kadam stated that he was engaged in melting and refining of gold and had received the gold with silver beads from Shri Santosh Kumar Poddar, Director of M/s. Anjani Gold with a bill for melting. He handed over the goods to his staff Shri Amol Deshmukh for taking it to his melting shop and he himself went to attend some other work and in a hurry forgot to hand over the bill to Shri Amol Deshmukh.

Further produced a copy of the said gold bill to the Investigating Officer. During inquiry with M/s. Anjani Gold Private Limited, it was found that they had purchased gold through Customs Auction issued by State Bank of India, Overseas Branch, Kolkata weighing a total of 19801.52 grams.

 But the marks/inscription on two of the Twenty pieces gold biscuits were not mentioned in the said invoice. Show Cause Notice was issued to Shri Amol Deshmukh, Shri Ganesh Haridas Kadam and Shri Santosh Kumar Poddar under Section 124 of the Customs Act, 1962 proposing confiscation of the seized goods under Section 111(b) & 111(d) of the Customs Act, 1962 and imposition of penalty under Section 112(b) of the Customs Act.

The Tribunal observed the statements recorded by the Revenue, it reveals that at no point of time ownership of the gold was agitated. The seized gold was duly recorded in the Books of Accounts of M/s. Anjani Gold Private Limited which was admittedly computerized. The purchase invoice issued by State Bank of India showing that 198015.52 grams in Customs auction are also not disputed by the Revenue.

The Tribunal also finds that the revenue has not been able to adduce any evidence to prove that the subject gold has been illegally imported by the appellants and the order of confiscation under Section 111(b) and under Section 111(d) of Customs Act is not sustainable as imposition of penalty under Section 112 is consequential to confiscation of goods under the Customs Act.

While setting aside the impugned order bench includes Judicial Member, P.K. Choudhary, and Technical Member, Bijay Kumar said that imposition of penalty on the Director of a Company without making the Company a party to the proceeding is not justifiable.