CESTAT Ahmedabad Sets Aside Customs Penalty On Rodex Partner As Firm and Partner Can't Both Be Penalised

The Customs, Excise and Service Tax Appellate Tribunal at Ahmedabad has set aside a ₹25 lakh customs penalty imposed on a Rodex International partner, holding that he could not be separately penalised once the partnership firm had already been penalised for the same contravention.

It, however, reduced another penalty against him to ₹2 lakh in the same concealment case.

“I hold that no separate penalty can be imposed on the appellant under Section 112(a)" of Customs Act. 

A bench of Judicial Member S.S. Garg was dealing with an appeal by Dilip Dhakan, partner of Rodex International, against penalties imposed in a case involving concealed memory cards found in an import consignment.

Officers of the Directorate of Revenue Intelligence had gathered intelligence that goods were being smuggled through a container imported in Rodex International's name. The firm had filed a bill of entry for 73 packages of refrigerators, Sony LCD TVs and Panasonic Plasma TVs.

On examination, officers found four black polyethylene bags concealed in the back side of four refrigerators. These contained 28,580 pieces of 'Micro' brand 2 GB SD memory cards that were not declared in the bill of entry.

The Commissioner of Customs, Kandla, had imposed penalties of ₹25 lakh each on Dhakan under Sections 112(a) and 114AA of the Customs Act. Dhakan argued that no separate penalty could be imposed on him once the partnership firm had already been penalised.

Accepting this contention, the bench set aside the first penalty.

However, the bench upheld the separate penalty under Section 114AA, noting that it was based on Dhakan's own statement before customs authorities. In that statement, he admitted that the goods would be imported in Rodex International's name and that he would receive ₹1 lakh for the memory cards.

“I find that the appellant has not withdrawn his admission made before the Customs authorities.”

The bench said this admission was sufficient to sustain the penalty, but found the ₹25 lakh amount disproportionate given his admitted benefit.

“After perusal of the provisions of Section 114A of the Customs Act, I find that there is a sufficient evidence against the appellant for imposition of penalty under the said section but the penalty imposed by the Commissioner is on higher side because as per his statement he was to get only benefit of 1 Lakh in the entire transaction and therefore the imposition of penalty is disproportionate and therefore I reduced the penalty up to Rs. 2 Lakh under Section 114AA of the Customs Act, 1962.”

The penalty under Section 114AA was reduced to ₹2 lakh.

For Appellant: Advocate Nirav P. Shah,