The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has reduced the penalty on account of ‘no monetary benefits’ to Appellant and has held that when penalty is imposed on partnership firm, penalty cannot be imposed on partnership firm, citing the decision of Hon’ble High Court of Gujarat.
Facts of the case
The appeals have been filed by M/s. Awin Exim, its partner Shri Satish Choudhary and by Shri Subhash Choudhary (Power of Attorney holder), against the order passed by Commissioner of Customs (Appeals), Ahmedabad. Here, the Appellants are the manufacturers of Made-ups and Readymade garments and they are having a letter of permission by the Development Commissioner, Kandla Special Economic Zone (KASEZ), Gandhidham. The appellant had imported certain goods, declaring the goods as “Shirting/ Dress Material & Pens” classifying the same under CTH 54075400 and CTH 96081000 respectively.
Interpretation of law
The appellant had also filed the KASEZ Bill of Entry No. 4714 dated 16.02.2004 classifying the said goods under CTH 54071016. However, on inspection of premises, the officers of Custom found that out of 10 collected samples, 7 samples were found “dyed, knitted fabrics made wholly of Polyester filament yarn” whereas the other three samples were found to be “woven fabrics”. It was therefore alleged that the appellant had imported dyed knitted fabrics made wholly of polyester filament yarn falling under Chapter heading 6001 of the Customs Tariff Act along with the woven fabrics falling under Chapter heading 5407 of the Customs Tariff Act. On follow up visits, the officers of the Customs detained 1458 Rolls of knitted fabrics wherein they found that 131 Rolls were of dyed, knitted fabrics made wholly of Polyester filament yarn falling under Chapter heading 6001 of the Customs Tariff Act. The seizure was made and a various summons was issued to Shri Satish Choudhary, Partner of M/s. Swim Exim Company and Shri Subhash Choudhary, Power of Attorney holder however, they did not appear.
On account of suppressing the classification of goods, the goods were ordered to be confiscated and penalties were imposed on the Appellants.
The Tribunal observed that while making these imports the M/s Awin Exim Company would not have gained any monetary benefit as no duty is involved. Moreover, the Appellants have not contested the confiscation of the goods and abandoned the goods. Thus, the Tribunal has reduced the penalty of Rs. 3 Lakh imposed on M/s. Awin Exim Company under Section 112 of Customs Act, 1962 to Rs. 1,50,000/- (Rupees one lakh fifty thousand only).
While setting aside the penalty, the Tribunal comprising of members Mr Ramesh Nair and Mr Raju by relying on the decision of Hon’ble Gujarat High Court in Commissioner of Central Excise vs. Jai Prakash Motwani held that when a penalty is imposed on partnership firm, a penalty cannot be imposed on its partner. On considering his limited role and fact that Shri Subhash Choudhary (Power of Attorney) would not have gained any monetary benefits, the Tribunal has also reduced the penalty of Rs. 2 Lakh to Rs.1,00,000/- (Rupees one lakh only).
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