ORDER
P.G. Chacko, Member (Judicial)
1. On careful examination of the Stay Applications and hearing both sides, we find that this is a fit case for instantaneous disposal. Accordingly, we allow the present applications and proceed to dispose of the appeals finally.
2. The appellants in appeal No.C/453/2000-A imported what they described as acrylic off-cuts/sheets etc. and claimed clearance thereof against Bill of Entry No.229 dated 8.6.96. The value of the goods was declared as US $ 6222 equivalent to Indian Rs. 2,29,262/- in the Bill of Entry. The Department subjected the goods to 100% examination, scrutinised the particulars in the Bill of Entry vis-a-vis those mentioned in the Bill of Lading, Invoice and allied documents, conducted market enquiry, recorded statements of the representative of the appellants and reached a preliminary finding that the importers mis-described the goods and mis-declared their value in the Bill of Entry. On this basis, by Show-Cause Notice, the Customs authorities proposed to confiscate the goods (already placed under seizure by them) and to impose penalties on the importer (appellants in Appeal No. C/453/2000/A) and two of their employees (appellants in Appeal Nos. C/454-455/2000/A). This proposal was contested by the parties. The dispute was adjudicated by the Dy. Commissioner of Customs, who ordered confiscation of the goods with option for redemption thereof on payment of a fine of Rs.7.2 lakhs and also imposed a penalty of Rs.2,52586/- on the importer-company and, further, personal penalties of Rs.1 lakh each on the two employees afore-named. This order of the Dy. Commissioner of Customs was taken in appeal by the parties before the Commissioner (Appeals). The lower appellate authority upheld the order of the Dy. Commissioner. Hence the present appeals before us. In the importer’s appeal, the order of confiscation, quantum of redemption fine and imposition of penalty are under challenge. In the other two appeal, the appellants have challenged the respective penalties imposed on them by the authorities under Section 112 (a) of the Customs Act.
3. Yet another pertinent fact relevant to the issues involved is that the imported goods which had been placed under seizure by the Customs authorities on charges of mis-description and under-valuation had been released provisionally, later on, to the importer on execution of a Bond pursuant to an order of the Hon’ble High Court of Punjab & Haryana in the year 1996 and that the assessment has ever remained provisional.
4. Reiterating the grounds of the appeals, ld., Advocate, Shri J.S. Agarwal submits that there was no specific demand of differential duty of customs consequent upon alleged under-valuation of the goods, in the Show-Cause Notice issued to the importer and further that the order of adjudication passed by the Dy. Commissioner also did not specifically demand any differential duty. But yet a penalty equivalent in quantitative terms to the differential duty of customs alleged to be due to the Department was imposed under Section 114-A of the Customs Act by the adjudicating authority and such penalty was upheld by the lower appellate authority. Ld. Advocate further submits that personal penalties were also imposed on the importer’s employees under Section 112(a) of the Act in spite of the fact that there was no such specific proposal in the Show-Cause Notice issued to them. It is the definite case of ld. Advocate that there was no warrant for imposition of mandatory penalty under Section 114-A in the absence of specific demand of duty of Customs based on any finalisation of assessment. Ld. Advocate has also sought to buttress his submissions by relying on certain decisions of the Tribunal. He prays for setting aside the orders of the lower authorities.
5. Ld. JDR, Shri S. Srivastava reiterates the findings of the authorities as recorded in their respective Orders. He has justified the impugned order on the ground that the quantum of differential duty of customs was worked out in the Show-Cause Notice and int he operative part of the order of the Dy. Commissioner, there was a specific mention of the liability of the importer to pay such duty. On this basis, ld. JDR submits that it cannot be said that the order of adjudication does not contain a demand of duty. It would follow that the order of imposition of mandatory penalty under Section 114-A of the Act is sustainable. As regards the penalties imposed on the importer’s employees under Section 112 (a) of the Act, ld. JDR submits that the order of adjudication passed by the Dy. Commissioner contains the necessary findings implicating those persons in connection with the importation in question. He, therefore, justifies the penalties imposed on those persons also. Ld. JDR prays for rejecting the appeals.
6. We have carefully examined the above submissions. One important fact which shows itself in this case is that, though, in the Show-Cause Notice, the allegation of under-valuation of the goods was specifically raised against the importer and the differential duty of customs allegedly sought to be evaded by the importer was quantified, the notice contained no proposal to recover such duty from the importer. The only proposals in the Show-Cause Notice, as we have been able to perceive, were confiscation of the goods, imposition of mandatory penalty under Section 114-A and imposition of personal penalties under Section 112 (a). It was not even ascertainable from the Show-Cause Notice as to which one of the parties was sought to be penalised under Section 114-A or under Section 112 (a). Nevertheless, we find, the Dy. Commissioner imposed mandatory penalty under Section 114-A on the importer and personal penalties under Section 112 (a) on their employees. We find that the order of adjudication did not make any specific demand of duty against the importer. Without a specific quantified demand of duty against the importer in the Show-Cause Notice and without confirmation of such demand in the order of adjudication under Section 28 (2) of the Customs Act, there can be no invocation of Section 114-A of the Act. It is because a penalty imposable under Section 114-A has a quantitative nexus with the quantum of duty demanded under Section 28 (2) of the Act. When there is no such demand of duty, there can be no such penalty. As regards the penalties imposed on the appellants in Appeal Nos. C/454 & 455/2000/A, we find that the Show-Cause Notice did not contain any personal allegation against those person warranting any such penalty. Therefore, the findings contained in the order of adjudication for penalising those persons under Section 112 (a) would not be sustainable inasmuch has any such findings would be beyond the scope of the Show-Cause Notice. The order of the lower appellate authority upholding such penalties also, therefore, cannot be sustained. Moreover, it is an admitted fact that the impugned goods are subject matter of provisional assessment and that such provisional assessment is yet to be finalised. This position is evident from the operative part of the order of adjudication in this case. Without a finalisation of assessment, there was no warrant for any penal action against the importer of their employees as proposed in the Show-Cause Notice.
7. In view of our findings recorded above, we are unable to sustain the orders passed by the lower authorities. We set aside both the orders and allow the present appeals. It is upto the Customs authorities to finalise the assessment first and then proceed against the appellants in accordance with law as well as the principles of natural justice.
(Announced and dictated in the Court)