ORDER
Moheb Ali M., Member (T)
1. After hearing both sides for some time, it is found possible to dispose off the appeals at this stage after waiving pre-deposit of penalties imposed on the appellants. The appellants before us are S/Shri Pragnesh Jain, Satyendra M. Sawant and Kiran M. Choksi.
2. The issue pertains to imposition of penalties on the appellants under Section 112 and Section 114A of the Customs Act. Shri Pragnesh Jain is an employee of a CHA firm M/s. Impex International who handled the consignments of polyester fabrics/cotton fabrics and HDPE imported under advance licence, which were later diverted to domestic market in violation of the conditions under which clearances were allowed dut\ free. The allegation against him is that he abetted the offence committed by M/s. Sahil Industries in whose name the said goods were imported. In the impugned order, the Commissioner imposed a penalty of Rs. 10 lakhs Under Section 112 of the Customs Act. Shri Saryendra Sawant on whom a similar penalty was imposed, was the proprietor of M/s. Sahil Industries, Investigations revealed that Sawant was a dummy in whose name all imports were made by one Shri Kiran Choksi. Investigations clearly revealed that he had no role to play in the imports except that he lent his name as a proprietor of the said firm. Shri Kiran Choksi was the man behind the conspiracy to import goods under advance licences and to divert the same into domestic market. He was imposed with a penalty of Rs. 4,49,52,079/- (Rupees four crores forty-nine lakhs fifty-two thousand and seventy-nine only). Hence these appeals.
3. Appearing for Pragnesh Jain, Shri V.S. Nankani, learned senior advocate, submitted that the Commissioner’s order imposing a penalty of Rs. 10 lakhs on his client Under Section 112 is unsustainable as the Commissioner imposed the penalties on surmises and presumptions. He argued that the Commissioner’s findings as to the role of the appellant are bald and unreal; that he has imposed the penalty by stating that the CHA must be aware of the diversion and that a CGA cannot claim ignorance of the activities of Kiran Choksi. He further argued that the order of the Commissioner is non-speaking and therefore should be set aside.
4. Appearing for Kiran Choksi, the learned advocate Shri Anil Balani argued that the principles of natural justice were violated in his client’s case as the Commissioner passed the impugned order without even waiting for the reply to the show cause notice. He pleaded that he requested for time to file a reply to the show cause notice. The Commissioner however decided the case and imposed a penalty of Rs. 4.49 crores approximately ex parte Under Section 114A of the Customs Act. He argued that such an order is unsustainable.
5. Shri Satyendra Sawant himself appeared to plead his case. He pleaded that he was in no way responsible for the alleged illegal imports and the person responsible was Kiran Choksi. He pleaded that no penalty should have been imposed on him in the light of the investigation which revealed that it was Choksi who masterminded the conspiracy to import duty free material under advance licences with a specific intention to divert the same into domestic market without fulfilling the export obligation.
6. Heard both sides.
7. We have considered the various submissions. From the records, it is apparent that the Commissioner imposed a huge penalty running to Rs. 4.49 crores approximately on the appellant Kiran Choksi without waiting for his reply to the show cause notice issued to him which itself ran into 1000 pages approximately. Such an action on the part of the Commissioner is clearly in violation of the principles of natural justice. The learned advocate also argued that he needs to verify the documents relied upon before replying to the show cause notice for which an opportunity be accorded to him. We observe that the ground taken is valid.
8. In regard to penalty imposed on Pragnesh Jain, we observe that the order of the Commissioner is perfunctory. It appears that the Commissioner imposed a penalty on him without appreciating the evidence.
9. In regard to penalty imposed on Satyendra Sawant, we observe that the impugned order does not bring out how he was aware of the fact that the imports made were being diverted to DTA without fulfilling the export obligation.
10. For the reasons enumerated above, we find that the impugned order needs to be set aside and remanded for a fresh adjudication with the following directions.
11. Appellant, Kiran Choksi, may be accorded an opportunity to scrutinise and take copies of the documents relied upon and furnish reply to the show cause notice within a reasonable time, say three months from the date of such a communication to him. The appellant shall adhere to the timeframe.
12. The Commissioner shall pass a fresh order in the matter of liability to penalty Under Section 112 on Pragnesh Jain and Satyendra Sawant clearly bringing out their role in the whole episode. He shall bring out clearly how the provisions of Section 112(a) and (b) of the Customs Act are attracted in their case. They may accord an opportunity of being heard, if they so desire.
13. The appeals are thus disposed of by way of remand.