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Case Law Details

Case Name : Shahid Ali Vs Principal Commissioner Customs (Import) (CESTAT Delhi)
Appeal Number : Customs Appeal No. 50105 of 2016
Date of Judgement/Order : 02/06/2021
Related Assessment Year :
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Shahid Ali Vs Principal Commissioner (CESTAT Delhi)

Conclusion: Adjudicating authority had imposed penalty on the importing firm as well as the proprietor thereof which amounted to double jeopardy. The penalty could not be imposed against the sole proprietor of proprietor ship firm along with the penalty upon said firm.

Held: Department based upon intelligence regarding undervaluation and mis­declaration into imports of ‘Food Supplements’ from several Delhi based importers namely, M/s. Jaskaran, M/s. SES M/s. Fox, M/s. Mondeo and M/s. Kamlin and that these importers were suppressing Retail Sale Price (RSP) of ‘Food Supplements’ in order to evade CVD; that searches were conducted at the premises. An information was received that all imports of these importers were controlled by one Shri Sunny Gujral, proprietor of M/s. Jaskaran and M/s. Fox. Accordingly search was also conducted at the residence of Shri Sunny Gujral. Department also observed that MRP prices were not the actual MRP but fake stickers were prepared in conformity with the declared under invoiced prices to the Customs. The department alleged that the MRP stickers which were meant for the goods to be sold from his shop were having much higher value than the one as was mentioned on the stickers affixed on the food supplements at the time of import. Department alleged that this had been done by Shri Sunny Gujral in order to evade CVD who intentionally declared lesser RSP of food supplements. With these observations the show cause notice was served not only upon Shri Sunny Gujral but also upon the companies for whom he was the proprietor, i.e. M/s. Jaskaran Enterprises and M/s. Fox. The show cause notice was also served upon remaining above named firms and the respective proprietors along with one of the dealer M/s. General Nutrition and the proprietor thereof, proposing the demand of duty along with interest and the proportionate penalties upon the firms and their proprietors. Assessees approached the Tribunal contending that the Original Adjudicating Authority had wrongly imposed penalties on the importing firm/ proprietorship firms as well as / proprietor thereof under section 112 and 114AA of the Customs Act, 1962 which amounted to double jeopardizing the assessees. It was held that though there was no illegality in the order of the adjudicating authority below while confirming the allegations of under-invoicing the price of imported food supplement by manipulating the invoices against Shri Sunny Gujral based upon his admission. But in the absence of any document produced by the department to prove their allegation, as against other importers and proprietors either in the form of Bill of Entry or any invoices either of the foreign supplier or the fake invoices with respect to any of these importers and that admission of Sunny Gujral could not be read against the other importer irrespective of the fact that these firms were managed and controlled by Sunny Gujral himself none else than Shri Sunny Gujral could be penalised. In such circumstances, the order under challenge confirming the demand of differential duty from the remaining importers other than M/s. Jaskaran Enterprises and imposition of penalty on other proprietors other than Shri Sunny Gujral was not sustainable in the eyes of law. Adjudicating authority had imposed penalty on the importing firm as well as the proprietor thereof which amounted to double jeopardy. The penalty could not be imposed against the sole proprietor of proprietor ship firm along with the penalty upon said firm.

FULL TEXT OF THE CESTAT DELHI ORDER

1. Present order disposes of following six appeals as have arisen out of common show cause notices No. 6119-29/2017 dated 28.11.2008 being decided by common Order-in-Original No. 12/2015 dated 20/21.10.2015:

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