2023-VIL-317-DEL-CU
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CUSTOMS High Court Cases

Customs – Under-invoicing – Levy of Penalty on exporter-overseas supplier - appellant is entity located in Dubai and is engaged in the business of supplying confectionary items such as wafers, cookies, toffees etc. - appellant has been exporting the said goods to various importers in India - DRI collected evidence and material during the investigations established the allegation that confectionary items exported by the appellant cleared on the basis of false invoices reflecting – whether penalty can be imposed under the Customs Act against an exporter-overseas supplier – HELD - The contentions that no penalty under Section 112(a) of the Customs Act can be imposed on the appellant as it is an overseas entity and the Customs Act does not have any extra-territorial operation, is unmerited. In the present case, the appellant was found to be complicit in clearance of the goods on the basis of false invoices issued by the appellant – Further, the appellant had collected part of the consideration for the goods in India, which was sent to it through hawala. The alleged offences have been committed within the territory of India. Thus, the contention that the levy of penalty under Section 112(a) of the Customs Act on the appellant was beyond the purview of the Customs Act is wholly misconceived - The appeals are accordingly dismissed - Whether penalty can be levied against the appellant when other co-noticees have settled the liability before the Settlement Commission – HELD - The contention that no penalty can be levied against the appellant since other co-noticees have settled the liability before the Settlement Commission is insubstantial. The show cause notices were issued to several persons. The fact that other co-noticees had approached the Settlement Commission and had settled their liability cannot absolve the appellant of its liability under the Customs Act - although the show cause notices were issued to various noticees, the proposal to impose penalties/liability were separate and severable. Discharge of liability of one of the noticees either by making payment without a contest, or by settlement before the Settlement Commission would not absolve the other noticees from their liability - Jurisdiction of DRI to issue Show Cause Notice – HELD - The contention that the officers of DRI had no jurisdiction to issue show cause notices to the appellant, is also unmerited. It is material to note that penalty has been imposed on the appellant under Section 112(a) of the Customs Act. The question as to levy of penalties is required to be adjudicated under Section 122 of the Customs Act. In the present case, the order was adjudicated by the Joint Commissioner of Customs and there is no dispute that he had the jurisdiction to adjudicate the question of levy of penalty under Section 122 of the Customs Act - The question as to whether the officers of DRI are proper officers for issuance of notice under Section 28 of the Customs Act does not arise in the present case. Ld. Tribunal has rightly rejected the said contention on the ground that the show cause notice issued to the appellant was not under Section 28(4) of the Customs Act
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