SUNDEEP AURORA Vs. COMMISSIONER OF CUSTOMS (EXPORTS), CHENNAI

JUDGEMENT

(1.) BOTH the appellants have challenged the imposition of penalty by Commissioner of Customs (Exports) by OIO 3133/04 dated 30 -9 -2004. The appellants were directors of a Company M/s. Pharmed Chemicals. They had imported raw materials under DEEC Scheme for manufacture of final products and for exporting the same. The appellants could not fulfil the export obligation due to several factors including the closure of the unit. All the export orders were cancelled and there was impossibility on the part of the company to fulfil the export obligation. The imported goods have been seized and duty is confirmed which is not challenged. The appellants are only challenging the imposition of penalty of Rs. one lakh each under Section 112(a) of the Customs Act. The learned Counsel submitted that in the circumstances the appellants could not discharge the export obligation due to reasons beyond their control and the company is closed on account of these factors. Further, it cannot be said that the appellant -directors had any intention to dispose of the goods in the market for making profit. He submitted that in the absence of mens rea, penalty cannot be imposed. He relied on the ratio of the following rulings wherein penalty has been set aside in similar circumstances.

(2.) LEARNED SDR defended the Order and pointed out that as the appellants have not fulfilled the export obligation therefore they are liable to be penalized.

(3.) ON a careful consideration and on perusal of the impugned order, it is clearly seen that there were several extenuating circumstances which prevented the appellants from fulfilling the export obligation. As the chemical was likely to loose shelf life, therefore on few occasions they were left with no alternative but to sell the same in the local market. The appellants had given all the details to the investigating authorities. The order itself clearly brings out that appellants had no mens rea in not fulfilling export obligations. The High Court by their order dated 9 -6 -2004 directed for liquidation of the Company as they were unable to fulfil the export obligation as the export orders had been cancelled. In view of these circumstances, it cannot be said that the appellant has not fulfilled the export obligation with a view to enrich themselves. The ruling cited by the Counsel has set aside the penalty imposed in similar circumstances. Therefore respectively following the said judgments, the penalty on the appellant is set aside by allowing the appeals.