Decided on June 30,1986



S. Kalyanam, Member (J) - (1.)THIS appeal is directed against the Order of Collector of Customs, Madras, dated 13.6.1985 imposing a penalty of Rs. 50,000/- on the appellant under Section 112 of the Customs Act, 1962, hereinafter referred to as the Act.
(2.)On the basis of information, on 15.11.1984, the Officers of the Special Investigation Branch of the Customs Department inspected the licensed private bonded warehouse of M/s. Maschmejer Aromatics India Limited, GST Road, Madras and found a considerable quantity by way of shortfall in the warehoused goods in the bonded store room. One Thiruvengadam was found to be in the possession of key of Customs lock of one warehouse and he gave a statement before the authorities that the imported raw materials were bonded in the private bonded warehouse, licensed by the Customs Department and whenever materials were required, the materials would be taken delivery from the warehouse and the keys of the warehouse were with one Sheriff, the Secretary of the Company. The appellant was the Managing Director of the Company till 16.9.1984 and the Chief Executive thereafter. The Purchase Officer of the Company, Mr. Mohd. Rahimatullah also gave a statement dated 16.11.1984 before the authorities that it is the appellant herein at whose instance and direction, goods from bonded warehouse were removed without the knowledge of the Customs authorities and without observing customs formalities. It is in these circumstances, after further investigations, proceedings were instituted against the appellant and Ors. which ultimately culminated in the present impugned order, now appealed against.
Shri V.P. Raman, the learned Counsel for the appellant submitted that the charge against the appellant is rested merely on the statement of one Rahimatullah dated 16.11.1984 and inasmuch as the same was retracted on the same day by means of a telegram and later by means of a representation, no weight could be attached to such retracted statement, in law, without sufficient corroboration. It was further urged that de-hors the retracted statement of the said Rahimatullah, there is absolutely no other evidence at all against the appellant for any act of omission or commission or for abetment or the appellant was privy to the illegal removal of non-duty paid goods from the Customs bonded warehouse. The learned counsel further contended that the appellant has been proceeded against and penalised merely because he happened to be the Managing Director till 16.9.1984 and thereafter, the Chief Executive of the Company, it was urged that either as a Managing Director or as a Chief Executive, it will be virtually impossible for a person like the appellant to be personally supervising each and every activity in the company and the liability being penal in nature, it is for the Department to establish by acceptable legal evidence that the appellant was guilty of commission or omission of guilty of abetment in the removal of goods from the customs bonded warehouse in contravention of law. The learned Counsel also assailed the finding against the appellant under the impugned order contending that Shri Sheriff, the Secretary of the Company has been exonerated of a similar charge under the impugned order on similar evidence on the ground that he was implicated only by one Thiruvengadam in his statement dated 15.11.1984 which was not corroborated by any other evidence. It was urged that the adjudicating authority on his own reasoning adopted and applied in the case of Sheriff should have exonerated the appellant since indisputably as against the appellant excepting the retracted statement of Rahimatullah, there is no other evidence connecting him with the commission of any offence. The learned Counsel also urged that inasmuch as the Company, M/s. Maschmejer Aromatics India Limited, has been fastened with a duty liability on the goods removed from the bonded warehouse coupled with a penalty of Rs. 3 lakhs, imposition of a penalty on the Executive of the Company, is not warranted either under law or on the evidence available on record in this case. Finally, it was urged that though the records clearly revealed that the Board of Directors, the persons who admittedly in control of the affairs of the Company knew about the illegal clandestine removal of non-duty paid raw materials, no penal action has been taken on any of them much less any proceedings instituted either and the appellant being one who has absolutely no pecuniary interest at all in the removal should not be singled out for penal liability.

(3.)THE learned SDR Shri K.K. Bhatia submitted that the appellant having been the Managing Director and Chief Executive of the Company at or about the relevant time, was in overall charge of the affairs of the Company and should be held responsible for removal of goods from the bonded warehouse in contravention of law. THE learned SDR further urged that even though Rahimatullah has retracted his statement, reliance could be placed on the same but fairly conceded that there is not enough of corroboration for the same. THE learned SDR also did not dispute seriously the plea of the appellant that different standards has been adopted so far as the appellant is concerned and though Shri Sheriff, the Secretary of the Company has been exonerated on the ground that his implication by Thiruvengadam has not been corroborated by any other evidence, the appellant has been visited with the penalty presumably because he was the Managing Director originally and later Chief Executive of the Company.

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