[ORDER PER: ANGAD PRASAD]

The present appeal has been filed against the Order-in-Original No. 03/2013 – Adjn (Cus)(Commr) dated 25.03.2013 (impugned order) passed by Commissioner of Customs, Central Excise & Service Tax, Hyderabad, whereby, penalty of Rs. 20,00,000/- has been imposed upon the appellant under Section 112(a) and 114AA of the Customs Act, 1962.

The facts, in brief, is that, the Directorate of the Revenue Intelligence (DRI), Chennai Zonal unit, conducted investigation into import of furniture from China / Hong Kong by Indian importers including M/s Om Overseas. Investigation allegedly revealed systematic undervaluation of imported goods through issuance of dual invoices. As per investigation, the appellant, being Director of M/s Maxx Access Ltd., Hong Kong, coordinated procurement of furniture from Chinese manufacturers, facilitated visits of Indian buyers to China, finalized prices, supervised manufacture and export of goods and arranged issuance of two sets of invoices, mainly one invoice reflecting actual transaction value and another invoice refracting suppressed value for Customs purposes. It was further alleged that differential amounts between actual invoice value and declared Customs value were remitted through unofficial / private channels. Accordingly, proceedings were initiated proposing penalty under Sections 112(a) and 114 AA of the Customs Act.

The allegation against the appellant as per Show Cause Notice, as thus:

“3.1 From the foregoing, it appears that:

a) Shri Ashok Kharey, Director of M/s Maxx Access Ltd., has been in contact/invited the parties intending to import furniture from China and facilitated visit to the manufacturing units / furniture showrooms in China, assisted them in identifying the proper furniture required by them and in placing orders.

b) Once the price and other terms such as advance payment etc., are finalized, the Indian Importers leave China. The rest of the activities such as getting the goods manufactured according to client’s quality standards, procuring the same from such manufacturers and stuffing into the containers and exporting from China to India were taken care by Shri Ashok Kharey.

c) The manufacturers in China issue an invoice for full / actual value of the goods in the name of M/s Maxx Access Ltd., the firm of Shri Ashok Kharey.

d) Shri Ashok Kharey issues two sets of invoices, one for the actual values and another for the suppressed / reduced values in the name of his company M/s. Maxx Access Ltd., in favour of the Indian Importer. Similarly in the case of imports from M/s. Shenzhen, Shri Mahesh received two sets of invoices.

e) The invoice with actual value, referred to as “LPI Statement” / “Actual Invoice is for the purpose of payment of full amounts by the Indian Importers to Shri Ashok Kharey and the other invoice with suppressed / reduced values, referred to as “BPI Statement” / “Commercial Invoice” / “Invoice” is issued for the purpose of submission to Customs Authorities at the time of assessment of duties and transferring of such suppressed / reduced amounts through banking channels.

f) The differential amount between the Actual Invoice and Invoice submitted to Customs is paid to Shri Ashok Kharey or to his wife Smt. Seema Kharey at Hyderabad as “Payment through private channels by the Indian importers. In a similar fashion, Shri Mahesh sent the differential amounts through private channels M/s. Shenzhen.”

The appellant filed a reply and contested the allegations made in Show Cause Notice, upon adjudication the Learned Commissioner confirmed the allegations and imposed penalty. Hence, the present appeal.

Learned Counsel for the appellant submits that the appellant is merely Director of a foreign company, incorporated outside India and no proceedings could have been initiated against him without making a company itself a noticee. Further, without impleading the principal offender (Export Company), penalty proceedings against its director alone are not s