2019 (7) TMI 1987 - AT - Customs

Tribunal Reduces Redemption Fine to Zero, Recognizes Compliance Despite Procedural Lapses

M/s. Rashtriya Chemicals & Fertilizers Ltd., M/s. ICICI Bank Ltd. Versus Commissioner of Customs (Import), Mumbai.

The Tribunal allowed the appeals, setting aside penalties and reducing the redemption fine to zero. It recognized substantial compliance with the ... Provisional release of confiscated goods - Benefit of Notification No. 84/97-Cus.dated 11.11.97 as amended which were assessed provisionally and the assessment should not be finalized accordingly - manner in which the project implementing authority certificate, which is the basis for claiming and allowing the benefit of exemption, has been countersigned - recovery of Customs Duty alongwith interest and penalty - HELD THAT:- Investigations conducted by DRI, establish beyond an iota of doubt that the signatures on the certificates submitted by the importer at the time of importation were forged. The Commissioner found these signatures as forged and has proceeded against the importers and all others concerned with importation - there is no dispute about the finding recorded by the Commissioner that the certificates produced before the Customs Authority for clearance of the goods at time of importation were having counter signatures which were forged. From the wording of the Notification, it is abundantly clear that the Joint Secretary, countersigning the certificate certifies the same thing which has been stated by the executive head. The certificate produced, continues to be the one which has been given by the executive head of Project Implementing Authority. Hence even after countersignature by the Joint Secretary, it cannot be said to be the certificate issued by him, but is only certifying the authenticity of the certificate issued. Penalty - HELD THAT:- Appellant 2 had acted under a bonafide belief, and the charge of negligence cannot be upheld this decision of tribunal cannot be applied to the facts of present case. Thus, the penalty imposed on Appellant 2 under Section 112 (a) cannot be sustained. The appeals filed by Appellant 1 and Appellant 2 against the impugned order allowed. Issues Involved:1. Confirmation and appropriation of customs duty.2. Confiscation of goods and redemption fine.3. Imposition of penalties on various entities and individuals.4. Validity and compliance with exemption notification conditions.5. Procedural and substantive compliance with customs law.6. Role and actions of the Department of Economic Affairs and other ministries.Detailed Analysis:1. Confirmation and Appropriation of Customs Duty:The Commissioner confirmed customs duty of Rs. 9,26,89,304 for imports through Mumbai Sea Port and Rs. 6,49,640 for imports through Air Cargo Complex, Sahar, under Section 18 of the Customs Act, 1962. The duty was appropriated from the deposits made by the contractor.2. Confiscation of Goods and Redemption Fine:The goods with CIF values of Rs. 22,95,67,164 and Rs. 15,93,058 were confiscated under Section 111(o) of the Customs Act, 1962. The Commissioner allowed redemption of the goods on payment of fines of Rs. 5.75 crores and Rs. 4 lakhs, respectively. Since the goods were released provisionally and were no longer available for confiscation, the redemption fine was appropriated from the revenue deposits.3. Imposition of Penalties:Penalties were imposed on various entities and individuals under Section 114A and Section 112(a) of the Customs Act, 1962. The penalties ranged from Rs. 4 lakhs to Rs. 9,33,38,944, depending on the role and involvement of each noticee.4. Validity and Compliance with Exemption Notification Conditions:The exemption under Notification No. 84/97-Cus was claimed based on certificates from the Project Implementing Authority (PIA) countersigned by a Joint Secretary. The Directorate of Revenue Intelligence (DRI) found that the countersignatures were forged. The Commissioner held that the conditions of the notification were substantially complied with except for the countersignature, which was a procedural requirement.5. Procedural and Substantive Compliance with Customs Law:The Tribunal examined whether the condition of countersignature was substantive or procedural. It was determined that the requirement of countersignature was procedural, and the substantial compliance with the main conditions of the notification was sufficient to allow the exemption. The Tribunal held that the procedural lapse did not warrant the denial of the exemption.6. Role and Actions of the Department of Economic Affairs and Other Ministries:The Department of Economic Affairs failed to nominate the appropriate Line Ministry for countersignature, leading to confusion and the subsequent forgery. The Tribunal noted the bureaucratic delays and lack of clarity from the Department of Economic Affairs, which contributed to the procedural lapses. The Tribunal emphasized the need for a more citizen-centric approach in governance to avoid such issues.Conclusion:The Tribunal allowed the appeals filed by the appellants, setting aside the penalties and reducing the redemption fine to zero. The Tribunal recognized the substantial compliance with the exemption notification and the procedural lapses due to bureaucratic inefficiencies. The appeals of other co-noticees were delinked and would be decided separately based on their individual roles and merits.