Shipping line employee's penalty under section 114AA set aside for lack of proof of connivance in document manipulation

CESTAT New Delhi set aside penalty imposed on shipping line employee under section 114AA for alleged document manipulation. The appellant, working as Operation Manager, stated in section 108 proceedings that supplier was Jubilee Middle East General Trading LLC, Dubai, based on Bill of Lading. CESTAT found no fault as statement matched shipping documents. Evidence showed manipulation occurred at Dubai branch office at actual supplier's behest, not by appellant. Revenue failed to prove employee's connivance in illegal import; rather appellant helped ascertain correct valuation. Court held no penalty can be imposed on employee acting under employer instructions without proof of fraud. Appeal allowed.

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Issues Involved:
1. Sustainability of penalty imposed u/s 114AA of the Customs Act, 1962 on the appellant.
2. Applicability of Section 114AA in the context of the appellant's actions.
3. Consideration of the appellant's role as an employee acting under employer's instructions.

Summary:

1. Sustainability of Penalty u/s 114AA:
The appellant challenged the order-in-appeal affirming the penalty u/s 114AA of the Customs Act, 1962. The penalty was imposed based on the appellant's statement made u/s 108 of the Act, which allegedly contained false information regarding the supplier of the goods.

2. Applicability of Section 114AA:
The appellant argued that the statement was made based on documents provided by the shipping line's office and under the instructions of the employer. The provisions of Section 114AA were intended to punish those who availed export benefits without actual exports, which was not the case here. The Tribunal noted that the manipulation in documents was done by the Dubai branch of the shipping line at the behest of the actual supplier, with no evidence linking the appellant to the manipulation.

3. Employee Acting Under Instructions:
The Tribunal referenced several judicial pronouncements establishing that penalties cannot be imposed on employees acting under employer instructions unless there is proof of fraud committed by the employee. The appellant, as an Operation Manager, made the statement based on the Bill of Lading provided by the employer, and there was no evidence of personal benefit or fraud by the appellant.

Conclusion:
The Tribunal found no justification for the imposition of penalty u/s 114AA on the appellant, as the manipulation was done by the Dubai office and the appellant acted under employer instructions. The appeal was allowed, and the impugned order was set aside.

Order Pronounced:
The appeal stands allowed, and the order was pronounced in open court on 18th April, 2024.

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