TaxTMI 
TaxTMI 
2019 (11) TMI 72
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....lcanizing press machines, hydraulic splitting machines, hydraulic flashing machines, hydraulic shaving machines etc for supplying the same to Ordinance Equipment Factory (OEF), Kanpur. At the time of filing of Bills of Entries, the importer claimed exemption from customs duty under the Notification No. 39/96-Customs dated 23.07.1996 on the strength of Customs Duty Exemption Certificates (CDECs) purportedly issued by OEF, Kanpur. Subsequently, Customs Department received an input from the Chief Vigilance Officer, Ministry of Defence, Ordinance Factory Board, Kolkata through the Chief Vigilance Officer, CBEC, New Delhi informing them that the CDECs filed by M/s Anurag Trading Company had not been issued by OEF, Kanpur and that the importer had committed a fraud. On the basis of the aforesaid information, the Customs Department carried out investigations and pursuant thereto, a Show-cause notice dated 08.07.2011 was issued with respect to the Bills of Entries pertaining to the goods imported by M/s Anurag Trading Company without payment of duty on the basis of forged Customs Duty Exemption Certificates. Under the said show cause notice, penalties were also proposed against Sh. Kailas....
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....l Excise and Service Tax Appellate Tribunal (hereinafter as 'CESTAT'), allowed the appeal of CHA in respect of both the show cause notices and set aside the penalties, holding that there was nothing on record to show that the CHA had any role to play in forging the certificates and misleading the customs authorities. 5. In the present appeal, the Customs Department impugns the order of the CESTAT allowing the appeal of the CHA, on the ground that the Tribunal was not justified in dropping the penalties, without considering the merits of the case. The Tribunal has failed to consider the failure on part of the Respondent in discharging its duties and responsibilities as a CHA. Mr. Kailash Gupta, the Managing Director of the Respondent company in his statement dated 05.03.2009 admitted that he knew that exemption certificates were signed by the General Manger, OEF, Kanpur and as per the relevant notifications, the certificates ought to have been issued by an officer not below the rank of Joint Secretary to Government of India, Ministry of Defence. Despite being aware of the above legal position, he did not exercise due care in checking the genuineness of the exemption certificates an....
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....usand rupees], whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (ii), to a penalty [not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest]." (emphasis supplied) "Section 114AA - Penalty for use of false and incorrect material- If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods." (emphasis supplied) 8. At this juncture, before we go delving into the merits of the case, it would be worthwhile to note that the Commissioner of Customs (General) had also initiated proceedings against the CHA under the provision....
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....d 17th November, 2017, the appellant was asked to clarify when departmental action was taken against the officers of the department, who accepted the certificate. Custom officers had also accepted the documents without suspecting foul play and notwithstanding that the document was not signed by the approved officer. 7. Today, during the course of hearing, learned counsel for the appellant has handed over a copy of the letter written by the Assistant Commissioner (Legal) stating that no action appears to have been taken against the officers of the department, though statements of 11 officers were recorded. The reason was that nothing could be found to establish malafide intention of the officers and their connivance. 8. The Central Bureau of Investigation ('CBI') had also investigated the issue of bogus exemption certificate. They have not charge-sheeted the Respondent. As per the charge-sheet, placed on record, FIR under Section 120B of the Indian Penal Code read with Sections 420/467/468/471 of the Indian Penal Code has been filed against Mr. Shyam Mehrotra, Proprietor of M/s Anurag Trading Company, Kanpur and Mr. Anand Mehrotra, Manager and Authorized Signatory of M/s Anurag ....
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....3, penalty has been imposed under Section 112 (b) as well as 114AA of the Act. A perusal of the said provisions clearly reveals that the penalty under the said provisions can be imposed wherever there is an element of mens rea or conscious knowledge, which is a sine qua non for imposition of the penalty. This is evident from a plain reading of Sections 112 and 114AA of the Act, which uses the expressions "does or omits to do" , "or abets the doing or omission of such act", "which he knows or has reason to believe are liable to confiscation under Section 111"- in Section 112 and "knowingly or intentionally" in Section 114AA . The facts of the case in hand do not reveal any such element of mens rea or conscious knowledge qua the importer. There is no active role attributed to the Respondent, which justifies the imposition of the penalty under Section 112 (b) and Section 114AA of the Act. Nothing has emerged even in the criminal investigation. 11. In respect of the show cause notice dated 08.07.2011, the imposition of the penalty has been made under Section 112 (a) of the Act in respect of the goods which have been held to be liable to be confiscated under Section 111 of the Act. Her....