TaxTMI 
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2019 (7) TMI 1987
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....r para 20(v) above]. 62. Customs duty amounting to Rs. 6,49,640 in respect of B/E931881 dt 26.7.2004 in respect of imports through Air Cargo Complex, Sahar, is hereby confirmed u/s 18 of the Customs Act, 1962, and is appropriated from the amount of Rs 6,49,640 deposited by M/s Uhde India Ltd on 7.8.2004 [refer para 22(v) above]. 63. The two Bills of Entry are treated as finalized accordingly. 64. The goods having CIF value of Rs 22,95,67,164 covered by B/E No. 480059 dtd. 22.7.2004, imported through Mumbai Sea Port, are confiscated u/s 111(o) of the Customs Act 1962. I, however, allow the goods to be redeemed on payment of a fine of Rs. 5.75 Crores. Since the goods have been released provisionally on execution of Bond and B/G and are no longer available for confiscation, I appropriate the redemption fine from the revenue deposit of Rs 5.75 crores of M/s Uhde India Ltd but later replaced by the B/G of M/s RCF as per the order of the Mumbai High Court. 65. The goods having CIF Value of Rs.15,93,058 imported vide B/E No.931881 dt 26.7.2004 imported through ACC, Sahar, Mumbai, are confiscated u/s 111(o) of the Customs Act 1962. I however, allow the goods to be redeemed on payme....
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....ment Bank. 2.2 To implement the project contractor imported the impugned goods at Mumbai by claiming the benefit of exemption under Notification No 84/97-Cus., dated 11.11.97, as amended by Notification No. 85/99-Cus., dated 6.7.99, No. 119/99-Cus., dated 2.11.99, No. 75/2001-Cus., dated 6.7.2001 and 107/2001Cus., dated 12.10.2001. The benefit under this Notification was admissible to all the goods imported into India and intended to be used in a project financed by the World Bank, the Asian Development Bank etc, subject to condition that the importer produces a certificate from the executive head of the Project Implementing Authority and counter signed by an officer not below the rank of Joint Secretary to the Government of India in the concerned Line Ministry, stating that the said goods are required for the execution of the said project and that this project has duly been approved by the Government of India. 2.3 Directorate of Revenue Intelligence, New Delhi ("DRI") gathered the information that Appellant 1 was claiming the benefit of this exemption from Customs duties based on forged certificates issued by Project Implementing Authority Certificates. Therefore an inquiry and ....
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....ugh Mumbai Port, Mumbai under Bill of Entry No 480059 dated 22.07.2004 as to why: (i) the benefit of Notification No. 84/97-Cus.dated 11.11.97 as amended should not be denied in respect of goods mentioned under Bill of Entry No 480059 dated 22.07.2004 which were assessed provisionally and the assessment should not be finalized accordingly; (ii) the said goods having declared CIF value of Rs. 22,95,67,164/- and released provisionally should not be confiscated under Section 111(o) of the Customs Act, 1962; (iii) Customs duty amounting to Rs. 9,26,89,304/-should not be demanded and recovered from them under proviso to Section 28 (1) read with Section 18 of the Customs Act, 1962; (iv) penalty under Section 112(a)/114A of the Customs Act, 1962 should not be imposed upon them for their acts of omission and Commission as aforesaid; (v) the amount of Rs. 15,01,89,303/- deposited during investigation should not be appropriated towards payment of duty and penalty. 2.9 Contractor and Appellant 1 were jointly and severally called upon, vide the same show cause notice, to show cause, in writing, to the Commissioner of Customs (Air CargoImport), Air Cargo Complex, Sahar, Mumbai in res....
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....cipation by the Government of India. They had taken up a project for upgradation of their High Pressure Nitrate plant, as per the approval granted by Ministry of Chemical and Fertilizers. The project was financed by a loan of USD 5.5 million from Appellant 2 after approval from Asian Development Bank. Appellant 2 was the project implementation authority. For execution of the project Appellant 1, imported certain goods for which the Bill of Entries were filed by the contractor claiming exemption under notification No 84/97Cus dated 11.11.1997 as amended from time to time. The benefit of exemption under this notification was admissible, subject to production of a certificate from the Project Implementation Authority (Appellant 2) countersigned by an officer not below the rank of joint secretary in the Line Ministry so notified by the Department of Economic Affairs in the Ministry of Finance. Appellant 1 was genuinely under the impression that the LINE Ministry was the Finance Ministry, which is borne out by the fact that Appellant 2, the project implementing authority, asked them to approach the Ministry of Finance to obtain the counter signature of the Joint Secretar....
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....mported were to be used in a project financed by the Asian Development Bank; project implementing authority was Appellant 2 and they had issued these certificates; Commissioner has stated that the only dispute was in respect of the countersignature of the certificates. Since the Commissioner had found that the conditions of notification had been substantially complied with, he should have allowed the benefit under the notification. Reliance is placed on the decisions in the case of,- Bombay Chemical Pvt Ltd [1995 (77) ELT 3 (SC)} Diwaliben Mohanlal Mehta Charitable Trust [2003 (162) ELT 796 (Comm Appl)] Thermax Pvt Ltd. [1992 (61) ELT 352 (SC)} Associated Cement Cos Ltd. [1999 (111) ELT 257 (T)] Impugned order is based on conjectures as stated in para 48 of the order. The order based on such conjectures and not on the basis of evidence, cannot be sustained in view of the decision of the Hon'ble Apex Court in the case of Rukumanand Bairaliya [1971 (3) SCC 167]. Reliance placed by the Commissioner on the decision of Hon'ble Apex Court in case of Eagle Flask Industries [2004 (171) ELT 296 (SC)], is totally uncal....
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...., Ministry of Urban Development expressed its inability to counter sign these certificates. Matter was discussed in the Meeting taken by the Secretary, Ministry of Chemical and Fertilizers, on 27th July 2016, wherein the Secretary directed for early resolution of this long pending issue. Vide letter dated 29th March 2017, Line Ministry, informed them that they have decided to engage Quality Council of India (QCI) for causing third party verification of the imported goods. The cost of engagement of QCI was to be borne by the Appellant 1. The financial proposal for the engagement of QCI was obtained by the Appellant 1 and forwarded to Line Ministry, and Line Ministry had vide its O M dated 7th July 2017, informed about engagement of QCI. Appellants also approached Hon'ble Bombay High Court in W P (L) No 737 of 2017. Vide letter dated 16th July 2018, Ministry of Chemical and Fertilizers, informed about the approval given by the competent authority to verification report given by QCI and asked them to furnish all the documents in original for counter signature of Project Implementation Authority Certificate. Thereafter vide their letter dated 23rd August....
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....stry in the Govt. of India, that the said goods are required for the execution of the said project & that the said project has duly been approved by the Government of India." He refers extensively to para 37 onwards in the impugned order and submits that at the time of importation, and along with the Bill of Entries, the Project Implementation Authority Certificates, with forged counter signature of the Joint Secretary of the Line Ministry was produced. The Appellant plea on substantial compliance of the notification is not acceptable so far as the notification is concerned, wherein the pre-import condition of producing PIA certificate is categorically stated. Hon'ble SC judgment in case of Commissioner of Custom (Import), Mumbai Vs M/s Dilip Kumar and Company & others reported in 2018TOIL-302-SC-CUS-CB and Eagle Flask Industries {2004 (171) ELT 296 (SC)] laid down that exemption notification should be interpreted strictly, and the conditions laid down for availing the benefit of notification is to be strictly complied with, and such conditions cannot be held to be merely procedural. Appellant 1 their CFO, GM Liaison & officials of Appellant 2 and others....
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....d for the execution of the said project and that the said project has duly been approved by the Government of India; or (b) imported for use in a project that has been approved by the Government of India and financed (whether by a loan or a grant) by an international organisation listed in the said Annexure, a certificate from an officer not below the rank of Deputy Secretary to the Government of India, in the Ministry of Finance (Department of Economic Affairs) that the said goods are required for the execution of the said project and that the said project has duly been approved by the Government of India; (ii) in case the said goods are intended to be used in a project financed (whether by a loan or a grant) by the World Bank, the Asian Development Bank or any other international organisation other than those listed in the Annexure, and the said project has been approved by the Government of India, a certificate from the executive head of the Project Implementing Authority and countersigned by an officer not below the rank of a Joint Secretary to the Government of India, in the concerned Line Ministry in the Government of India, that the said goods are required for the execut....
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....of Project Implementation Authority (Appellant 2). This certificate was duly countersigned by one Shri R Banerjee, Joint Secretary (FB) in the Ministry of Finance, Department of Economic Affairs. However, investigations carried out by the Directorate of Revenue Intelligence, on the basis of information available with them revealed that the countersignatures of the Joint Secretary on the certificates produced were forged. It was also alleged that the Joint Secretary (FB) was not the proper Joint Secretary of the nominated "Line Ministry" for counter signing the certificate issued by Project Implementation authority. In view of the investigations carried out, these goods were placed under seizure and subsequently confiscated by the Commissioner as per the impugned order. 4.4 Commissioner has in para 37 to 44 of the impugned order, observed as follows:- 38. "There is no dispute regarding the fact that the impugned goods were intended to be used in a project financed by the Asian Development Bank. There is also no dispute regarding the fact that the said project has been approved by the Govt of India. There is also no dispute on the issue that the project implementation authority in....
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....ppropriate officer in the Line Ministry. That ICICI bank were aware of this responsibility is evident from the letter addressed by them to the Jt.Sec. Ministry of Finance forwarding a copy of the certificate for countersignature. The letter from ICICI bank could have been sent by post, courier or by their representative directly to the Ministry of Finance. In their wisdom they chose to send it through the representative of the project owner, M/s RCF, who in turn used the "good offices'; of their contractor, M/s Uhde Ltd, to get the countersignature. In fact M/s ICICI bank, in their written submission, have confirmed that the certificate duly countersigned by the proper officer of the MOF though forged in this case, was received back by them under a forwarding letter from the Director(ADB) of the Deptt of Economic Affairs. Thereafter, the certificate carrying the countersignature of the appropriate officer was handed over to RCF for effecting the clearance of the imported goods. 41. It is also to be noted that in response to the initial letter 11.6.2004 to the MOF, the MOF wrote back to ICICI, vide Ministry letter dated 5.7.2004, that they were not the appropriate Line Ministr....
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..... This arguments implies that the requirement of the countersignature by an officer of the level of Joint Secretary and above to the Govt of India, is redundant and at most a mere formality. The wordings of the exemption notification clearly imply that the certificate of the PIA is worthless unless it is countersigned by the appropriate officers of the LINE ministry. It cannot even be said that once the PIA has issued a certificate the countersignature by the proper officer of the Line Ministry is a mere formality and the officer has no option but to sign it. This again pre-supposes that the appropriate line Ministry to the GOI is a mere rubber stamp and that no application of mind is involved in countersigning the certificate. If that be so, why require the signature of such a senior office of the Govt of India and not let it be signed by a much junior gazetted officer like the Under Secretary. One cannot anticipate or presume the internal checks or guidelines which are necessary before the proper officer signs the certificates. One reason could be that since the line of credit of the ADB as well as the particular project under which the imports are proposed to have been effected,....
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....t Secretary of MOF directly to get his countersignature?" 4.5 Supporting these findings, of the Commissioner learned Authorized representative, who appeared for revenue, argued that the issue on law of interpretation of the exemption notification has been settled by the constitutional bench of the Apex Court in the case of Dilip Kumar & Other [2018 () ELT (SC)]. As per the law laid down by the Hon'ble Apex Court the exemption notification needs to be interpreted strictly and even if there is any ambiguity in interpretation the same should be interpreted in the favour of revenue. 4.6 There is no dispute about the interpretation of the conditions prescribed by the exemption notification. This notification was issued on 11.11.1997 and thereafter amended twice before the date of importation of the goods. Notification clearly defines the "Line Ministry" as the Ministry to be nominated by the Ministry of Finance, Department of Economic Affairs. However, the Department of Economic Affairs failed to nominate any Ministry as Line Ministry for the purpose of this notification. Appellants had approached the Department of Economic Affairs for counter signature of the Project Implementation A....
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....inistry" has been defined as the ministry in the Government of India, which has been so nominated with respect to a project by the Department of Economic Affairs in the Ministry of Finance, Government of India. According to the petitioner, it is entitled to the exemption and the certificates for the above purpose have been issued by the ICICI Bank. Pursuant to a direction issued by this Court by the order dated 6.4.2005 passed in an earlier writ petition being Writ Petition No. 578 of 2005, the Department of Economic Affairs aforesaid nominated the Ministry of Urban Development as the "Line Ministry". However, when the certificates were submitted in the 'Line Ministry" for counter signatures, the said "Line Ministry" by letter dated 29.8.2006 intimated the petitioner that the said ministry is not in a position to sign the documents with regard to the project. A copy of that order dated 20.8.2006 has been enclosed with this writ petition as Annexure 16. The letter does not mention any reason as to why the ministry is not in a position to sign or counter sign the certificates but the letter says that this decision has already been communicated to the aforesaid Department of Eco....
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....ing Authority Certificates. As is seen from the order of Hon'ble High Court of Allahabad, supra, court was compelled to direct for nomination of another line ministry whose Joint Secretary would counter sign the Project Implementing Authority Certificates. Matter was again taken up with the Department of Economic Affairs, who vide their letter dated 8th October 2010, informed as follows: "Subject: Issue of Project Implementation Authority Certificate (PIAC) for availing customs duty exemption for goods imported under ADB loan reg. Sir, This is with reference to Meeting chaired by Dr Anup K Pujari, the then Joint Secretary (MI) on 6th August 2010 wherein it was agreed that the Ministry of Urban Development (MoUD) would continue to be the Line Ministry. would forward requests for PIAC to the appropriate expert Ministry for verification/ authentication with a copy to ICICI Bank and DEA. ICICI Bank in its role as the Project Implementation Authority would facilitate such cross verification from the concerned expert Ministry, for further submission to MoUD countersigning the PIAC. The minutes of meeting is attached. M/s Triveni Engineering and M/s Rashtriya Chemicals and Fer....
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.... petitioner planned to set up a 22 MW Bagasse based co-generation Power Plant 2 at its Sugar Unit at Deoband in district Saharanpur. The petitioner approached the ICICI Bank for funding the Project to the extent of US 250 million dollars through its Asian Development Bank Line of Credit under the Urban Environment and Infrastructure Facility Project which was duly approved by the Government of India and qualified for exemption under the aforesaid two notifications dated 28 August 1995 and 11 November 1997. The Asian Development Bank also agreed to fund the Project and accordingly granted its approval by letter dated 9 December 2003. It is stated that after receiving the approval from the Asian Development Bank, the petitioner placed purchase orders on different manufacturers / vendors for supply of the goods required for setting up the Project at Deoband. The details of such supplies along with the Excise Duty and Custom Duty implications were provided to the ICICI Bank which in the capacity of a Project Implementing Authority was required to issue necessary certificates. It is stated that the necessary 43 PIA certificates were issued by the ICICI Bank to the petitioner. Accordin....
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....n had issued the essentiality certificates nor it was aware of the Project Sponsoring Authority that gave the permission. The records of the writ petition indicate that thereafter various correspondence took place between the Ministry of Urban Development and the Power Corporation. According to the petitioner, in order to remove all doubts, a communication dated 17 May 2012 was sent by the petitioner to the Ministry of Urban Development with a copy to the Power Corporation pointing out that the ICICI Bank as the Project Implementing Authority had signed the Certificates after carrying out due diligence and, therefore, it may be asked to provide the necessary details. The petitioner also made a request that they were also agreeable to the appointment of a third party agency at the cost of the petitioner for verification of the installation of such equipments. An application was accordingly moved by the petitioner for modification of the order dated 5 October 2006 passed by the High Court in Writ Petition No. 1516 of 2006 and the order was modified on 2 March 2012 to the extent that the "Line Ministry", if it had not yet considered the matter for counter signatures of the certifi....
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.... A short counter affidavit has also been filed by the ICICI Bank. Paragraphs 7, 8 and 9 are reproduced below:- "7. That the Triveni Engineering and Industries Ltd. (hereinafter referred as Petitioner Company) approached the ICICI Bank for the funding of a 22 MW Bagasse based co-generation power plant at its sugar unit situated at Deoband, Saharanpur. ICICI Bank after scrutinizing the Loan application of the petitioner company approved a sub-loan of Rs. 250 million and have forwarded the sub-project application of the petitioner company to Asian Development Bank vide its letter dated September 2, 2003 for its approval; Photocopy of the letter is being filed herewith as Annexure-SCA-'4'. That Asian Development Bank vide its letter dated December 9, 2003 has approved the subproject application for the petitioner company of Rs. 250 million under UEIF; Photocopy of the said letter is being filed herewith as Annexure-SCA-'5'. 8. That the ICICI Bank fairly replied to the query of the petitioner company on the basis of the letter issued by the Government of India dated 21.02.2000 that the ICICI Bank had executed an agreement dated 19.05.2000 with the Asian Development ....
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.... used for the project because actual use is what makes the project eligible for the Asian Development Bank funding which in turn makes it eligible for exemption and the same could not have been carried out without verification as above for reasons of lack of expertise of the Ministry of Urban development, since having been nominated as Line Ministry. In order for the subproject to be eligible for duty exemption benefit the materials procured have to be used for the project funded under the UEIF loan. The loan was taken by the Triveni Engineering & Industries Ltd., for the co-generation plant to be set up in their sugar mill at Deoband in Saharanpur District. In order to verify the said equipment in respect of which exemption is being sought by the TIEL was meant for the power project, the MoUD approached the Ministry of Power to certify the usage of the goods for the bagasse based power plant. The Ministry of Urban Development has approached the Govt. of U.P. in whose territory the plant lay, to verify the installation of the said equipment and was in actual use for the bagasse based power plant of TIEL at Deoband for which the sub loan had been provided by the borrower to the TI....
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....the date a certified copy of the order is filed by the petitioner before the Joint Secretary in the Ministry of Urban and Development, New Delhi. Upon such receipt of information the Joint Secretary shall pass a fresh order. The order impugned in the present petition shall abide by the order to be passed. The petition is, accordingly, disposed of." 4.10 On 18th January, 2016, Ministry of Urban Development issued another office memorandum stating as follows: "Subject: Issue of Project Implementation Authority Certificate (PIAC) for availing customs duty exemption for goods imported under ADB loan. The undersigned is directed refer to Ministry of Chemical & Fertilizers' D O letter No. 18016/4/2015-FCA dated 15.12.2015 on the above subject and to state that Ministry of Urban Development has no expertise to certify the import of such goods from the necessity point of view. Further, MoUD was also not consulted at the time of loan negotiation. Therefore, MoUD is not in position to sign PIACs. We are forwarding herewith all related documents to take decision at your end. 2. This issues with the approval of Competent Authority." 4.11 On 8th May 2016, Ministry of Chemical and Fert....
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....gradation of 320 MTPD HP Nitric Acid Plant at Trombay. The Company had awarded the project to M/s Uhde India Ltd. (Uhde), after following the International Competitive Bidding Procedures and the contract was finalized with NIL Custom duty under Notification No.84/97 Cus. dated 11.11.1997 as amended by Notification No.85/99 dated 6.7.1999. b) These equipment's were imported by RCF in terms of Notification No.84/97 - Cus. dated 11.11.1997 as amended by Notification No.85/99 dated 6.7.1999 which exempts the goods imported into India for execution of the Project financed by, World Bank, Asian Development Bank or any other international organization subject to the condition that: i. The project has been approved by the Government of India; ii. Such equipment's are intended to be used in a project financed by World Bank, Asian Development Bank or any other international organization; iii. A certificate is issued by the Executive Head of the Project Implementing Authority (i.e. ICICI Bank in this case) that the said goods are required for the execution of the said project and the said project has duly been approved by the Government of India; iv. The above certificate of....
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....approach Ministry of Urban Development (MOUD) who have been nominated as the line ministry for the purpose of PIACs. However, the MOUD requested Ministry of Finance to withdraw the order nominating them as the line ministry as it is inconsistent with the mandate of their ministry. h) Ministry of Finance vide its letter dated 9/15/2004ADB.I dated 8.10.2010 Ministry of addressed to ICICI Bank and a copy to MOUD, RCF Ltd. and Directorate General of Central Excise Intelligence, had informed that the Ministry of Urban Development (MOUD), would continue to be the line ministry. i) Based on this communication, ICICI bank vide its letter TFG/ADB/445 dated 20th January 2011 had sent the said certificate to the MOUD for countersignature. j) The matter was followed up regularly for the countersignature by JS, MOUD on PIAC. The Ministry of Urban Development vide its letter no. K 14011/30/2014 -UD-II dated 24th April 2014 has asked RCF to submit the relevant detail to Ministry of Chemicals & Fertilizers for their verification before countersigning the PIAC. The relevant details were forwarded by RCF to Department of Fertilizers. k) The Department of Fertilizers vide their O.M .No. 18016....
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....ant while certifying that the said machinery has in fact been installed and is being used for the purpose for which it was imported. Payment for the cost incurred for above exercise to be borne by RCF. This needs to be done in a time bound manner as the case is coming up for hearing very shortly. A communication to this effect should be conveyed to 1 MOUD to sort out the long pending issue to meet the end of justice." 4.13 As seen from the above minutes Appellants had also approached the Ministry of Urban Development, for counter signature of the Project Implementation Authority Certificates. However the concerned Joint Secretary, in the nominated Line Ministry refused to counter sign these certificates. Matter was also taken up with the Secretary Ministry of Chemical and Fertilizers. Thereafter Appellant approached Hon'ble Bombay High Court by way of writ. In para 15, of the Writ Petition 1534 of 2017 filed by the Appellant making Union of India through Secretary Department of Economic Affairs, Secretary Ministry of Urban Development, Secretary Ministry of Chemicals and Fertilizers, Secretary Ministry of Finance, Chairman Central Board of Excise and Customs and Commissioner Custo....
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....the Respondents: (i) That the 2nd Respondent should forthwith countersign the certificates issued by the ICICI bank; (ii) That in the alternative the Respondents should appoint the Ministry of Fertilizers, the 3rd Respondent herein as the Line Ministry and the 3rd Respondent should be directed to forthwith countersign the said certificates." 4.14 Ministry of Urban Development, vide their letter dated 29th March 2017 asked Quality Council of India, for conducting third party verification of the imported goods, stating as follows: "Subject: Issue of Project Implementation Authority Certificate (PIAC) for availing customs duty exemption for goods imported under ADB loan, Rashtriya Chemicals & Fertilizers Limited (RCFL)- proposal for third party verification -reg. Sir, Rashtriya Chemicals and Fertilizers Limited (RCM) had taken up the modernization of its HP Nitric Acid Plant at Trombay at an approximate cost of Rs.85 Crore and accordingly imported certain equipment for Technology up gradation of 320 MTPD HP Nitric Acid Plant at Trombay. The Company had awarded the project to M/s Uhde India Ltd. (Uhde). 2. The above equipments were imported by RCF in terms of Notification ....
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....ilizers is requested to provide necessary funding support as per the proposal from QCI for carrying out the said verification of the equipment. It is also requested that QCI may be contacted for any further query or verification and this Ministry may be intimated accordingly." 4.16 Vide their letter dated 18th July 2018, Ministry of Chemicals and Fertilizers, informed Appellant 1, stating as follows: "Subject: Issue of Project Implementation Authority Certificate (PIAC) to RCF for availing Project custom Implementation Authority Certificate (PIAC) to RCF for availing customs duty exemption. Sir, I am directed to inform that the verification report submitted by QCI vide their letter dated 30.4.2018 has duly been approved by the Competent authority and before signing the PIAC certificate towards the imported goods by RCF under ADB loan, the original documents required for the purpose. 2. In view of the above, you are requested to kindly provide the relevant original documents to DoF at the earliest, so that the same may be got signed by the authorized signatory in DoF." 4.17 Thereafter along with their letter dated 23rd August 2018, forwarded the countersigned Project....
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....fore the Tribunal, the Tribunal would examine the same, of course, after giving an opportunity to the respondents to meet with such materials." 4.19 As directed by the Hon'ble High Court of Mumbai, Appellant 1 had moved a Miscellaneous Application for production of additional documents. This application was allowed by the tribunal vide M/sc Order No M/85139-85140/2019. While allowing the Miscellaneous Applications, tribunal observed as follows: "2. The applicant has filed these Miscellaneous applications, seeking for consideration of additional documents / evidences in context with the appeal being No. C/1627/2005 filed before this Tribunal. Appeal No. ST/86353/2018. 3. On perusal of the documents annexed to the Miscellaneous applications, we find that those evidences are required for deciding the issue whether the benefit of exemption Notification No. 84/1997-Cus dated 11.11.1997 should be extended to the applicant or not. We do not appreciate the submissions made by the learned D.R. for Revenue that those additional evidences were not in context with post clearance of the goods, which are evident from the records. Therefore, the Miscellaneous applications filed by the ....
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....d by the appellants. This is not an empty formality. It is the foundation for availing the benefits under the Notification. It cannot be said that they are mere procedural requirements, with no consequences attached for nonobservance. The consequences are denial of benefits under the Notification. For availing benefits under an exemption Notification, the conditions have to be strictly complied with. Therefore, CEGAT endorsed the view that the exemption from operation of Rule 174, was not available to the appellants. On the facts found, the view is on terra firma. We find no merit in this appeal, which is, accordingly, dismissed." 4.22 From the reading of the above para of the decision in the case of Eagle Flask Industries, it is evident that the condition of notification which was not complied with, was found to be substantial and not a procedural condition. Holding the condition to be substantial, the Apex Court has denied the benefit of exemption claimed. In case of Dilip Kumar & Co, relied upon by the Authorized Representative, Hon'ble Apex Court has referred to the decision rendered in the case Hari Chand Shri Gopal [2010 (260) ELT 3 (SC)] and has observed as follows: "38. ....
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....ditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption." 39. The Constitution Bench then considered the doctrine of substantial compliance and "intended use". The relevant portions of the observations in paras 31 to 34 are in the following terms - "31. Of course, some of the provisions of an exemption notification may be directory in nature and some are mandatory in nature. A distinction between the provisions of a statute which are of substantive character and were built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in their nature, on the other, must be kept clearly distinguished... Doctrine of substantial compliance and "intended use" 32. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably be expected of it, but failed or faulted in some minor or inconsequent aspects whi....
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....ute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the "essence" of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance with those factors which are considered as essential." 51. In Hari Chand case (supra), as already discussed, the question was whether a person claiming exemption is required to comply with the procedure strictly to avail the benefit. The question posed and decided was indeed different. The said decision, which we have already discussed supra, however, indicates that while construing an exemption notification, the Court has to distinguish the conditions which require strict compliance, the noncompliance of which would render the assessee ineligible to claim exemption and those which require substantial compliance to be entitled for exemption. We are pointing out this aspect to dispel any doubt about the legal position as explored in this decis....
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....e plain reading of the above, it is quite evident that for the purpose of allowing exemption under this notification, the substantial requirement is production of "a certificate from the executive head of the Project Implementing Authority", before the Assistant/ Deputy Commissioner of Customs at the time of clearance of the goods stating that "the said goods are intended to be used in a project financed (whether by a loan or a grant) by the World Bank, the Asian Development Bank or any other international organization other than those listed in the Annexure, and the said project has been approved by the Government of India." The requirement of countersignature by the Officer not below the rank of a Joint Secretary in the concerned Line Ministry, is only to certify the correctness of the assertions made by the executive head of Project Implementing Authority. Even in very old circular No 55/98/70-Cus IV dated 25.08.1970, Board after taking the opinion of law Ministry has clarified in respect of counter signature done by the Assistant Commissioner on the Bill of Entry stating as follows: "Check of assessment on bills of entry by Asst. Collectors, Position regarding, Assessment Ord....
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....ionary, Revised Fourth Edition, page 421, St Paul Minn West Publishing Co.) 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. 4.23 Black Law Dictionary has explained the word "Procedure", stating as follows: PROCEDURE. .The mode of proceeding by which a legal right is enforced, as distinguished from the law which gives or defines the right, and which, by means of the proceeding, the court Is to administer; the machinery, as distinguished from its product. Per Lush, L. J., in 7 Q. B. Div, 333. That which regulates the formal steps in an, action or other judicial proceeding; a form, manner, and order of conducting suits or prosecutions. Mahoning Valley Ry. Co. v. Santoro, 93 Ohio St. 53, 112 N.E. 190, 191. The judicial process for enforcing r....
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.... Department of Economic Affairs had failed to nominate any ministry as the Line Ministry for the purpose of this project. When no Ministry had been nominated as Line Ministry at the time of importation, a fact which had been noted by the Hon'ble Allahabad in its decision dated 15.10.2006 how can this condition of countersignature by the Joint Secretary of Line Ministry have been implemented. It is not the case that the appellant did not make an effort to get the certificate countersigned. However in absence of proper nomination of the Ministry as line ministry, even the Department of Economic Affairs was unable to guide them properly. 4.27 It is more interesting to note that while notification 84/97Cus as amended provides the condition of countersignature by the Joint Secretary in the Line Ministry, nominated by the Department of Economic Affairs, Ministry of Finance and in para 44 of the impugned order, Commissioner holds that this conditions is substantial and mandatory by recording reasons which are not prescribed by the notification or by way of any instruction, circular issued. We do not find any procedure and manner of such countersignature prescribed anywhere. In absence of....
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....t has in the case of Indian Social Action Forum [Civil Appeal No 1510 of 2020 order dated March 6, 2020] held as follows: "20. Where the provisions of a statute are vague and ambiguous and it is possible to gather the intention of the legislature from the object of the statute, the context in which the provisions occur and purpose for which it is made, the doctrine of "reading down" can be applied. To save Rule 3(v) from being declared as unconstitutional, the Court can apply the doctrine of "reading down"." 4.29 In case of JSW Dharamtar Port Pvt Ltd [2019 (20) GSTL 721 (Bom)], Hon'ble Bombay High Court by adopting the principle of reading down, held as follows: 14. From the perusal of this provision, one thing becomes clear that the respondents cannot link the requirement of refund application being made within the period of limitation envisaged in sub-section (3) of Section 103, with the condition of production of certificate from the Ministry that the contract had been entered into before 1-3-2015. Both these conditions namely; production of certificate as well as making the applications within the period of limitation have to be fulfilled, but the assessee cannot be expect....
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....ssioner has in his order clearly observed that except for the requirement of countersignature on the Project Implementation Authority Certificate, all other conditions prescribed for claiming the benefit of exemption under this notification are fulfilled and satisfied. 4.33 It is also fact available on the record that the Project Implement Authority Certificate which was produced by the importer's at the time of clearance of imported goods, before the jurisdictional Assistant/ Deputy Commissioner was bearing the countersignature, which investigations show was forged. However it is not even the case of the revenue that Appellant 1 had himself forged this countersignature. Appellant 1 and Appellant 2, had approached the concerned officers in the Department of Economic Affairs, for getting the Project Implementation Authority Certificate countersigned. However, the Department of Economic Affairs vide their letter dated 05.07.2004, responded not by pointing/ directing them to the concerned line ministry, (that was to be nominated by them), instead they reiterated the condition of Notification. When Appellant, again approached the Department of Economic Affairs, the certificate with fo....
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....40 (at ACC, Sahar) They were also directly involved in paying bribe to Shri Rakesh Yadav Jr. Finance Officer in the Deptt. Of Economic Affairs. Instead of reporting this matter to the Police or to the Sr. officers of Shri Yadav they choose to be a party to this crime going to the extent of even negotiating the amount. Because of their actions the goods became liable for confiscation u/s 111(o) of the Customs Act, 1962, since the goods were exempted subject to production of certificate countersigned by the Joint Secretary from the LINE Ministry, which they did not possess. This condition of the notification was not satisfied since they produced forged certificates. Since the goods are liable for confiscation they themselves become liable for penal action u/s 114A of the Customs Act 1962. Section 114A is invoked wherein any duty is not levied or short levied by reason of collusion of willful Misstatement or suppression of facts. In this case it is very clear that M/s Uhde India colluded with RCF and Mr Rakesh Yadav (all were privy to the act of bribe giving/taking) to obtain forged certificates. M/s Uhde India also suppressed the fact that these certificates had been procured only af....
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.... that no Ministry has been nominated as line ministry for the project. In view of this reason we do not find any fault in the order of the Commissioner holding the goods liable for confiscation. However, since Commissioner has in the impugned order, as is evident from para 51, not determined the quantum of redemption fine, by determining the market value of goods as provided by Section 125 of the Customs Act, 1962. The relevant provision is reproduced below: "SECTION 125. Option to pay fine in lieu of confiscation. - (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: Provided that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscate....
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....or goods Imported under ADB Loan. The true copy of the Project Implementation Authority Certificate (PIAC) counter signed by ICICI Bank limited has duly been signed by the Additional Secretary (Fertilizers) on behalf of Ministry of Finance (Copy enclosed)" If the Department of Economic Affairs, who had to nominate the Line Ministry, had acted fairly and nominated the Line Ministry in time the fraud committed by their own officers could have been checked and all the inconvenience and project overrun costs in the case of this project approved by Government of India could have been avoided. The project overrun costs already incurred by the Appellant 1, are sufficient and imposition of any further redemption fine will only add to the same. All these project overrun costs in some way or other get reflected back on the government exchequer only. Thus while we hold that the imported goods are liable for confiscation, and have been rightly confiscated by the Commissioner in terms of Section 111 (o) of the Customs Act, 1962, we reduce the redemption fine imposed to Rupees Zero. 4.38 Commissioner observation that the Appellant 1 was direct beneficiary of the Acts of contractor and Shri Rak....
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....ad High Court, and it was only on the direction of the High Court that the Department of Economic Affairs nominated the Ministry of Urban Development as line ministry, much after these imports were made. The failure on the part of the Department of Economic Affairs to nominate the Line Ministry in time, cannot be negligence of anyone else except them. Notification No 84/97-Cus, was amended twice before the imports in the present case. Definitely at time of amending the notification the Ministry of Finance, Department of Revenue, responsible for issuing this notification and its amendments would have reviewed the notification. However even while undertaking such a review this thing escaped their knowledge. For all these failures, can Appellant 2, who has acted bonafidely as per his belief, be made guilty of negligence for imposition of penalty under Section 112 (a)? 4.40 The Commissioner has relied upon the decision in case of Airport Authority of India Ltd [2003 (158) ELT 33 (T-Del)] to hold that a penalty under Section 112 (a) can be imposed for the act of negligence. "7. The argument of the learned Counsel that only duty on the missing goods could be demanded from the appellan....
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....e is 4.41 Tribunal has in case of Air Freight Ltd [2004 (172) ELT 229 (T) ], held as follows: "13. Besides, the levelled allegations can at best be termed as an act of negligence for which no penalty can be imposed under Section 112(a). Provisions of Section 112(a) require that the person must have a knowledge or reason to believe that his acts of commission or omission would lead to confiscation of imported goods. It is nobody's case that the appellants had prior knowledge, that the goods imported through missing diplomatic bags would be liable to confiscation. It is not even established that the appellants had any knowledge of the arrival of such bags. The question of knowledge of the contents can arise only thereafter. In the absence of any such findings by the lower authorities, the penalty imposed on the appellants cannot be sustained." 4.42 Since we hold 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, we are unable to sustain the penalty imposed on Appellant 2 under Section 112 (a). 4.43 While considering this case we have been guided by what....
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....ssioner and DRI authorities wherein he had significantly suppressed the fact that cheque had been tendered on the basis of a false declaration regarding availability of funds. All along he stuck to the plea that mere late realization was of no consequence and since cheque was not dishonored duty at post-budget rates cannot be levied. (2) Respondent No. 3 - Shri P.R. Ashok was fully aware of the fact about non-availability of funds. But he made a false declaration about sufficiency of funds. The cheque was not on a Bank at Jamnagar but at Rajkot. This was a part of a well planned plan to perpetuate frauds. (3) Respondent No. 4 - Shri Nitin Bhat was in charge of Customs clearance related work. In his letters to the Customs authorities he clearly stated about availability of funds when moving for cancellation of warehouse licence. He also played active part in ensuring that the Bank does not return the cheque. 44. In view of the aforesaid, it was concluded by the Commissioner that in respect of the imported goods the aforesaid three persons have done or omitted to do acts which acts or omissions have rendered such goods liable for confiscation and they had also abetted in acts w....