TaxTMI 
TaxTMI 
2024 (6) TMI 779
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....for transacting business of their clients at Mumbai. The appellant had facilitated customs clearance of power tools imported from China by certain importers during the year 2017. On the basis of investigation conducted by the Directorate of Revenue Intelligence, Delhi Zonal Unit (DRI) against various importers, it was concluded that the said Shri Suresh Kumar Aggarwal, Partner of M/s I.C.S. Cargo had connived with the importers for undervaluation of imported goods with an intent to evade customs duty. In this regard, DRI investigation interalia, recorded statements of Shri Suresh Kumar Aggarwal, Partner of M/s I.C.S. Cargo and on the basis of his role played in import duty evasion case, show cause proceedings were initiated vide SCN dated 11.04.2018. The said show cause notice was adjudicated by the ADG (Adjudication), Mumbai vide impugned order in confirmation of the demands proposed in the SCN and imposing penalty on the importers, besides imposition of penalty of Rs.5,00,000/- on the appellant under Section 114AA of the Customs Act, 1962. Feeling aggrieved with the impugned order, the appellant had preferred this appeal before the Tribunal. As a matter of....
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....ct misuse of IEC, that his suspicion was not aroused as the values of power tools declared by Sharma's companies were in the same range as the values declared by Yusuf Pardawala. I find that Mr. Suresh K. Aggarwal in his statement dated 15.01.2018 and 22.01.2018 has admitted to the fact that the documents for the Bills of Entry for import of power tools by the companies owned by Mr. Siddharth Sharma should have been received from him, but since he was aware that since the said consignments were actually owned by Mr. Yusuf Pardawala he received tge sane from Mr. Yusuf Pardawala and that he filed the bill of entry in the companies of Mr. Siddharth Sharma, that after the clearance of the consignments of Mr. Yusuf Pardawala the same were despatched by them to Bhiwandi warehouse of Mr. Yusuf Pardawala. He further submitted that the payments and charges for clearance etc. were paid to them from the accounts of concerned companies in which the bill of entry was filed. Thus, he was aware that the IECs of Shri. Siddharth Sharma were utilized by Shri Yusuf Pardawala. Therefore, it was but natural that the values declared in Shri. Siddharth Sharma's companies were similar to....
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....rupulous activities undertaken by the importers, undoubtedly attracts penal action under the relevant Rules. Accordingly, I hold that Mr. Suresh K Aggarwal, Partner of M/s I.C.S. Cargo (Customs Broker firm having License No. 11/1248 at Mumbai Customs) is liable for penal action under Section 114AA of the Customs Act, 1962. To arrive at the above Conclusions, I have also relied upon a number of judgements which are enumerated in above Paragraphs 5.11.6 to 5.11.9. I do not reproduce the same for the sake of brevity. 5.16.4 As regards penal liability has proposed under Section 117 of the Act, it is noticed that: Section 117:Penalties for contravention, etc., Not expressly mentioned.- Any person who contravenes any provision of this Act or abets any such contravention or who fails to comply with any provision of this Act which it was his duty to comply, where no express penalty is elsewhere provided for such contravention of failure, shall be liable to penalty not exceeding four lakhs rupees. I do not find it a fit case for penalty under Section 117 as acts and omissions of Noticee are covered within the penal provisions as provided under Secti....
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....at it has been introduced for the first time in the said Act and brought into effect from 13.07.2016. The said provision lays down that a maximum penalty not exceeding five times the value of the goods is liable to be imposed in certain situations stated therein. I also find that the Customs Act, 1962 inter alia, provide for imposition of penalties under various sections such as Section 112, 114, 114A ibid which was in existence prior to the insertion of Section 114AA. Further, some more sections have also been introduced for imposition of penalty, subsequent to the introduction of section 114AA viz. Section 114AB, 114AC ibid. 8.2 Thus in order to ascertain the true intent of the legal provisions of newly introduced Section 114AA ibid, it is relevant to look into the existing legal provisions for imposition of penalty and the background of such new legal provisions. Section 111 ibid deals exclusively with situations covering confiscation of the imported goods, and Section 113 ibid deals exclusively with situations covering confiscation of the export goods. Consequently, penalty under Section 112 ibid deals with imported goods and penalty under Section 114 ibid deals with export ....
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....ade under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty 19[not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), 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. Penalty for short-levy or non-levy of duty in certain cases. 114A. Where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the ....
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....r to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person." (Emphasis supplied) 8.3 From a careful analysis of the above legal provisions it can be seen that Section 112 ibid deals with omission or commission of an action, in relation to goods, acquiring possession of goods, various actions such as carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing of such goods, all of which make such goods liable for confiscation. Similarly, Section 114A ibid deals with non-levy or short levy of customs duty arising on account of the reason of collusion or any wilful misstatement or suppression of facts by any person. In contrast to the above, legal provisions under Section 114AA ibid does not mention about the goods which are liable for confiscation, but it deals with the situation of certain conduct of a person, in transaction of any business for the purpose of Customs Act, 1962. Any transaction for the purpose of customs law sans goods, can therefore be indicative that the various actions mentioned in Section 114AA ibid, such as making or sign....
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.... documents are being created in order to avail illegal benefits of export incentives like drawback, rebate etc. 8.5 In this regard, I also find that in order to appreciate and properly apply the legal provisions of the taxation statute, I would take the guidance provided in the judgement dated 06.04.2021 given by the Hon'ble Supreme Court in the case of Deputy Commissioner of Income Tax & Anr. Vs. Pepsi Foods Ltd. in Civil Appeal No. 1106 of 2021. In this case, while dealing with constitutional validity of third proviso to Section 254(2) of the Income Tax Act, 1962, which was struck down by a judgement of the Hon'ble Delhi High Court wherein they held that such a provision which did not permit the Income Tax Appellate Tribunal to give extension of a stay order beyond 365 days, even in a case where the assessee was not responsible for delay caused in hearing the appeal and has laid down the importance of following the 'golden rule' of interpretation of statute. The relevant paragraph in the said judgement of the Hon'ble Supreme Court is extracted and given below: "24. The learned ASG then relied upon Commr. of Customs V. Dilip Kumar & Co. (2018) 9 SCC 1 (paragraphs 32 to....
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....s in equity rather than in injustice, then such construction should be preferred to the literal construction. Furthermore, in the instant case we are dealing with an artificial liability created for counteracting the effect only of attempts by the assessee to reduce tax liability by transfer. It has also been noted how for various purposes the business from which profit is included or loss is set off is treated in various situations as assessee's income. The scheme of the Act as worked out has been noted before." 25. The law laid down by the impugned judgment of the Delhi High Court in M/s Pepsi Foods Ltd. (supra) is correct. Resultantly, the judgments of the various High Courts which follow the aforesaid declaration of law are also correct. Consequently, the third proviso to Section 254(2A) of the Income Tax Act will now be read without the word "even" and the words "is not" after the words "delay in disposing of the appeal". Any order of stay shall stand vacated after the expiry of the period or periods mentioned in the Section only if the delay in disposing of the appeal is attributable to the assessee. The appeals of the revenue are, therefore, dismissed." 8.6 F....
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....ew impugned in this case. The decision of the Larger Bench has not been challenged by the Department being of the view that repeated special leave petition raising the same issue was unnecessary. 6. The sub-section which was introduced in terrorem cannot be construed as punishing the assessees for matters which may be completely beyond their control. For example, many of the Tribunals are not constituted and it is not possible for such Tribunals to dispose of matters. Occasionally by reason of other administrative exigencies for which the assessee cannot be held liable, the stay applications are not disposed within the time specified. The reasoning of the Tribunal expressed in the impugned order and as expressed in the Larger Bench matter, namely, IPCL v. Commissioner of Central Excise, Vadodara (supra) cannot be faulted. However we should not be understood as holding that any latitude is given to the Tribunal to extend the period of stay except on good cause and only if the Tribunal is satisfied that the matter could not be heard and disposed of by reason of the fault of the Tribunal for reasons not attributable to the assessee." On the basis of above judgment of Hon'b....
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....nalty on the CHA is founded on the ground that he has abetted the offence. Though, for imposition of penalty in respect of the cases falling under Section 112(a) of the Act, mens rea may not be required to be proved as condition precedent, however, when it comes to imposition of the penalty on an abettor, it is necessary to show that the said essential element/ingredient is present. [Ref. : Amritlakshmi Machine Works v. The Commissioner of Customs (Import), [2016 SCC OnLine Bom 66 = 2016 (335) E.L.T. 225 (Bom.)]. 12. In the present case, there is no element of mens rea or conscious knowledge which can be attributed to the CHA. The investigation carried out by the CBI and other facts reveal that the CHA acted bona fide and merely facilitated the imports on the strength of the documents which were handed over to him by the importer. There is no sufficient material on record to show that the CHA was actively involved in the fraudulent availment of the exemption by the importer, warranting levy of personal penalty. Therefore, we do not find any ground to interfere with the findings of the Tribunal visà-vis the respondent. 13. Since, the present appeal does not ....
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....tion of new section 114AA) 62. Clause 24 of the Bill reads as follows: After section 114A of the Customs Act, the following section shall be inserted, namely:- "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." 63. The information furnished by the Ministry states as follows on the proposed provision: "Section 114 provides for penalty for improper exportation of goods. However, there have been instances where export was on paper only and no goods had ever crossed the border. Such serious manipulators could escape penal action even when no goods were actually exported. The lacuna has an added dimension because of various export incentive schemes. To provide for penalty in such cases of false and incorrect declaration of material particulars and for giving false statements, declarations, etc. for the purpos....
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....KHANDURI, Chairman, Standing Committee on Finance. NEW DELHI 12 December, 2005 21 Agrahayana, 1927 (Saka) From the above detailed discussion and examination of the legal provisions as introduced in the Taxation (Amendment) Bill, 2005, which inter alia includes Section 114AA, it could be concluded that Section 114AA was examined in detail by the Standing Committee on Finance, before it was brought into the Customs Act by Taxation Laws (Amendment) Act, 2006 w.e.f. 13.07.2006. During the examination of the Section 114AA by the Standing Committee on Finance on the representatives of trade expressing that the proposed provisions were very harsh, which might lead to harassment of industries, by way of summoning an exporter/importer to give a 'false statement' etc., it was explained by the Ministry of Finance that new Section 114AA has been proposed consequent to the detection of several cases of fraudulent exports, where the exports were shown only on paper and no goods crossed the Indian border. The imposition of enhanced penalty is applicable for serious frauds being committed as no goods are being exported, but papers are being created for availing ....
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.... appreciation of the aspect of various rules for interpretation of statute, I had attempted to apply firstly the 'literal rule' of interpretation to see the plain meaning of the legal provision contained in Section 114AA ibid as discussed in paragraphs 8.1 to 8.4 above, and thus have come to the conclusion that the provision for imposition of penalty under Section 114AA is applicable in a situation and on any person making an action stated therein sans goods. 10.2 In order to further examine whether such attempt has lead me to the proper conclusion, I had also attempted to apply the 'mischief rule' of interpretation by analysing what was the legal provision for imposition of penalty before insertion of the Section 114AA ibid, what was the mischief or defect for which the penal provision under Section 114AA was firstly introduced, what remedy the Parliament has provided to cure such defect and what is the true reason of the remedy in my analysis in paragraphs 9.1 and 9.2 above. Thus, I had come to the conclusion that the penalty provided under Section 114AA ibid is only in respect of transacting any business with Customs sans goods, i.e., fake paper transactions without inv....
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....री से डी à¤à¤¸ (à¤à¤¨) 04.0007/2006–08 REGISTERED NO. DL—(N)04/0007/2006-08 à¤à¤¾à¤°à¤¤ का राजपतà¥à¤° The Gazette of India 35] No. 35] असाधारण EXTRAORDINARY à¤à¤¾à¤— II खणà¥à¤¡ 1 PART II – Section 1 पà¥à¤°à¤¾à¤§à¤¿à¤•à¤¾à¤° से पà¥à¤°à¤•à¤¾à¤¶à¤¿à¤¤ PUBLISHED BY AUTHORITY नई दिलà¥à¤²à¥€, शà¥à¤•à¥à¤°à¤µà¤¾à¤°, जà¥à¤²à¤¾à¤ˆ 14, 2006 / आषाढ़ 23, 1928 NEW DELHI, FRIDAY, JULY 14, 2006 / ASADHA 23, 1923 इस à¤à¤¾à¤— में à¤à¤¿à¤¨à¥à¤¨ पृषà¥à¤ संखà¥à¤¯à¤¾ दी जाती है जिससे कि वह अलग संकलन के रूप में रà¤....