TaxTMI 
TaxTMI 
2026 (8) TMI 808
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....hgarh. For clearance of the imported goods. The appellant filed Bill of Entry No. 1289 dated 22.05.2003 and Ex-Bond Bills of Entry Nos. 274 dated 23.06.2003 and 282 dated 26.06.2003. The customs duty payable on the imported goods was sought to be discharged by utilizing nine Transfer Release Advices [TRAs] purportedly issued against DEPB licences in terms of Notification No. 45/2002-Cus. dated 22.04.2002. Subsequently, the Customs authorities at ICD, Ballabhgarh sought verification of the said TRAs from the issuing authority, namely Jawaharlal Nehru Custom House [JNCH] Nhava Sheva. Upon verification, the Special Intelligence and Investigation Branch [SIIB] JNCH informed that the DEPB licences and the corresponding TRAs were not genuine and had not been issued by the competent authority. On being informed of the alleged forgery, the appellant, deposited the customs duty amounting to Rs. 1,29,43,927/- vide TR-6 Challan dated 12.08.2003 under protest. Thereafter, SIIB, JNCH conducted detailed investigations and, vide letter dated 14.10.2003, informed that nineteen DEPB licences, including the nine licences utilized by the appellant, were found to be forged. 2.1 On the basis of the ....
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....rections, the adjudicating authority fixed dates for personal hearing. At the request of the appellant, cross-examination of Shri Vijay Singh Bishnoi was conducted on 01.03.2023) During cross-examination, Shri Bishnoi stated, inter alia, that he had independently dealt in sale and purchase of import licences; admitted having business dealings with the appellant in relation to five import licences, but denied acting as an agent of M/s ACME Trading Co. or M/s Ankur Impex in relation to the impugned TRAs. After considering the remand proceedings, cross-examination, written submissions and personal hearing, the Commissioner of Customs passed the impugned Order-in-Original No. 21/VC/Commr/Munjal Showa/23-24 dated 17.10.2023, wherein he held that the appellant had failed to establish its bona fides or due diligence in utilizing the forged DEPB licences/TRAs and concluded that penalty under Section 114A of the Customs Act, 1962 was attracted. Accordingly, the Commissioner imposed a penalty of Rs. 1,29,43,927/- upon M/s Munjal Showa Ltd. under Section 114A, while extending the statutory option to pay 25% of the penalty in terms of the first proviso to Section 114A. However, the Commissione....
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....rough cogent, affirmative, and credible evidence demonstrating the conscious involvement of the appellant in the alleged wrongdoing. In support of his contention, learned Counsel relied upon the decision of M/s Uniworth Textiles Ltd. vs. Commissioner of Central Excise- 2013 (288) E.LT. 161 (S.C.). Further, learned counsel submitted that the CESTAT, while remanding the matter on the issue of penalty expressly recognised that confirmation of duty does not automatically justify imposition of penalty. In Para 6.1 of the said Order, the Tribunal observed that "penal action, in our opinion, is warranted only when there is knowledge or intention on the part of the appellants about the fraud committed." Thus, the Tribunal itself had held that the mere fact that the subject scrips were ultimately found to be forged was not sufficient to sustain penalty, unless the Department establishes that the Appellant had knowledge of the fraud or was a conscious participant therein. The said principle was subsequently echoed by the Hon'ble Supreme Court in the appellant's own case wherein it was held that whether the buyer had knowledge of the fraud or forged DEPB licences and whether the buyer....
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.... Appellant's bona fide belief regarding their authenticity. In view of the above, learned counsel submitted that the appellant had taken all possible steps to verify the authenticity of the subject scrips and TRAS. Without prejudice, he further that the appellant was eligible for the benefit of reduced penalty in terms of proviso to Section 114A of the Customs Act. Without prejudice, the learned counsel submitted that they had paid 25% of the penalty imposed vide the impugned Order within 30 days from the date of communication of the impugned Order. Accordingly, the appellant has duły complied with the conditions prescribed under the first and second provisos to Section 114A and was entitled to the benefit of reduced penalty to the extent of 25% of the penalty imposed. 4. Learned Authorized Representative appearing for the Department reiterated the findings in the impugned order and submitted that based on the impugned Order-in-Original dated 17.10.2023, the only surviving issue after the remand by the CESTAT and the directions of the Hon'ble Supreme Court is the imposition of penalty under Section 114A of the Customs Act, 1962 and the personal penalties upon the of....
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....gation. Even during the cross-examination, no material emerged establishing that Shri Bishnoi had sold the disputed nine forged licences to the appellant. On the contrary, Shri Bishnoi categorically denied any involvement with the impugned forged DEPB/TRAs. Hence, the appellant's defence was based on mere allegations without proof and had rightly been rejected. Learned AR stated that the appellant had failed to exercise the minimum level of due diligence expected from a prudent importer. The appellant admittedly did not verify the authenticity of the DEPB licences from DGFT, did not verify the identity of Shri Bishnoi, did not verify the credentials or addresses of M/s ACME Trading Co. and M/s Ankur Impex, and did not verify the genuineness of the licences from the original DEPB holders. Such complete failure to undertake elementary verification clearly established negligence and disentitled the appellant from claiming any equitable relief or bona fide protection. The statutory mandate of Section 114A of the Customs Act, 1962 is absolute and leaves no judicial discretion to reduce or waive the penalty once the short-levy or non-levy of duty has been established by reason of col....
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....r factual matrix, the issue involved in the present appeal is no longer res integra and stands settled by a catena of judicial pronouncements are available to uphold the imposition of penalty under Section 114A of the Customs Act, 1962. In Freudenberg Nonwovens India Pvt. Ltd. v. Commissioner of Customs (supra), the Tribunal reiterated that in cases involving forged TRAS/DEPB scrips, the liability to penalty under Section 114A depends upon the extent of due diligence exercised by the importer and, following the earlier decision in Mercedes Benz India Pvt. Ltd., affirmed the principles governing such cases. In Nidhi Enterprises vs. Commissioner of Customs (Export), New Delhi (supra), the Tribunal held that an importer claiming to be a bona fide purchaser must establish that reasonable precautions and due diligence were exercised before availing the benefit of transferable duty credit scrips, and also reiterated that the question of penalty is to be examined on the basis of the facts attributable to the importer. In Mercedes Benz India Pvt. Ltd., O.A. Associates & Pashupati Acrylon Ltd. versus Commissioner of Customs & Others (supra), the Tribunal elaborately examined the legal posit....
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....hat the benefit of reduced penalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provided also that where the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, for the purposes of this section, the duty or interest as reduced of increased, as the case may be, shall be taken into account: Provided also that in a case where the duty or interest determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, the benefit of reduced penalty under the first proviso shall be available if the amount of the duty or the interest so increased, alongwith the interest payable thereon under section 28-AB, and twenty-five per cent. of the consequential increase in penalty have also been paid within thirty days of the communication of the order by which such increase in the duty or interest takes effect: Provided also that where any penalty has been lev....