2019 (11) TMI 570 - AT - Customs

Imposition of penalty u/s 112(a) for ₹ 5 lakh and Section 114AA of CA - it was alleged that the appellant being a Chartered Engineer issued a Certificate in respect of import of embroidery machine under EPCG whereas the machines were not installed and diverted - HELD THAT - The whole purpose of requirement of the Certificate from the Chartered Engineer is that machine which are imported under EPCG have been installed in the factory. Only on that basis the benefit of EPCG exemption is available to the importer. Without verifying the fact that the machines are installed in the factory the appellant was facilitated to evade Customs duty, therefore, there is a serious offence on the part of the appellant. The appellant is rightly liable for penalty under Section 112(a) and 114AA. However, considering the fact that the appellant have been kept away from the business for three years, as per the document submitted by the Ld. Counsel issued from the Institute of Engineers India dated 28-11-2017, the appellant have suffered as he could not carry out his profession for 3 years, hence, the appellant deserves a leniency - quantum of penalty reduced. Appeal allowed in part.

Summary

Issues:
Penalty under Section 112(a) and 114AA for issuance of Chartered Engineer Certificate without verifying installation of imported machines under EPCG scheme.

Analysis:
The appeal challenged penalties imposed under Sections 112(a) and 114AA of the Customs Act due to the issuance of a Chartered Engineer Certificate without verifying the installation of imported machines under the EPCG scheme. The appellant argued that the certificate was issued in good faith based on documents submitted, claiming no direct involvement in duty evasion. The appellant cited previous judgments to support the argument that penalties were not applicable. Additionally, the appellant highlighted the cancellation of registration by the Institute of Engineers India as a significant punishment already endured.

The Revenue, represented by the Assistant Commissioner, maintained that the penalties were justified as the incorrect certificate issuance facilitated duty evasion by the importer, posing a serious risk to revenue. The Revenue emphasized the importance of verifying machine installation for EPCG benefits and argued against any leniency in penalty imposition.

Upon review, the Tribunal acknowledged the necessity of the Chartered Engineer Certificate for EPCG compliance and noted the serious nature of the offense resulting from the failure to verify machine installation. Despite affirming the appellant's liability for penalties under Sections 112(a) and 114AA, the Tribunal recognized the appellant's three-year professional ban as a significant punishment. Consequently, the Tribunal reduced the penalties from ?5 lakh each to ?2 lakh each, granting partial relief to the appellant.

In conclusion, while upholding the penalties for the Chartered Engineer's oversight in verifying machine installation, the Tribunal considered the appellant's previous professional restrictions and reduced the penalties as a form of leniency, partially allowing the appeal.