2024 (3) TMI 1051 - AT - Customs

Levy of penalty u/s 112(a) and Section 114AA of CA on Chartered Engineer - Issuance of Certificate under EPCG scheme without verification - issuance of Certificate based on documents so submitted for installation and use of such imported embroidery machine under EPCG without first verifying whether the machine in question were installed or not by Chartered Engineer - HELD THAT - There is no dispute as regards the fact that the Appellant had issued such Certificate for installation and use of machinery which is a mandatory requirement under the EPCG Scheme without verifying the installation of machine in the premises of the factory of the importer. The purpose of such certificate issued by a Chartered Engineer is not only to facilitate installation of machinery as imported under the EPCG Scheme but the installed machine also acts as a precursor for the importer to avail benefit of EPCG exemption therefore to fulfill purpose of installation it is imperative that the presence of machinery on the premises be verified. To issue such Certificate without verification of the fact that machines are installed in the factory, the appellant has facilitated to evade custom duty by the importer which under the application of law is construed to be a serious offence on the part of the Appellant. The Appellant is liable for penalty under Section 112(a) and Section 114 AA. However, considering the fact that the Appellant under bonafide belief relied on the documents to issue certificate due to which his registration was cancelled and his business suffered for three years, the Appellant deserves leniency as regards the quantum of penalty imposed. The penalty under section 112(a) from Rs.1,00,000/- reduced to Rs. 50,000/- and that under section 114AA from Rs.10,000/- to Rs. 5,000/- - appeal allowed in part.

Summary

Issues involved:
The case involves the issuance of a Certificate by a Chartered Engineer for the installation and use of imported machinery under the EPCG scheme without verifying if the machines were actually installed, leading to the imposition of penalties under Section 112(a) and Section 114AA.

Details of the Judgment:

Issue 1: Verification of Installation of Machinery
The Appellant, a Chartered Engineer, issued a Certificate for machinery installation without confirming if the machines were actually installed at the importer's factory, which is a mandatory requirement under the EPCG Scheme. The Tribunal found that by not verifying the installation, the Appellant facilitated the importer in evading customs duty, constituting a serious offense. Consequently, the Tribunal held the Appellant liable for penalties under Section 112(a) and Section 114AA.

Issue 2: Bonafide Belief and Leniency
The Appellant argued that the Certificate was issued in good faith based on the documents submitted, without knowledge of any diversion of the machines. Despite the cancellation of registration and a three-year professional ban, the Appellant maintained that the penalty was excessive. The Tribunal acknowledged the Appellant's reliance on submitted documents but emphasized the importance of verifying machinery presence for EPCG benefits. Considering the Appellant's circumstances, the Tribunal reduced the penalties from Rs. 1,00,000/- to Rs. 50,000/- under Section 112(a) and from Rs. 10,000/- to Rs. 5,000/- under Section 114AA.

*Note: The judgment was pronounced by the Hon'ble Member (Judicial) Mr. Ramesh Nair and the Hon'ble Member (Technical) Mr. Raju on 20.03.2024.*