2017 (12) TMI 244 - AT - Customs

Recovery of duty u/s 28 of CA, 1962 - levy of penalties for abetment of customs duty - forgery of certificates prescribed for availing concessional rate of duty - With the finding that the certificates issued by Line Ministry were not in existence at the time of presentation of bills of entry, the adjudicating authority fastened duty liability and imposed penalties on the appellant for failure to comply with the condition in the notification requiring the production of the prescribed certificate - time limitation. Held that - the eligibility being contingent upon essentiality of the goods for the project and approval of the Government of India which can be evidenced only by the countersignature of the designated official and such being non-existent in the impugned imports, the eligibility does not exist even till today - The failure of the Government of India in the Department of Economic Affairs, Ministry of Finance to nominate a Line Ministry for the project at the time of import does not waive the requirement of compliance with the condition in the notification to evidence essentiality and approval. Neither does it condone the production of a forged certificate to accord it a sanctity that it fails to possess ab initio. The role of Shri Rakesh Yadav in the fabrication of the certificates has been sufficiently established. That M/s ICICI Bank and M/s Jindal Steel & Power Ltd have a major financial stake in the execution of the project is axiomatic. Any delay in obtaining the countersignature of the designated officer in the certificate issued by M/s ICICI Bank would have repercussions for both that would motivate them to collaborate in submission of a certificate that was not in accord with the prescriptions in the notification. Indeed, they stood to derive the benefits emanating from the fabrication of the documents - Their protestations of being the victims of cross-fire may not find many takers as the exemption notifications claimed by them cannot but have been within their knowledge and the crucial role of Line Ministry is unambiguously clear. The definition of Line Ministry i.e. offers no scope for any doubt that the Line Ministry may have been the Department of Economic Affairs in Ministry of Finance as that Department was enjoined to nominate one and, that too, for each project. Their failure to press for the nomination of such Line Ministry and their acquiescence in the ingenuity of a personage of that Department to fill the void, albeit without authority, is not easily obliterated. Jurisdiction - validity of the notice leading to the impugned order - Held that - the decision in the case of Mangali Impex vs. Union of India 2016 (5) TMI 225 - DELHI HIGH COURT relied upon - matter on remand. It would be appropriate to remand the matter to the adjudication authority - appeal allowed by way of remand.

Issues Involved:
1. Liability for recovery of duty under section 28 of the Customs Act, 1962.
2. Penal consequences under the Customs Act, 1962.
3. Validity and genuineness of certificates used for availing concessional duty.
4. Bar of limitation on the show-cause notice.
5. Role and collusion of various entities in the forgery of certificates.
6. Proper procedure for countersigning certificates by the designated Line Ministry.

Detailed Analysis:

1. Liability for Recovery of Duty:
The core issue was the liability for the recovery of duty under section 28 of the Customs Act, 1962, due to the post-clearance investigation revealing forged certificates used to avail concessional duty. The Commissioner of Customs (Import), Mumbai, held the appellant liable for duty, interest under section 28AB, and imposed fines and penalties. The appellant argued that the project met the eligibility requirements and that the goods were not dutiable, thus not liable for confiscation or penalty. However, the investigation showed that the certificates presented were forged, rendering the goods ineligible for the concessional duty, thus justifying the recovery of duty.

2. Penal Consequences:
The order imposed penalties under section 112 of the Customs Act, 1962, on the appellant for using forged certificates. The appellant contested the penalties, arguing no evidence of collusion with the forger, Shri Rakesh Yadav. Despite this, the adjudicating authority found that the appellant’s actions led to the improper availing of duty exemptions, justifying the penalties.

3. Validity and Genuineness of Certificates:
The certificates issued by ICICI Bank, meant to be countersigned by the designated Line Ministry, were found to be forged. The adjudicating authority determined that the signatures of Dr. Adarsh Kishore and the forwarding letters by Shri SC Garg were fabricated by Shri Rakesh Yadav. The appellant’s reliance on these forged certificates invalidated their claim for concessional duty.

4. Bar of Limitation:
The appellant argued that the show-cause notice issued on 12th May 2005 was barred by limitation. However, the adjudicating authority held that the extended period was applicable due to the fraudulent nature of the documents, thus negating the limitation bar.

5. Role and Collusion in Forgery:
The investigation revealed that Shri Rakesh Yadav forged the necessary signatures. Statements from various officials, including Dr. Adarsh Kishore and Shri SC Garg, confirmed the forgery. The adjudicating authority concluded that ICICI Bank and the appellant had a financial stake in the project and facilitated the submission of forged documents, thus implicating them in the forgery.

6. Procedure for Countersigning Certificates:
The proper procedure required the Project Implementation Authority’s certificates to be countersigned by an officer not below the rank of Joint Secretary in the designated Line Ministry. The absence of such countersignatures rendered the certificates invalid. The Ministry of Environment & Forests was later nominated as the Line Ministry but did not countersign the certificates, maintaining the invalidity of the imports for concessional duty.

Conclusion:
The Tribunal upheld the findings of the adjudicating authority, confirming the forgery of certificates and the appellant’s liability for duty and penalties. The appellant’s arguments regarding the validity of the certificates and the bar of limitation were rejected. The matter was remanded to the adjudicating authority for reconsideration in light of the pending Supreme Court decision in Mangali Impex case, ensuring judicial discipline.

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