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TMI Blog2019 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty has been imposed under Section 112 (b) as well as 114AA of the Act. A perusal of the said provisions clearly reveals that the penalty under the said provisions can be imposed wherever there is an element of mens rea or conscious knowledge, which is a sine qua non for imposition of the penalty - The facts of the case in hand do not reveal any such element of mens rea or conscious knowledge qua the importer. There is no active role attributed to the Respondent, which justifies the imposition of the penalty under Section 112 (b) and Section 114AA of the Act. Nothing has emerged even in the criminal investigation. Imposition of penalties u/s 112 (a) of Customs Act - HELD THAT:- 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 - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mported by M/s Anurag Trading Company without payment of duty on the basis of forged Customs Duty Exemption Certificates. Under the said show cause notice, penalties were also proposed against Sh. Kailash Gupta, Director of M/s. Trinetra Impex Pvt. Ltd., CHA/Respondent. On further investigation, another Show-cause notice dated 06.03.2013 was issued in respect of 39 Bills of Entries filed by M/s Anurag Trading Co. for the period between 14.08.1996 to 23.07.2006. In the said Show-cause notice as well, penalties were proposed against Mr. Kailash Gupta, Managing Director of the Respondent CHA. The aforesaid Show-cause notices were adjudicated vide common Order-in-Original No. 09-10/2015/SRB/Commissioner (Import) dated 30.06.2015 and a penalty of ₹ 5 lacs under Section 112 (a) of Act was imposed on Mr. Kailash Gupta, Managing Director of CHA in respect of show cause notice dated 08.07.2011; and a penalty of ₹ 10 lacs was imposed under Section 112 (b) and ₹ 5 lacs under Section 114 AA of the Act in respect of show cause notice dated 06.03.2013. For the sake of completeness, it would be appropriate to note that under the afore-noted Order-in-Original, the demand and reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued by an officer not below the rank of Joint Secretary to Government of India, Ministry of Defence. Despite being aware of the above legal position, he did not exercise due care in checking the genuineness of the exemption certificates and carelessly accepted the version of the importer that the General Manager of the OEF was equivalent in rank to the Joint Secretary of Government of India. The CHA was obligated to verify whether the goods were eligible for exemption or not. Since it failed to discharge its statutory obligations, it is liable to the imposition of the penalty under of the Act. 6. We have heard Mr. Harpreet Singh, learned senior standing counsel for Customs Department at considerable length. 7. The relevant provision under the Act relating to imposition of penalty on the CHA are as follows: Section 112 - Penalty for improper importation of goods, etc-Any person,- (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act , or (b) who acquires possession of or is in any way co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular, 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. (emphasis supplied) 8. At this juncture, before we go delving into the merits of the case, it would be worthwhile to note that the Commissioner of Customs (General) had also initiated proceedings against the CHA under the provisions of Customs House Agent Licensing Regulations, 2004, which culminated in passing of the order dated 12.05.2015 whereby a punishment of forfeiture of security deposit of ₹ 50,000 was imposed. The said order was impugned by the Customs Department before the Court by way of appeal under Section 130 of the Act before this Court titled as Commissioner of Customs (Import and General) New Delhi v. M/s. Trinetra Impex Pvt. Ltd, CUSAA 62/2017 on the ground that the punishment was not proportionate and commensurate with the allegations. The said appeal has been decided by an order dated 11.12.2017 and the appeal of the Customs has been dismissed in limine. The observations of the Court in the said order are germane and relevant for deciding the present appeal and same are being extracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reau of Investigation ( CBI ) had also investigated the issue of bogus exemption certificate. They have not charge-sheeted the Respondent. As per the charge-sheet, placed on record, FIR under Section 120B of the Indian Penal Code read with Sections 420/467/468/471 of the Indian Penal Code has been filed against Mr. Shyam Mehrotra, Proprietor of M/s Anurag Trading Company, Kanpur and Mr. Anand Mehrotra, Manager and Authorized Signatory of M/s Anurag Trading Company, Kanpur and the proprietorship concern. CBI after investigating role and involvement of the Respondent and found that the CHA (the Respondent) had received a copy of the bill of exchange with zero customs duty duly signed by the then Custom officer. The CBI has also stated in the charge sheet that the Respondent CHA had retained photocopies of the said bill of exchange for its office records and had forwarded the original copies of the same along with his bill to the importer for getting payments - thus clearly implying that the CHA had performed its part of the duties and no role in the forging of the bill of exchange. The Respondent s direct involvement with the importer i.e. the beneficiary was not established. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowledge qua the importer. There is no active role attributed to the Respondent, which justifies the imposition of the penalty under Section 112 (b) and Section 114AA of the Act. Nothing has emerged even in the criminal investigation. 11. In respect of the show cause notice dated 08.07.2011, the imposition of the penalty has been made under Section 112 (a) of the Act in respect of the goods which have been held to be liable to be confiscated under Section 111 of the Act. Here, the imposition of the penalty 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.] 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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