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TMI Blog2024 (6) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... ibid. Section 112 ibid deals with omission or commission of an action, in relation to goods, acquiring possession of goods, various actions such as carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing of such goods, all of which make such goods liable for confiscation. Similarly, Section 114A ibid deals with non-levy or short levy of customs duty arising on account of the reason of collusion or any wilful misstatement or suppression of facts by any person. Furthermore, in the case of Commissioner of Customs (Import) Vs. Trinetra Pvt. Limited [ 2019 (11) TMI 72 - DELHI HIGH COURT ] wherein the department having aggrieved that penalty imposed on CHA/CB under Sections 112(b) and 114AA of the Customs Act, 1962 was deleted by the Tribunal, had filed Customs Appeal. In the said case, the Hon ble Delhi High Court have held that in the absence of an element of mens rea or conscious knowledge which can be attributed to CHA/CB, and where a CHA/CB had merely facilitated imports on strength of documents that were handed over to him by importer no penalty can be imposable under Section 112(b) or 114AA ibid. The provisions of Section 114AA ibid does not apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow cause proceedings were initiated vide SCN dated 11.04.2018. The said show cause notice was adjudicated by the ADG (Adjudication), Mumbai vide impugned order in confirmation of the demands proposed in the SCN and imposing penalty on the importers, besides imposition of penalty of Rs.5,00,000/- on the appellant under Section 114AA of the Customs Act, 1962. Feeling aggrieved with the impugned order, the appellant had preferred this appeal before the Tribunal. As a matter of abundant caution, it is clarified that present appeal is limited to the extent of assailing the impugned order only for imposition of penalty on the appellant. 2.1 Heard both sides and perused the records of the case. I have also examined the submissions advanced by the learned Advocate appearing for the appellant and the learned Authorized Representative of the Department. Further, I have also perused the additional written submissions in the form of paper books submitted by both sides along with citation of case laws which both sides have mentioned in support of their case. 3. The impugned order deals with various issues covering rejection of declared value of imported goods, re-determination of the value of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by them to Bhiwandi warehouse of Mr. Yusuf Pardawala. He further submitted that the payments and charges for clearance etc. were paid to them from the accounts of concerned companies in which the bill of entry was filed. Thus, he was aware that the IECs of Shri. Siddharth Sharma were utilized by Shri Yusuf Pardawala. Therefore, it was but natural that the values declared in Shri. Siddharth Sharma s companies were similar to that of Shri Yusuf Pardawala. 5.16.2 I find that Shri Suresh K Aggarwal, Partner of M/s I.C.S. Cargo (Customs Broker firm having License No. 11/1248 at Mumbai Customs) in his statement recorded under section 108 of the Customs Act, 1962 has admitted to the fact that he was aware that Mr. Yusuf Pardawala of M/s Yuri Impex Pvt. Ltd. was utilizing the IEC of other entities for making imports. In this respect I find that as per Section 7 of the Foreign Trade (Development and Regulation) Act, 1992, as amended in 2010 read along with Rule 12 of Foreign Trade (Regulation) Rules, 1993, every person should make import or export only with Importer-Exporter Code number allotted to him. Further as per Para 2.9.2 of Handbook of Procedures, Vol.1, 2009-12 an IEC number allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of this Act which it was his duty to comply, where no express penalty is elsewhere provided for such contravention of failure, shall be liable to penalty not exceeding four lakhs rupees. I do not find it a fit case for penalty under Section 117 as acts and omissions of Noticee are covered within the penal provisions as provided under Section 114 AA of the Act. xx xx xx xx xx 5.17. In view of the detailed discussion herein above, I find that: ... (vii) Mr. Suresh K Aggarwal, Partner of M/s I.C.S. Cargo (Customs Broker firm having License No. 11/1248 at Mumbai Customs) is liable to penalty under Section 114AA of the Customs Act, 1962. Accordingly, I pass the following Order. ORDER xx xx xx xx xx 6.7(c) I impose penalty of Rs. 5,00,000/- (Rupees Five Lakhs Only) on Mr. Suresh K Aggarwal, Partner of M/s I.C.S. Cargo (Customs Broker firm having License No. 11/1248 at Mumbai Customs) under Section 114AA of the Customs Act, 1962. 5. As the original authority has dropped the proposal for imposition of penalty on the appellant under Section 117 of the Customs Act, 1962 and had imposed penalty on the appellant only under Section 114AA ibid, the short issue for consideration before me is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 112 ibid deals with imported goods and penalty under Section 114 ibid deals with export goods. Section 114A ibid deals with penalty for short levy or non-levy of customs duty in certain cases. As the provisions of imposing penalty under Sections 114AB, 114 AC ibid have been brought into the law subsequent to the issue of Show Cause Notice in this case, there are arises no need to discuss the same for the present case. For ease of reference the relevant legal provisions under Section 112, 114A ibid are extracted and reproduced below: Penalty for improper importation of goods, etc. 112 . 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 concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable, (i) in the case of goods in respect of which any prohibition is in force under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or interest, as the case may be, as determined under sub-section (8) of section 28 shall also be liable to pay a penalty equal to the duty or interest so determined : Provided that where such duty or interest, as the case may be, as determined under subsection (8) of section 28, and the interest payable thereon under section 28AA, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the duty or interest, as the case may be, so determined : Provided further that 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 or increased, as the case may be, shall be taken into account : Provided also tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person doing such action being liable for penalty, is without reference to the goods, and is only relating to declaration, statement or document without presence of goods. In the perspective of import of goods, the act of making any declaration or statement or documents for customs law starts from filing of Import Manifest under Section 30 ibid and filing of Bill of Entry under Section 46 ibid in case of licit import, when the vessel enters into the country/India; and in case illicit import when the smuggled goods enters the customs waters for taking necessary action as provided under the Customs Act, 1962. Since, in all these situations elaborated above, as goods are involved, invoking the penal provisions under Section 114AA ibid is not appropriate, rather penal provisions under Section 112 or 114A is more appropriate. 8.4 In the perspective of export goods, the action of declaration or statement or documents for customs law starts firstly at the time of filing of Shipping Bill under Section 50 ibid for assessment of export goods, even before the export goods are brought to customs area for inspection of export goods. In this regard, it is also important to note that in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax. The present appeals have nothing to do with determining eligibility to tax. They have only to do with a frontal challenge to the constitutional validity of an appeal provision in the Income Tax Act. Also, it is important to remember that the golden rule of interpretation is not given a go-by when it comes to interpretation of tax statutes. This Court in CIT v. J.H. Gotla (1985) 4 SCC 343, put it well when it said: 46. Where the plain literal interpretation of a statutory provision produces a manifestly unjust result which could never have been intended by the Legislature, the Court might modify the language used by the Legislature so as to achieve the intention of the Legislature and produce a rational construction. The task of interpretation of a statutory provision is an attempt to discover the intention of the Legislature from the language used. It is necessary to remember that language is at best an imperfect instrument for the expression of human intention. It is well to remember the warning administered by Judge Learned Hand that one should not make a fortress out of dictionary but remember that statutes always have some purpose or object to accomplish and sympathetic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d held that the interpretation of the sub-section (2A) to Section 35C of the Central Excise Act, 1944 in a manner that would act as punishing the tax payer/assessee in delay caused on account of the matters which is completely beyond their control is incorrect construction/interjection of law. The relevant paragraphs of the said judgement is extracted below: 2 . The issue in these appeals is the construction of sub-section (2A) of Section 35C of the Central Excise Act, 1944. The sub-section which was introduced on 11-5-2002 by the Finance Act, 2002 provided as under : (2A) The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed; Provided that where an order of stay is made in any proceeding relating to an appeal filed under sub-section (1) of Section 35B, the Appellate Tribunal shall dispose off the appeal within a period of one hundred and eighty days from the date of such order; Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated. 3. The provision has cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l.) wherein the department having aggrieved that penalty imposed on CHA/CB under Sections 112(b) and 114AA of the Customs Act, 1962 was deleted by the Tribunal, had filed Customs Appeal CAA No.195 of 2019. In the said case, the Hon ble Delhi High Court have held that in the absence of an element of mens rea or conscious knowledge which can be attributed to CHA/CB, and where a CHA/CB had merely facilitated imports on strength of documents that were handed over to him by importer no penalty can be imposable under Section 112(b) or 114AA ibid. The relevant paragraphs of the said judgement is extracted below: 10 . Now coming to the facts of the present case. The facts noted above are not disputed before us, however, the Customs Department is aggrieved by the deletion of the penalties imposed on the CHA. In respect of the show cause notice dated 6-3-2013, 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. This is evident from a plain readin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AA ibid is not imposable in the case of the appellants who is acting as a Partner of Customs Broker firm, in relation to import of goods. 9.1 In an effort to delve into background to the introduction of legal provision under Section 114AA, ibid, I find that in the Budget Speech for the year 2005-2006 presented before the Parliament on 28.02.2005, the Hon ble Finance Minister had stated as follows regarding the changes proposed in the Direct and Indirect Tax Laws: 180. I have received many suggestions on amendments to the direct tax laws and the indirect tax laws. I have decided to accept some suggestions that require to be acted upon immediately, but I do not propose to burden the Finance Bill with those changes. Instead, I intend to introduce a separate Bill for that purpose during this session. In due course, I intend to place before Parliament a revised and simplified Income Tax Bill. Accordingly, the Taxation Laws (Amendment) Bill, 2005 was introduced in the Parliament on 12th May, 2005, providing for certain proposals to further amend the Income-tax Act, 1961, the Customs Act, 1962, the Customs Tariff Act, 1975 and the Central Excise Act, 1944. This inter alia included inserti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concerns, the Ministry in their reply stated as under: The enhanced penalty provision has been proposed considering the serious frauds being committed as no goods are being exported but papers are being created for availing the benefits under various export promotion schemes. The apprehension that an importer can be summoned under section 108 to give a statement that the declaration of value made at the time of import was false etc., is misplaced because person summoned under Section 108 are required to state the truth upon any subject respecting which they are being examined and to produce such documents and other things as may be required in the inquiry. No person summoned under Section 108 can be coerced into stating that which is not corroborated by the documentary and other evidence in an offence case. 65. The Ministry also informed as under: The new Section 114AA has been proposed consequent to the detection of several cases of fraudulent exports where the exports were shown only on paper and no goods crossed the Indian border. The enhanced penalty provision has been proposed considering the serious frauds being committed as no goods are being exported, but papers are being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibid for grant of CB license, in a slightly similar manner does not any way grant authority for imposition of penalty on the Customs Broker under Section 114AA of the Customs Act, 1962, for the violation or contravention of the obligations imported on CB under CBLR 2018. 9.4 Further, the findings of the ADG (Adjudication) in the impugned order that on account of the violation of Regulation 11(d) of the CBLR, 2013 /Regulation 10(d) of the CBLR, 2018, the appellant has also become liable to penalty under Customs Act, 1962 is not sustainable for the reasons that the CBLR, 2018 is a separate set of Regulations under Section 146 ibid. These Regulations-CBLR, 2018 inter alia, provide for the manner of regulating the licensing of Customs Broker, their qualification, obligations under the statute and the consequences of violation of such regulation including circumstances under which the license granted may be suspended or revoked or make them liable for penalty etc. after due conduct of inquiry proceedings as provided therein. Regulation 18 of CBLR, 2018 provides for imposition of penalty on a customs broker who fails to comply with any provision of CBLR, 2018 which inter alia include the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Section 114AA ibid does not apply to the present case of the appellant conoticee who is a Partner in a Customs Broker firm, as neither there was any dummy export being made only on paper, nor there was any criminal intent involving evasion of duty. In fact, the present case deal with demand of short paid duty arising from under valuation of imported goods by various importers, in which the appellant-CB being co-noticee had only facilitated as a customs broker, but was imposed a penalty under Section 114AA ibid. Hence I had come to the considered view that imposition of penalty under Section 114AA does not arise in the present case of the appellant. 12. In view of the foregoing discussions and analysis, and in terms of the judgements of the Hon ble Supreme Court, it is found that there are no strong grounds to sustain imposition of penalty under Section 114AA of the Customs Act, 1962 on the appellant in the present case. Consequently the impugned order dated 03.04.2020, to the extent that it has imposed penalty of Rs.5,00,000/- (Rupess Five Lakhs) on the appellant is not legally sustainable. 13. In the result, by modifying the impugned order dated 03.04.2020, to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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