Almas Impex vs Commissioner Of Customs (Ep)

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No.II

APPEAL No.C/86445/15

(Arising out of Order-in-Appeal No.MUM-CUSTM-AXP-APP-43&44/15-16 dated 17/04/2015 passed by Commissioner of Customs (Appeals), Mumbai)

For approval and signature:

Honble Mr. Raju, Member (Technical)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

Almas Impex Appellant Vs. Commissioner of Customs (EP), Respondent Mumbai

Appearance: Shri.ND George, Advocate for appellant Shri.Ahibaran, Addl. Comm. (AR) for respondent

CORAM: Honble Mr. Raju, Member (Technical)

Date of Hearing : 30/10/2015 Date of Decision : /11/2015

ORDER NO

Per: Raju

1. The appellant, M/s.Almas Impex are exporters and availing the benefit of Vishesh Krish Upaj Yojana (VKUY). They obtained a VKUY script No.0310497817/0/24/00 dated 15/12/2008 by submitting 296 shipping bills to DGFT. During the verification process it was found that only 175 of those shipping bills were genuine and rests were not genuine. After examining the facts, the Jt. DGFT also imposed a penalty of Rs.5.00 lakhs on the appellant. The appellant appealed against the said order before the Additional DGFT who rejected the said appeal. The VKUY scrips issued to the appellant was cancelled and they paid the penalty imposed on them. During investigation, Shri Najmuddin a Jessani, the proprietor of the firm, who was looking after most of the functions like purchase of vegetables, interacting with the DGFT staff, claiming VKUY licence, etc, admitted that he himself submitted the export promotion copies of free shipping bills, invoices and copies of bank realization certificates along with the application to DGFT. He also claimed that sometimes, he gave documents to its agent for submitting on his behalf. After investigation, a notice was issued to the appellant as to why penalty should not be imposed under Section 114AA of the Customs Act. Before original adjudicating authority, they claimed that they have already surrendered the scrips before the DGFT and also paid penalty imposed by the authority. After considering the submissions, the Additional Commissioner imposed a penalty of Rs.10 lakhs under Section 114AA, the appellant challenged this order before the Commissioner (Appeals). In appeal, the appellant again took the same ground that their scrip has been cancelled and they have paid a penalty of Rs.5.00 lakhs to DGFT. They also claimed that the same was done by the agent they cannot be held responsible for the same. The Commissioner (Appeals) upheld the order-in-original. The appellants are in appeal against the said order.

2. The appellant claim is that they have been severely punished in so far as their scrip has been cancelled not only for the purged shipping bills but also in respect of genuine shipping bills. They claimed that they were genuinely entitled to four lakhs worth of scrips but the entire 7.2 lakhs works of scrip has been cancelled. Moreover, a penalty of Rs.5.00 lakhs were also being made with they have paid.

3. Learned Counsel asserted that no penalty under Section 114AA can be imposed under Section114AA only penalty upto five times value of the goods can be imposed. He argued that in the instant case in respect of first bill of entry there were no goods and therefore, no penalty under Section 114AA can be imposed. He relied on the decision of the Honble High Court of Andhra Pradesh in the case of S. Chandrasekharan Vs. CC, Hyderabad  2009 (247) ELT 405 wherein it has been held that penalty under Section 114 cannot be imposed unless there is confiscation of goods, no penalty can be imposed.

4. Learned AR relies on the impugned order.

5. I have gone through the rival contentions. I find that the fact that VKYU scrips have been claimed on the basis of purged shipping bills has not been challenged. The primary challenge before the original adjudicating authority and the Commissioner (Appeals) was on two counts.

i) that they have been severely punished by cancellation of full scrip even in respect of their genuine exports, a penalty of Rs.5.00 lakhs has been imposed which they have paid.

ii) that they are not personally responsible as it was done by the agent.

5. I find that second question has been answered by the Commissioner (Appeals) and original adjudicating authority. The appellants were only beneficial and were handling their matters directly and personally as admitted by them. They cannot shy away from the responsibility in such circumstances. They have raised a fresh grounds regarding the applicability of penalty under Section114AA. Section 114AA reads as follows:

Penalty for use of false and incorrect material.If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, 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.

6. Section 112 and Section 114 of the Customs Act, specifically deals with penalty for violation in respect of movements of goods into or out of the country. Section 114AA deals with a person who knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular. It can be seen that in cases were movement of goods into and outside the country is involved there are separate sections dealing with the legal provisions. Section 114AA specifically deals with cases where documentation, which is incorrect or false. There may been cases where documents are made and there no movement of goods either way and benefits are claimed. Section 114AA is intended to cover those cases. In this respect, the term of penalty not exceeding five times of the value of the goods needs to be read as penalty not exceeding five times of the value of the goods declared in the said declaration or statements or documents. The appellants relies on the case law with reference to the Section 114 is not relevant that in so far as Section 114 deals with violation in respect of actual movement of goods outside the country. Thus for invocation of Section 114 the actual movement of goods is necessary, however for the purpose of Section 114AA movement or existence of goods is not necessary. In view of the above, I am of the opinion that penalty under Section 114AA can be legally imposed in the present circumstances.

7. Now I come to the quantum of penalty that can be imposed. On the one hand there was a claim of the appellant that they have not only lost the legally admissible part of the scrip but they have also paid Rs.5 lakhs as penalty with DGFT. On the other side the claim of the Revenue that the case is of deliberate forgery and needs to be dealt with strictly. In view of the fact that the appellant was personally involved in all the activities, the penalty needs to be deterrent. In view of the fact I dismiss the appeal.

(Pronounced in Court on ..)

(Raju) Member (Technical)

pj

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Appeal No.C/86445/15