Customs, Excise and Gold Tribunal - Calcutta
Calcutta Motor Dealers Association vs Collector Of Customs on 26 April, 1988
Equivalent citations: 1989(22)ECR455(TRI.-KOLKATA), 1988(37)ELT400(TRI-KOLKATA)
ORDER S.K. Bhatnagar, Member (T)
1. The case came up for hearing on different dates. On 28-10-1987 Shri Basu Roy stated that in this case admittedly a technical offence was committed inasmuch as the licence was valid for importation of goods from Czechoslovakia only whereas the goods were of Russian Origin and were imported from that country.
2. It was, however, only a case of bona fide mistake and not of a deliberate importation in violation of law.
3. Actually the licence was originally issued to M/s. Projects and Equipments Corporation of India Ltd., and the importers named Calcutta Motor Dealers Association Were letter of authority holders.
4. Since they wanted to have the flexibility of importing the goods from any country in the Rupee-payment-area, they had approached to the licence holders who had in turn approached the licensing authority and the licensing authority had agreed to suitably amend the licences and make them valid for R.P.A. also. Accordingly, the licences were sent and were duly endorsed by the licensing authority for R.P.A. But due to a clerical mistake, this one particular licence somehow was left out and this fact remained unnoticed at the stage of opening of letter of credit also.
5. As a consequence, the importation took place against the unamended licence as it was. Thus, this technical violation was unwittingly committed. The Collector also has observed in his order that had they approached the licensing authority the said authority would have in the normal course agreed to amend the licence and make it valid for R.P.A. The Collector has, however, imposed a penalty of Rs. 19.922/- approximately as no valid licence could be produced in terms of the licence bond against which the goods had been cleared.
6. It was their submissions that as it was a case of a bona fide mistake, further leniency was required to be shown and they would pray that the penalty may be reduced substantially or if the Tribunal thinks it appropriate, the case may be amended on a warning or caution.
7. The learned departmental representative, Sri Jain, stated that the facts narrated by the learned counsel are correct. However, they would wish to point out that the Col lector had already taken a lenient view.
8. In response to a Court question regarding justification for invoking Section 112 in the circumstances of the case and imposing a penalty on the ground that the goods had been released on the licence bond and were not available for confiscation, the learned JDR requested for time.
9. Sri Basu Roy had no objection.
10. Accordingly the case was adjourned.
11. On 8-12-1987 the case came up for hearing. At the outset it was observed that neither side had filed a copy of the show cause notice. The learned JDR showed his copy of the show cause notice from the departmental records and offered to file a copy thereof. The learned SDR submitted that in this case a penalty had been imposed by the Collector as the licence produced was valid for importation through Czechoslovakia only, whereas the goods had been imported from the U.S.S.R. and therefore, apparently the licence did not cover the consignment in question.
12. The department gave the appellants an opportunity to get the licence amended and produce a valid licence covering the goods within one month. The department had released the goods on licence bond. However, the appellant have failed to produce any valid licence within the time allowed.
13. Under the circumstances, importation was obviously an unauthorised one, and since the goods had already been released, the Collector could not confiscate them although they were liable for confiscation.
14. The Collector had, however, imposed a penalty as such a penalty was imposable under Section 112 in respect of unauthorised importation.
15. Sri D.L Basu Roy, the learned counsel speaking for the appellants, stated that Section 112 could not be invoked in this case as the department had not been able to show any mens rea.
16. On the contrary, the Collector had himself accepted that had the appellants approached the licensing authority before importation, they could have allowed the licence amended to cover importation through U.S.S.R. Under the circumstances, imposition of penalty under Section 112 was not proper.
17. In support of his contention that mens rea was an essential ingredient of Section 112, he would like to cite the case of Messrs. Janata Traders, Bombay v. Collector of Customs, Bombay 1988 (34) ELT 65 in which it was held that penalty cannot be imposed when mens rea has not been established since penalty proceedings are quasi-criminal proceedings.
18. Sri Basu Roy stated that while it was open to the Collector to have taken action in terms of conditions of the bond and to appropriate the bond amount or a part thereof, it was not open to him to impose a penalty under Section 112.
19. Sri M.C. Thakur, SDR, stated that the case cited by the learned counsel was a case of valuation, whereas the present case is that of violation of Import Trade Control Act and admittedly in this case, there was no valid licence to cover the goods. Hence, penalty could be imposed, ipso facto, under Section 112.
20. Although the learned Collector had indicated that he was taking a lenient view and since the goods were not available for confiscation, he was imposing a personal penalty, it was his contention that the order must be read as a whole and when so read, it would be apparent that actually the Collector had imposed the penalty because the goods had been imported in violation of Section 11 read with Section 3(2) rendering them liable for confiscation under Section 111 (d). The leniency was shown to the extent that no fine had been imposed and the goods were allowed to be released on a licence bond, as the appellants had admittedly no valid licence at the time of importation.
21. Sri Thakur, SDR, emphasised that the fact of illegal importation itself was a sufficient justification for imposition of penalty. He would like to rely on the case reported in AIR 1974 SC 228.
22. Both the sides stated that they would like to buttress their respective submissions regarding the requirement or otherwise of the mens rea as an essential ingredient of Section 112 by citing more case laws if time is allowed.
23. The case was adjourned. Both the sides were allowed time.
24. On 24-3-1988 the learned SDR, Sri Thakur, stated that in the Supreme Court judgment in the case of Ajit Mills, AIR 1977, Supreme Court 2279, it has been observed, inter alia, that the notion that a penalty or a punishment cannot be cast in the form of an absolute or no fault liability but must be preceded by mens rea must be rejected. The classical view that 'no mens rea no crime' has long ago been eroded especially regarding economic crimes".
25. He would also like to draw attention to the case of James David Crighton and Ors. v. S.H. Srivastava, AIR 1969 Calcutta 260 in which also it was observed, inter alia, that" The substance of my finding is that mens rea may not be an element in interpretation of Sections 30, 111, 112 of the Customs Act".
25A. In view of this position it was his contention that mens rea may or may not be an essential ingredient in all cases and there may be situation where the fact of violation of law may be self evident and may, ipso facto, amount to sufficient justification for imposition of penalty. In the instant case, admittedly, there was no licence to cover the imported goods.
26. In spite of it the appellants have been given one chance to procure and produce the licence if they could and the goods were released provisionally under a licence bond. Not only that even though the time given, as per the bond, had expired the department did not straightway appropriate the bond amount but gave the appellants another chance to defend themselves. The appellants have also admitted the violation. In the circumstances, the Collector was justified in his finding that the imported goods were rendered liable to confiscation. Hence they were ipso facto liable to penalty also. Since the goods had already been released and were therefore not available for confiscation the Collector merely imposed a penalty.
27. The operative portion of the order of the Collector should be read to mean that it was a penalty for unauthorized importation of goods. In fact the Collector has already taken a lenient view.
28. The learned counsel stated that the Tribunal itself has taken this view in a number of cases that mens rea was the essential ingredient of Section 112. In this connection he would like to draw attention to the case of Janata Traders reported in 1987 (30) 685 CEGAT (S.B.A) in which it was observed inter alia that penalty proceedings are quasi-criminal proceedings and the revenue has not been able to establish that there was mens rea on the part of the appellant. The Hon'ble Superme Court in the case of Commissioner of Income-tax West Bengal v. Anwar AH had held that before penalty can be imposed the entirety of the circumstances must reasonably point to the conclusion that the disputed amount represented income, and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. In other words, the Tribunal was of the view that penalty cannot be imposed if mens rea is not established.
29. He would also like to cite the case of Lemuir Air Express, New Delhi v. Collector of Customs, 1986 (26) ELT 608 in which it was observed, inter alia, that "it is well settled that if there is no intention or motive to evade tax, penalty should not be imposed because the proceedings relating to the levy of penalty are criminal and penal in character and requisite mens rea must be proved before imposition of penalty.
30. In the instant case the department had released the goods on a licence bond. Once the bond condition was not fulfilled it was open to the department to proceed in terms of the bond, but it was not open to the Collector to impose a personal penalty merely because the goods were not available for confiscation.
31. Before imposing personal penalty ingredients of Section 112 are required to be satisfied. It has already been held by the High Court of Madras in the case of B. Lakshmichand v. Government of India, 1983 ELT 322 (Mad.) that the "onus of establishing essential ingredients under that provision was necessary to bring home the offence to an accused is on the prosecution" and 'there should be specific allegations even in the show cause notice and as well as in the subsequent proceedings and the ultimate orders to be passed by the authorities under the Act as to which of the clauses are attracted...". However, in the instant case the notice does not disclose whether Section 112A was applicable or 112B or both because no clause has been mentioned. It was also his submission that the learned Collector himself has observed that "I am convinced that had they applied in time, they would have got necessary amendment done" and that is why he was inclined to take a lenient view. Under the circumstances there was no cause for imposition of penalty. Since it was a case of bona fide mistake, the order of penalty is required to be set aside.
32. I find that the learned SDR's argument has strong force.
33. Although the operative portion of the learned Collector's order is not very happily worded it becomes apparent on reading the order as a whole that the penalty was evidently imposed on account of unauthorized importation of goods.
34. That such a penalty was indeed imposable and the appellant was liable to the same is clear from the fact that the goods had been admittedly imported without a proper licence and were therefore liable to confiscation under Section 111 (d) of the Customs Act.
35. As a matter of fact the whole case boils down to the plea of leniency put forth by the appellants.
36. Technically of course the learned counsel for the appellants is correct in pointing out that once having released the goods on a bond it was open to the Collector to proceed as per the terms of the bond and realise the amount in accordance with the same. That however does not mean that no other action could be taken. In my opinion it was open to the department to take penal action in addition to enforcing the terms of the bond. In the instant case neither the appellant had a licence at the time of importation nor could he procure one within the time allowed. The net result was that the goods were rendered liable to confiscation. These having been released in terms of bond, the Collector could either enforce the terms of the bond and/or impose a penalty. The very fact that he has not enforced the bond and has merely restricted himself to initiation of penal proceedings indicates the leniency shown in the matter, and in fact the Collector has himself recorded in so many words that he is taking a lenient view and imposing a penalty only.
37. This brings us to the question whether in view of the fact that the Collector was himself convinced that had the appellants applied in time, they could have got the necessary amendment made in the licence a penalty was called for. The learned counsel has pleaded that since there was no mens rea therefore no penalty could be imposed and has cited the Tribunal's order in case of Lemuir Air Express 1986 (26) ELT 608 in support of his contention. The learned SDR, on the other hand, has drawn our attention to the Supreme Court judgment in the case of Ajit Mills reported in AIR 1977 S.C. 2279, and I consider that we have to be guided by the judgment of the Hon'ble Supreme Court in this respect.
38. In fact, as in the case of Central Excise, so in the case of Customs, mens rea may or may not bean essential ingredient or sole consideration for the imposition of penalty depending upon the facts and circumstances of a case and the relevant provision of law. In this connection SDR has once again rightly drawn our attention to the case of James David Crighton and Ors., reported in AIR 1969 Calcutta 260. In other words situations are conceivable where the fact of violation of law may be self evident and may ipso facto justify imposition of penalty as rightly pointed out by the learned SDR. Therefore, it is incorrect to generalize that in all cases without exception mens rea must be established before imposing a penalty.
39. In the instant case the attendant circumstances pointed out by the learned counsel do show that there was some scope for leniency but do not show that no penalty at all was called for.
40. This fact has been recognized rightly by the learned Collector and, therefore, while holding that violation has taken place and observing that a lenient view was called for, he has imposed some penalty.
41. Looking to the totality of facts and circumstances I consider that a slightly more lenient view could be taken. I, therefore, reduce the penalty from Rs. 19,922.48 to Rs. 15.000/- only. The order of the learned Collector is modified to this extent only. It is otherwise confirmed. The appeal is thus partly allowed.