Custom, Excise & Service Tax Tribunal
Ingram Micro India Pvt Ltd vs New Delhi on 8 August, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH,
COURT NO. IV
Customs Appeal No. 50259 of 2019
[Arising out of the Order-in-Original No. 08/2018-19/VS/COM dated
26/10/2018 passed by The Commissioner of Customs, Air Cargo (Import),
New Customs House, New Delhi.]
M/s Ingram Micro India Pvt. Ltd. Appellant
5th Floor, Block B, Godrej IT Park,
Phirojshanagar, LBS Marg, Vikhroli West,
Mumbai - 400 079.
VERSUS
The Commissioner of Customs Respondent
Air Cargo Complex (Import), New Customs House, New Delhi.
Appearance Shri Amit Jain, Advocate - for the appellant.
Shri Sunil Kumar, Authorized Representative (DR) - for the Respondent.
CORAM: HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE SHRI C.L. MAHAR, MEMBER (TECHNICAL) FINAL ORDER NO. 51067/2019 DATE OF HEARING : 08/04/2019.
DATE OF DECISION: 08/08/2019.
C.L. MAHAR :-
Briefly stated facts are that the appellant had filed a bill of entry no. 4780276 dated 04/04/2016 in the customs, Air Cargo (Imports), New Delhi for clearance of wireless fitness watch/ wireless fitness tracker having declared as Fitbit Alta having model number FB-406, ETA-730/2015/ERLO through their
2 CUS/50259 of 2019 custom broker M/s Express Global Logistics Private Limited. The goods were of Chinese origin and imported from M/s Fitbit International Limited, China. As the goods were wireless in nature, the importer was asked to produce the Equipment Type Approval (ETA) certificates in terms of Notification No. GSR 45(E) dated 28/01/2005 of WPC Wing, Department of Telecom, Ministry of Communications and Information Technology as this product operates in the licence free band width ranges between 2400- 2483.5 MHz. The importer submitted ETA No. 730/ERLO dated 01/12/2015 purportedly issued by Joint Wireless Advisor to the Government of India, Head of Office, Department of Telecommunications, Regional Licensing Office (East), Kolkata. It was observed that ETA certificate was issued for the goods manufactured in USA whereas the imported goods were manufactured in China. Suspecting that the goods were not genuine, investigations were initiated by SIIB against the importer. During the course of proceedings, it was noticed that 12 ETA were for the import of Fitbit fitness tracker/smart fitness watch/body motion pattern measuring tracker of different models under 30 bills of entry. In a search conducted at the Delhi warehouse of the importer on 20/07/2016, 3294 pieces of the subject goods was seized all of which were manufactured in China whereas the ETAs were for the USA manufacture. In a clarification issued to the importer, by the Department of Telecommunications New Delhi. It was made clear that if the manufacturer and the supplier were different, fresh ETA was required to be issued. Further, in an enquiry made from the Department of Telecommunication, Regional Licensing Office(East) New Delhi for verification of the ETA produced by the importer for bill of entry number 4780276 dated 04/04/2016, they vide their letter dated 18/05/2016 informed that the said ETA was not issued from their office. Accordingly, 2250 pieces of the goods covered in the bill of entry number 4780276 dated 04/04/2016 were seized vide pachnama dated 04/08/2016 under Section 110 of the Customs Act. Thus in total 5544 pieces of 3 CUS/50259 of 2019 Fitbit wireless devices having a cumulative assessable value of Rs.3,15,45,401/- were seized. On the request of the appellant, the seized goods were permitted to be shifted to bonded warehouse under Section 49 of the Customs Act, 1962. The importer vide their letter dated 28/09/2017, requested for permission to re-export the seized goods and prayed for waiver of show cause notice. A personal hearing was granted on 28/02/2018 by the Commissioner on the request of the appellant. During the course of personal hearing and vide their letter dated 01/03/2018, the appellant explained to the Commissioner that the responsibility of arranging the ETA was on Fitbit Inc. USA which availed the services of M/s T.P.C., a third party consultant. They pleaded that the third party consultant had provided them the forged ETAs for which they initiated legal action against them. The appellant again requested for re-export of the seized goods vide their letters dated 05/04/2018 and 05/10/2018, the Commissioner vide impugned order dated 25/10/2018, imposed a penalty of Rs.31,54,540/- under Section 112(a) of the Customs Act, 1962 holding that the goods were liable to confiscation under Section 111(d) of the Act as the appellant had filed fake/invalid ETA as a part of import documents. He allowed re-export of the seized goods as requested by the appellant.
2. Vide corrigendum dated 26/10/2018 to the impugned order dated 25/10/2018, the Commissioner further imposed a penalty of Rs.9,00,000/- under Section 114AA of the Customs Act, 1962. The appellant is before us against the impugned order dated 25/10/2018 and corrigendum dated 26/10/2018.
3. The learned Counsel appearing on behalf of the appellant has vehemently argued that there is no requirement under the IT Act for declaring the place of manufacture/country of origin when applying for ETA. He has argued that it did not matter whether the goods were manufactured in USA or in China, so long as the wireless devices operate in the frequency band 2400-2483.5 4 CUS/50259 of 2019 MHz, the ETA is valid. That the place of manufacture/country of origin is not a parameter on the basis of which ETA is granted. That for all intents and purposes, it is Fitbit Inc. USA, the owner of the brand „Fitbit‟ that was the manufacturer and there was no mis-declaration in the ETAs. It is further argued that is fresh ETA certificate in favour of import was not required as long as the goods satisfy the technical specifications mentioned in the ETA. He further argued that no ETA was required in respect of accessories amounting to Rs. 7,11,137/- and hence the impugned order to the extent imposes penalty on accessories of Fitbit devices is not sustainable. Further argued that the appellant is in no way responsible or involved with the procurement of fake ETAs and as soon as the appellant came to know that the ETAs procured by the consultant of Fitbit Inc. USA were not genuine, they immediately requested Fitbit USA to obtain fresh ETAs which were duly obtained and submitted by the appellant before the Department and the learned Commissioner after considering fresh ETAs has held that the goods were not liable to confiscation under Section 111(d) of the Customs Act as those were not imported contrary to any prohibition imposed under the Customs Act or any other law for the time being in force in as much as it is procured by the appellant from WPC authorities are valid since there exists no requirement to obtain different ETAs for identical goods manufactured in different countries under the same brand name. It has further been argued that there was no mens-rea as it was a third party fault and they were under the bonafide belief that the ETAs given to them on behalf of supplier were genuine. He further argued that corrigendum has attempted to review its own impugned order and thus additional penalty imposed on the appellant under Section 114 AA of the Customs Act, 1962 is liable to be set aside. The appellant has further contested the imposition of penalty under Section 114AA of the Customs Act as they had not knowingly or intentionally used any document, which were false 5 CUS/50259 of 2019 or materially incorrect. They were under the bonafide belief that the ETA obtained by the third party was valid and true.
4. On the other hand the learned DR has argued that the goods were liable to confiscation, after the ETA certificates have been found to be fake and element of mens-rea is not an essential ingredient for confiscation and imposition of penalty for contravention of provisions of a civil act. He also argued that as per Foreign Trade Policy 2015-2020 para 2.03, all the domestic Laws/ Rules/ Orders/ Regulations/ Technical specifications/ environmental / safety and health norms applicable to domestically produced goods shall apply, mutatis mutandis, to imports unless specifically exempt. It is argued that the corrigendum was validly issued as the Adjudicating Authority had only rectified the unintended mistake by imposing penalty under Section 114AA of the Customs Act, as the appellants could not have escaped wrath of penal action under Section 114AA having produced fake/forged ETA. He relied upon the case law in Sanjay Bahadur versus Commissioner of Central Excise, Belapur reported in 2009(240) E.L.T. 282 (Tri- Mumbai).
5. Having heard both sides and on perusal of appeal record, we find that it is an admitted fact that ETAs produced by the importer were found to be fake on verification. Once the ETAs is found fake, the argument put forth by the learned Counsel of the appellants that country of manufacture was not relevant and not required to be mentioned on ETA holds no ground. The argument could have some validity only when the ETA had been genuine and there was only dispute of country of manufacture or origin. Here country of manufacture is not in the dispute but there is a violation of relevant notification issued by the Ministry of Telecommunication No. GSR 45(E) dated 28/01/2005 which requires the importer to produce a valid ETA issued by the Ministry of Telecommunication. Once it is on record that the ETA was not issued by the Ministry of Telecommunication and was 6 CUS/50259 of 2019 fake, all other arguments that country of origin was not required on ETA etc. become meaningless.
6. The other argument advanced by the learned Counsel is that they were not personally involved in the forgery of the ETAs and it was the third party who had given them fake ETAs and thus no mens-rea was involved on their part and hence they had not violated the provisions of Section 111(d) Customs Act with respect to imports. In his regard we find that in view of the fact that the Hon‟ble Apex Court has held in a number of cases that mens-rea is not necessary for contravention of a civil act. The Hon‟ble High Court of Madras in the case of Commissioner of Customs (Export), Chennai-I versus Bansal Industries reported in 2007(207) E.L.T. 346 (Mad.) has upheld an imposition of penalty under Section 112 of the Customs Act without involving any mens-rea in the case by placing reliance upon the Hon‟ble Apex Court decision in Chairman, SEBI versus Shriram Mutual Fund [(2006) 5 SCC 361] where it has been held as under :-
"In our opinion, mens-rea is not an essential ingredient for contravention of the provisions of a civil act. In our view, the penalty is attracted as soon as contravention of the statutory obligations as contemplated by the Act is established and, therefore, the intention of the parties committing such violation becomes immaterial. In other words, the breach of a civil obligation which attracts penalty under the provisions of an Act would immediately attract the levy of penalty irrespective of the fact whether the contravention was made by the defaulter with any guilty intention or not".
7. Once the ETA was found to be fake, the importer could not escape the liability to contravention of Section 111(d) which states that goods imported in contravention of the Customs Act or any other law for the time being in force would be liable to confiscation. We also find that the compliance of statutory requirements with regard to valid importation of the goods, was primary responsibility of the appellant being importer and therefore he cannot escape from this responsibility and thus 7 CUS/50259 of 2019 become liable for penalty under Section 112 (a) of the Customs Act, 1962.
8. However, we are of the considered view that the corrigendum issued for imposing of penalty under Section 114AA of the Customs Act, 1962 which had no reference in the original order is not sustainable as it amounts to review of the original order. There is no reference that the original order had considered imposition of any penalty under Section 114AA of the Customs Act. We are in agreement with the learned Counsel of the appellants that once the order is passed by the Adjudicating Authority, he becomes a functus officio and he cannot reopen the case. Only clerical mistakes, which are apparent on record can be rectified by a corrigendum. We find that case law in Sanjay Bahadur versus Commissioner of Central Excise, Belapur reported in 2009(240) E.L.T. 282 (Tri-Mumbai) is distinguishable because in that case penalty under Section 11AC of the Central Excise Act was imposed but only the quantum was not mentioned. As penalty under Section 11AC is mandatory penalty such mistake could be rectified. Further, penalty was proposed on the director in the show cause notice but no order was passed in the original order with respect to penalty either for vacating or imposing the penalty. Thus mistake was apparent on record which was rectified by the corrigendum. In this case no show cause having been issued and no penalty in the impugned original order been imposed, we cannot consider that the original order envisaged any imposition of penalty under Section 114AA. Even on merits we find that penalty under Section 114AA involves mens-rea on the part of the person who is held liable to penalty under section ibid as the section is applicable to persons who "knowingly or intentionally" makes use of the false document. The appellants have always taken this stand that the procurement of valid ETA was the responsibility of Fitbit Inc. USA and they had only produced ETAs procured by Fitbit Inc. USA through a third person. There is nothing on record that the 8 CUS/50259 of 2019 appellant had knowingly or intentionally produced the false ETAs. Hence penalty under Section 114AA is not sustainable. We also hold that the accessories valued Rs. 7,11,137/- are also not liable to confiscation as those did not attract the requirement notified under Ministry of Telecommunication letter dated 28/01/2005 mentioned above.
9. In view of the above discussions penalty of Rs. 9,00,000/- imposed under Section 114AA of the Customs Act, 1962 is set aside.
10. In view of above discussions, we feel that the appellant are liable to penalty under Section 112 (a) (ii) of the Customs Act, 1962 and thus we find no infirmity in the order-in-original on this count, however, considering all the facts and circumstances of the matter the quantum of penalty under Section 112 (a) is reduced to Rs. 10,00,000/- (Rupees Ten Lakhs only).
11. The appeal is partly allowed in above terms.
(Order pronounced in open court on 08/08/2019.) (Ashok Jindal) Member (Judicial) (C.L. Mahar) Member (Technical) PK