Custom, Excise & Service Tax Tribunal
Ashoka Buildcon-Valecha Engineering ... vs Commissioner Of Customs (Import) on 9 January, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.C/120 , 121 &122/09 (Arising out of Order-in-Original No.152/2008/CAC/CC(I)/ SR/Gr. VA dated 17/11/2008 passed by Commissioner of Customs (Import), Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Anil Choudhary, Member (Judicial) 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? ========================================
Ashoka Buildcon-Valecha Engineering Ltd., Appellant Shri.Satish D. Parakh Vs. Commissioner of Customs (Import), Respondent Mumbai Appearance:
Shri.J.H. Motwani, Advocate for appellant Shri.V.K. Agarwal, Addl. Comm. (AR), for respondent CORAM:
Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr.Anil Choudhary, Member (Judicial) Date of Hearing : 09/01/2013 Date of Decision : /2013 ORDER NO Per: P.R.Chandrasekharan
1. The appeals are directed against order-in-original No.152/2008/CAC/CC(I)/SR/Gr.VA dated 17/11/2008 passed by the Commissioner of Customs (Import), New Custom House, Mumbai.
2. The appellants, M/s.Ashoka Buildcon-Valecha Engineering Ltd. (Joint Venture), Nashik (importer in short) imported one unit of Nordberg Primary Lokotrack Mobile Crushing Plant Model LT 105 consisting of Nordberg Primary Jaw Crusher Model C-105 (jaw type stone crusher) and one unit of Nordberg Secondary Lokotrack Mobile Crushing Plant Model LT 1100 consisting of Nordberg Secondary Cone Crusher Model GP 11F (cone type stone crusher) under Bill of Entry No.720254 dated 02/11/2006. While the Jaw Type Stone Crusher valued at Rs.53,49,828/- was cleared on payment of duty of Rs.19,65,328/-, the Cone Type Stone Crusher valued at Rs.4,36,90,266/- was cleared by availing duty exemption benefit of Rs.1,60,50,182/- under Sl.No.230 of Notification No.21/2002 dated 01/03/2002. The benefit of duty exemption on Cone Type Stone Crusher imported under Notification No.21/2002 was subject to the condition that the importer undertook that the same would be used exclusively for construction of roads and the importer will not sell or otherwise dispose of the goods in any manner for a period of five years from the date of import. The importer also executed an undertaking to that effect at the time of importation. Intelligence received by the officers of SIIB, Mumbai Customs, indicated that the appellant/importer had diverted the Cone Type Stone Crusher before the stipulated period of five years and was not adhering to the end use the condition stipulated in the Notification and therefore, the officers visited the premises of the appellants on 01/02/2008. As per the contract produced by the appellant at the time of importation, the road construction equipment including the aforesaid stone crushers were imported for execution of the Chittorgarh bypass contract awarded by NHAI and as per the contract for the said Chittorgarh bypass executed on 03/08/2005, the same was for a period of two years and had expired on 02/08/2007. However, as the work was delayed due to non-availability of clear path, they had applied for extension till May 2008, which was agreed to by NHAI. When the project site was visited by the officers of the Jodhpur Customs on 08/02/2008, it was learnt that the primary jaw crusher and Cone type stone crusher imported under Bill of Entry No.720254 dated 02/11/2006 had been shifted to a new project site at village Deoli on NH-6, near Bhandara District, Maharashtra in the month of December, 2007 and the said new project was a venture of M/s.Ashoka Buildcon Ltd. and not that of the importer M/s.Ashoka Buildcon Ltd.-Valecha Engineering Ltd. (Joint Venture).
3. A statement of Shri A.D. Adke, General Manager (Project) of M/s Ashoka Buildcon and also an authorized signatory of Ashoka Buildcon-Valecha Engineering JV was recorded under Section 108 of the Customs Act, and he confirmed that the primary jaw crusher and the secondary cone type stone crusher were earlier used for the Chittorgarh Bypass project and was installed at the camp site situated at village Mandalda, near Chittorgarh and both these machines were shifted from Chittorgarh project site to their new site at Deoli village, Bhandara District of Maharashtra in the month of December 2007. He also confirmed that the goods were being used at Deoli project site for construction of roads on the contract awarded to M/s.Ashoka Buildcon Ltd. and not of the joint venture. Therefore, it appeared that the importer had violated the conditions No.40(b) of the Notification No.21/2002 rendering the cone type stone crusher liable for confiscation under section 111 (o) of the Customs Act, 1962. Accordingly, on 27/02/2008 the same cone type stone crusher was seized on the reasonable belief that the same is liable for confiscation under Section 111 (o).
4. A statement of Shri. R.P. Sharma, General Manager of M/s.Ashoka Buildcon Ltd. was recorded on 27/02/2008 under Section 108 of the Customs Act. He also confirmed that the contract for the section falling in Bhandara District i.e. from KM 445 to KM 485 was awarded by NHAI to M/s.Ashoka Highways Bhandara Ltd., a company of the Ashoka Group. He further submitted that M/s.Ashoka Highways Bhandara Ltd is a company appointed as Concessionaire by the consortium Ashoka-IDFC, who had entered into a construction agreement with NHAI for the construction of roads from KM 405 to KM 485 of NH-6 on BOT basis. When questioned about the ownership of the Nordsberg Secondary cone type crushing plant model LT1100 seized by the officers of the Customs from the project site of M/s.Ashoka Buildcon Ltd., he stated that the said cone type stone crusher plant belonged to M/s.Ashoka Buildcon Ltd. When asked how this cone type stone crusher arrived at the Deoli, District Gondia on NH-6, he informed that the said cone type crushing plant has arrived at the project site through road transport from their project at Chittorgarh in the third week of December, i.e. on 22/12/2007. He further confirmed that the said cone type crusher was being used by M/s.Ashoka Buildcon Ltd. for crushing aggregates required for the construction work against the contract awarded by NHAI.
5. Statement of Shri S.P. Londhe, Director of M/s.Ashoka Buildcon Ltd. was recorded on 19/02/2008. In his statement, Sri. Londhe, inter alia, admitted that M/s.Ashoka Buildcon Ltd-Valecha Engineering Ltd. (Joint Venture) was formed as an Association of Persons by two independent companies i.e. M/s.Ashoka Buildcon Ltd. and M/s. Valecha Engineering Ltd., both registered under the Companies Act, to bid for contract of construction of 4/6 Lane Access Controlled Chittorgarh Bypass in the State of Rajastan under NHAI funding with NHAI. He also informed that since both the companies did not have independently the desired experience as per the pre-qualification criteria for the above project, it was decided to form a joint venture by both the companies to bid for the contract with NHAI and the said contract was formalized in the form of agreement between NHAI and the joint venture and the contract period was for 24 months starting from 24/08/2005 and was subsequently extended up to 31/05/2008. As per the joint venture agreement both the companies will participate, contribute and share profit or loss in the ratio of 51:49 (Ashoka:Valecha) and had agreed that M/s.Ashoka Buildcon Ltd. will be the lead partner in the joint venture. He further submitted that since the contract was awarded to joint venture by NHAI, the machinery was imported in the name of a joint venture, to avail duty exemption under Customs Notification No.21/2002 and the Bill of Entry was filed in the name of the joint venture. He also confirmed that the said cone type stone crusher was used at Chittorgarh after its import and since the use at Chittorgarh Bypass project was completed, it was diverted to the project site of M/s.Ashoka Highways Bhandara Ltd. in District Gondia, Maharashtra in December 2007 and M/s.Ashoka Buildcon Ltd., was using the said cone type stone crusher in execution of their work at Bhandara, Maharashtra.
6. Another statement of Shri S.P. Londhe was recorded on 15/07/2008 and he was questioned about the import of cone type stone crusher. In his statement he, inter alia, submitted that cone type stone crusher was imported by M/s. Ashoka Buildcon Ltd. but for claiming duty exemption benefit, the bill of entry was filed in the name of joint venture as per the advice of the Customs House Agent. Before doing so, a high seas sale agreement was entered into between M/s.Ashoka Buildcon Ltd and the Ashoka Buildocn-Valecha Engineering Ltd. (Joint venture). He also admitted that the NHAI had issued the essentiality certificate for procuring the equipment in the name of the joint venture and to facilitate the clearance of the stone crusher, transfer documents, i.e., high seas sale agreement was executed with a nominal value as Ashoka Buildcon Ltd. was the lead member of the joint venture and possession and operational responsibility was supposed to be of M/s.Ashoka Buildcon Ltd. only for execution of Chittorgarh Bypass project and the high seas sale agreement was made to facilitate the filing of the Bill of Entry in the name of the joint venture and except for 2% of the CIF value as mentioned therein, no other consideration was made to M/s.Ashoka Buildcon Ltd. by the joint venture as the machine was to be operated by M/s.Ashoka Buildcon Ltd.
7. Statement of Shri S.D. Parakh, Managing Director of M/s.Ashoka Buildcon Ltd. was recorded on 25/07/2008 wherein he admitted and confirmed the facts stated by Shri S.P.Londhe in his statements. He also confirmed that he had authorised Shri S.P. Londhe to import the equipment in the name of joint venture for availing duty exemption and the diversion of the cone type stone crusher from Chittorgarh to the project site of M/s.Ashoka Buildcon Ltd. in Maharashtra was done with his permission.
8. On completion of investigation, a show-cause notice dated 20/08/2008 was issued proposing to deny customs duty exemption under notification No.21/2002 dated 01/03/2002 on cone type stone crusher imported under Bill of Entry No.720254 dated 02/11/2006 and demanding customs duty of Rs.1,60,50,182/- along with interest thereon under the provisions of Section 28 (1) read with section 12 of the Customs Act, 1962 and Section 125 (2) of the said Customs Act and also by enforcing the bond/undertaking executed at the time of import. It was also proposed to confiscate the machinery under Section 111 (o) of the Customs Act, for non-fulfillment of the condition of the exemption notification. It was further proposed to impose penalty on the importer M/s.Ashoka Buildcon-Valecha Engineering Ltd., (Joint Venture) under the provisions of Section 112 (a) and (b) of the Customs Act, read with Section 114 (a) of the Customs Act, 1962. It was further proposed to impose penalty on Shri S.D. Parakh, Working Committee Member of the importer and Shri S.P. Londhe, authorised representative of the importer under Section 112 (a) and (b) of the Customs Act, 1962. The said notice was adjudicated vide the impugned order and the duty demand was confirmed by denying the benefit of Notification No.21/2002 dated 01/03/2002. The cone type stone crusher was confiscated under the provisions of Section 111 (o) of the Customs Act with an option to redeem the same on payment of a fine Rs.90 lakhs under Section 125 of the Customs Act. A penalty of Rs.9 lakhs was imposed on the importer under Section 112 (a) of the Customs Act and a penalty of Rs.3 lakhs each was imposed on Shri S.D.Parakh, Working Committee Member and Shri S.P.Londhe, Authorised Representative of the importer under the provisions of Section 112 (b) of the Customs Act, 1962. It was against this order, the appellants are before us.
9. The Ld. Counsel for the appellants makes the following submissions:
1) In the instant case, there is no dispute about the fact that the appellant importer was eligible for the import duty benefit as the goods were specified under Sl.No.230 of the table annexed to NotificationNo.21/2002. The appellant had a valid contract awarded by the NHAI for construction of roads in Rajasthan.
2) The imported equipment was also used in construction of roads by the appellant for a period of one year or so after importation. When the contract for the said Chhattisgarh Bypass got over the imported equipment became free and was available for use elsewhere. Therefore, the equipment was given to M/s.Ashoka Buildcon Ltd. who was the lead partner of the importer joint venture. The equipment was also used for the construction of roads by M/s.Ashoka Buildcon Ltd. in respect of a contract awarded by NHAI for construction of roads in the Gondia District in Maharashtra. Therefore, they have substantially complied with the conditions of the Notification. They have not sold or otherwise disposed of the imported equipment; what they have done is to allow the equipment to be used by the lead partner instead of keeping such a costly equipment idle which would have only resulted in waste of important assets. The purpose of the Notification is to reduce the cost of construction of roads by granting duty concession on equipment required for the construction of roads and considering this broad policy objective of the Government, it may be seen that the appellant has not indulged in any malpractice. Further the appellant could have got back the equipment any time inasmuch as the ownership vested with them.
3) The Ld. Counsel also relied on the meaning of the term disposal as given in the book Words and Phrases of Central Excise, Customs and Service Tax Edited by Shri S.B. Sarcar IVth Edition. As per the said book, disposal means transfer of title in the goods to any person. In the instant case, they have not transferred the title in goods to any other person. Therefore, it cannot be said that they have otherwise disposed of the goods as stipulated in the notification. He also relies on the decision of the Honble apex Court in the case of Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes) Ernakulam Vs. Thomas Stephan & Co. reported in 1988 (34) ELT 412 (SC) wherein the apex Court interpreted the meaning of the expression disposal as follows:
The question, therefore, is whether there is any disposal of these goods in any manner otherwise than by way of sale within the State. Disposal means transfer of title in the goods to any other person. The expression dispose means to transfer or alienate.
4) From the above decision, it can be seen that only when the goods are transferred or alienated, the goods can be said to have been otherwise disposed of. They have neither transferred nor alienated the goods and therefore, they have not violated the terms and conditions stipulated in Notification No.21/2002.
5) The Ld Counsel also submits that a huge amount of fine of Rs.90 lakhs have been imposed on the imported goods, which is totally unwarranted. Considering the fact that the appellant had not diverted the goods but used the goods in the construction of roads, imposition of fine in this case is not sustainable in law. There was also no warrant to impose penalties on the appellant and also on the Managing Director and the authorised signatory. In any case, as soon as the mistake was pointed out they have discharged the liability along with interest thereon. This could act as mitigating factor.
Accordingly he prays for allowing the appeal by setting aside the impugned order.
10. The Ld. Addl. Commissioner (AR) appearing for the Revenue on the other hand strongly opposed the arguments put forth by the Counsel for the appellants. He submits that the conduct of the appellants has to be seen as a whole while considering the case. Individual members of the Joint Venture were not eligible for bidding for the contract of NHAI for the Chittorgarh Bypass as evident from the statements given by the senior officials of the appellants firm. Therefore, a joint venture was formed to get the contract from NHAI. When the contract was awarded, they realized that the equipment has to be imported in the name of the contractor. Since the machinery in this case had already been imported by M/s.Ashoka Buildcon Ltd. the lead partner of the joint venture, a high seas sale agreement was entered into between the importer and the joint venture so that the bill of entry can be filed in the name of the joint venture and the benefit of NotificationNo.21/2002 can be availed. From the statements given by the various officials of the joint venture, it is clear that the high seas sale agreement was entered into only for the purpose of availing customs duty exemption on the advice of the CHA and the appellants also knew very well that Chhattisgarh Bypass would be completed soon and they will no longer being able to utilize the equipment after completion of the project. Therefore, the equipment was transferred to M/s.Ashoka Buildcon Ltd. for use elsewhere than in the approved project. The said transfer was not intimated to Customs authorities at any point of time. It is his contention that the appellant had resorted to transfer of the imported equipment after its use for about an year to another person and therefore, the condition of exemption is clearly violated. Since the goods have been transferred to M/s.Ashoka Buildcon Ltd., the lead partner, it amounts to disposal of the goods within the period of five years as stipulated in the notification. He submits that notification has to be interpreted strictly and any violation of the terms and condition of the notification would result in denial of benefit of exemption. The appellant had given an undertaking at the time of import that the appellant importer, namely, M/s.Ashoka Buildcon-Valecha Engineering Ltd., (JV) hereby agrees that we shall use the goods imported as described in the scheduled bill exclusively for the construction of roads and we shall not sell or otherwise dispose of the goods in any manner for a period of five years from the date of importation. After giving such an undertaking, the appellant violated the terms and conditions of the notification. The appellant had also given a provisional duty bond at the time of importation for satisfying the terms and condition of the notification. He also relied on the statement given by Shri S.P.Londhe, Director of M/s.Ashoka Buildcon Ltd. dated 15/07/2008. From the statement, it is clear that the procurement of stone crusher was effected by M/s.Ashoka Buildcon Ltd. and he along with Shri.S.D.Parakh, Managing Director of M/s.Ashoka Buildcon Ltd. and Shri Parakh Mehta decided to claim the duty exemption for the stone crusher by declaring the name of the importer as M/s.Ashoka Buildcon-Valecha Engineering Ltd., (JV) and they also obtained an essentiality certificate from the NHAI in this regard. From the statement it is further evident that as the stone crusher was imported by M/s.Ashoka Buildcon Ltd., to claim the duty exemption benefit, the bill of entry was filed in the name of the joint venture as per the advice of the Customs House Agent and a high seas sale contract was entered into between Shoka Buildcon Ltd. and M/s. Ashoka Buildcon-Valecha Engineering Ltd., (JV). He further submitted that the high seas sale agreement was executed for a nominal value as M/s.Ashoka Buildcon Ltd. being the lead member of the Joint Venture and the possession and operational responsibility was that of M/s.Ashoka Buildcon Ltd. only for execution of Chittorgarh Bypass project. From the statement, it is evident that the high seas sale agreement was made to facilitate the filing of the Bill of Entry in the name of the joint venture and except for 2% of the CIF value, no other consideration was paid to M/s.Ashoka Buildcon Ltd. It has been further admitted in the statement that on completion of Chittorgarh Bypass Project, the equipment was transferred to District Gondia, Maharashtra for some other project and this decision was taken not by the Joint Venture but by the Managing Director of M/s.Ashoka Buildcon Ltd. The above statement of Shri S.P.Londhe has been confirmed by Shri.S.D Parakh, Managing Director of M/s.Ashoka Buildcon Ltd. in his statement dated 25/07/2008, wherein he had clearly admitted that the entire transaction was managed in such a way as to avail the benefit of notification No.21/2002 and the diversion of the machinery after the completion of the project at Chittorgarh was also taken by him and he had directed Shri S.P. Londhe to shift the machinery from Chittorgarh to Maharashtra. From this statement it is evident that the entire transaction was a sham and was done with a fraudulent intention to avail ineligible duty exemption.
10.1 The Ld. AR also relies on the decision of the Honble apex Court in the case of Novopan India Ltd., Vs. CCE, Hyderabad, reported in 1994 (73) ELT 769 (SC) wherein it was held that exemption being in the nature of exception has to be construed strictly at the stage of determination whether assessee falls within its terms or not and in case of doubt or ambiguity, benefit of it must go to the state. He also relies on the decision of the apex Court in the case of Gammon India Ltd., Vs. CC, Mumbai, reported in 2011 (269) ELT 289 (SC) wherein the same principle was reiterated. Accordingly, he submits that the condition of notification with regard to non-sale/non-transfer of the imported equipment within a period of five years stands clearly violated and therefore, the goods are liable to confiscation under the provisions of Section 111 (o) of the Customs Act, 1962. Since the condition of the Notification has been violated, the appellant is not eligible for the benefit of duty exemption and therefore, the demand of duty along with interest is sustainable in law.
10.2 As regards the imposition of penalties confirmed on the appellants Shri.S.D.Parekh, Managing Director of M/s.Ashoka Buildcon Ltd. and Working Committee Member of the importer and Shri S.P.Londhe, Authorised Representative of the importer, he submits that Shri S.D.Parekh and Shri SP Londhe hatched a conspiracy to evade Customs duty by creating a sham transaction of high seas sale agreement and therefore, they are liable to penalty under the provisions of 112 (b) of the Customs Act, 1962 and the appellant importer is liable to penalty under Section 112(a) of the Customs Act, 1962.
10.3 As regards the quantum of fine imposed, he submits that considering the value of Rs.4.5 crores (approximately) of the imported equipment, the fine of Rs.90 lakhs imposed on the equipment works out to only 20%, which is very reasonable and accordingly he pleads for upholding the order in toto.
11. We have carefully considered the submissions made by both the sides. Our findings and conclusions are enumerated in the paragraphs below.
11.1 It will be useful at this juncture to consider condition No.40 which needs to be satisfied for availing the benefit of concessional rate of duty under notification No.21/2002. The condition required to be satisfied stipulated under condition 40 (b) reads as follows:-
the importer, at the time of importation, furnishes an undertaking to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, to the effect that he shall use the imported goods exclusively for the construction of roads and that he shall not sell or otherwise dispose of the said goods, in any manner, for a period of five years from the date of their importation.
11.2 From the wordings of the notification, it can be seen that there are two conditions which needs to be satisfied to avail the benefit. One is with regard to the user and the other one is with regard to the use of the imported equipments. The use as stated in the notification is construction of roads and the user should be the importer who furnishes the undertaking to the Customs authorities. The undertaking stipulates that the importer shall not sell or otherwise dispose of the said goods in any manner for a period of five years from the date of importation. In other words, it is the user who has to undertake the use and not anybody else. Secondly, the importer should be the owner of the goods at the time of importation; otherwise, the condition regarding sale or otherwise dispose of of the goods can not be satisfied and the undertaking would become meaningless. In the case under consideration after using the imported goods for a period of one year or so, the goods were diverted for use elsewhere than for the project for which contract was awarded to the importer. Further, the user was also different. The contract for the Chittorgarh bypass was awarded to M/s.Ashoka Buildcon-Valecha Engineering Ltd., (JV) and the use was in respect of the construction of roads, namely, Chittorgarh bypass. After using the equipment for a period of about one year, the goods were diverted to use elsewhere in the District Gondia in the state of Maharashtra by M/s.Ashoka Highway Bhandra Ltd. for the project in the district of Gondia which was awarded by NHAI to M/s.Ashoka Buildcon Ltd. who was not the importer of the goods but a different entity. It is also evident from the statements of Mr. S.D. Parakh and Sri. S.P.Londhe that M/s. Ashoka Buildcon Ltd. was the de facto importer of the goods and in order to claim the benefit of duty exemption, a high seas sale agreement was entered into by M/s.Ashoka Buildcon Ltd. with the joint venture for a nominal value of 2% CIF value of the goods. This was done only for the purpose of availing the benefit of customs duty exemption; otherwise the entire transaction of the high seas sale agreement was a sham. It is illogical to presume that the importer had the ownership or control over the goods after paying only a nominal sum of 2% of the CIF value of the goods. Be that as it may, after using the equipment for the Chittorgarh bypass project, the same was diverted elsewhere to be used by the de facto owner, M/s.Ashoka Buildcon Ltd., who was not the importer. In other words, the importer, which is the joint venture, transferred or alienated the goods to M/s.Ashoka Buildcon Ltd. and they had no control over the goods. Therefore, the transaction comes within the mischief of the term sell or otherwise dispose of in any manner. From the statements of Mr. Londhe and Mr. Parakh, it is very clear that the ownership/control over the goods did not vest with the importer at all at the time of importation. Secondly the importer did not have any say in the diversion of the goods and this decision to divert was taken by M/s Ashoka Buildcon itself without any concurrence or approval from the importer which is the joint venture. Thus the importer violated the terms and conditions of the notification by transferring/alienating the goods within a period of five years contrary to the undertaking given by it.
11.3 The Honble apex Court in the case of Novopan India Ltd. and Gammon India Ltd. (cited supra) has clearly held that exemption notification should be strictly construed since it is an exception. The relevant extracts from the Novopan India Ltd. case is quoted verbatim herein below:-
We are, however, of the opinion that, on principle, the decision of the Court in Mangalore Chemicals -and in Union of India v. Wood Papers, referred to therein -represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound -does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Manga/ore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave, (1969) 2 S.C.R. 253 that such a Notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption."
Respectfully following the ratio of the apex Court in these decisions, we hold that the appellant has violated the terms and conditions of the notification and accordingly, he is not, therefore, eligible for the benefit of duty exemption under the said notification.
11.4 To be eligible for the benefit of duty exemption under the notification, both the conditions with respect to the user as well as use has to be satisfied which has not been done in the instant case. When the notification stipulates two conditions, one with respect to the use and the other with respect to the user, both these conditions needs to be satisfied simultaneously and it cannot be said that the condition relating to the user can be ignored. If that is done, it would make the condition relating to the user redundant. It is a well settled principle of law that the statute has to be interpreted in a harmonious manner so as to give effect to each and every word/expression used therein.
11.5 In Balwant Singh vs. Jagdish Singh [2010 (262) ELT 50 (SC)] while interpreting the provisions of Section 15 of the Haryana Urban Rent (Control of Rent and Eviction) Act, 1973, the apex Court laid down the following principle:-
It must be kept in mind that whenever a law is enacted by the legislature, it is intended to be enforced in its proper perspective. It is an equally settled principle of law that the provisions of a statute, including every word, have to be given full effect, keeping the legislative intent in mind, in order to ensure that the projected object is achieved. In other words, no provisions can be treated to have been enacted purposelessly. Furthermore, it is also a well settled canon of interpretative jurisprudence that the Court should not give such an interpretation to provisions which would render the provision ineffective or odious. Seen from this perspective, we are of the considered view that the importer appellant has violated the conditions of exemption and he is not eligible for the benefit of exemption. Accordingly, we uphold the confirmation of duty demand along with interest thereon made in the impugned order.
11.6 As regards the confiscation of the impugned goods, the end-use condition relating to the goods stands clearly violated. Therefore, they are rightly liable to confiscation under the provisions of section 111(o) of the Customs Act and we hold accordingly.
11.7 Regarding the quantum of fine of Rs.90 lakhs imposed on the goods, some leniency might be called for. Though the goods were diverted, they were used for the construction of roads though by a different user which could be considered as a mitigating factor in this case. Therefore, we are of the view that the fine imposed ought to be reduced substantially. Accordingly, we reduce the redemption fine imposed from Rs.90 lakhs to Rs.30 lakhs.
11.8 As regards the penalties imposed on the appellant firm under section 112 (a), penalty is liable to imposed for contravention of the provisions of the law and there is no mens rea required to be established. In this case, the mens rea is also evident from the conduct of the appellant. Considering the amount of duty sought to be evaded to the tune of Rs.1.6 Crore, the penalty of Rs. 9 lakhs imposed can not be said to harsh or unreasonable.
11.9 With regard to the penalties imposed on the Managing Director Mr. S.D.Parakh and the authorized signatory Shri. S.P. Londhe, from the statements recorded, it is evident that they are the two persons who conspired to enter into a sham transaction of high seas sale so as to avail ineligible duty exemption and it was them who took the decision to divert the goods from Chittorgarh to Gondia. Thus they aided and abetted the commission of the offence. The penalty imposed on them is only Rs.3 lakhs each. Considering the amount of duty sought to be evaded, the penalty imposed is reasonable and we do not want to interfere with the same.
12. In sum, we uphold the demand of duty along with interest thereon confirmed in the impugned order. We also uphold the penalties imposed on the appellants. However, we reduce the redemption fine imposed on the goods from Rs.90 lakhs to Rs.30 lakhs.
13. Appeals are disposed of in the above manner.
(Pronounced in Court on ) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 23