Custom, Excise & Service Tax Tribunal
Nitin Gandhi vs New Delhi(Icd Tkd) on 17 March, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. II
Customs Appeal No. 52392 of 2019(SM)
(Arising out of Order-in-Appeal No. CC(A)CUS/D-11/ICD/TKD/552/2019 dated
02.07.2019 passed by the Commissioner of Customs(Appeals), New Delhi.)
Nitin Gandhi
Appellant
B-96, Sharda Puri,
Ramesh Nagar, New Delhi-110015
Vs.
Commissioner of Customs, New Delhi (ICD TKD) Respondent
Inland Container Depot ( import), ICD Tughlakabad, New Delhi-110020 APPEARANCE:
Ms. Priyanka Goel, Advocate for the Appellant Mr. Viswa Jeet Saharan, Authorised Representative for the Respondent CORAM:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) FINAL ORDER NO. 50355/2023 Date of Hearing: 06.03.2023 Date of Decision: 17.03.2023 ANIL CHOUDHARY:
The issue involved in this appeal is whether penalty of Rs. 5 lakh under Section 112(a) of the Act and penalty of Rs. 5 lakhs under Section 114AA of the Act have been rightly imposed.
2. The brief facts are that this appellant was employee of one Mr. Hemant Gandhi during the relevant period. During the month of August, 2012, appellant met Mr. Sanjay Kumar Singh of Promod Logistic Services-CHA, with respect to clearance of the goods imported at the behest of Mr. Hemant Gandhi, using the IEC code of 2 C/52392/2019-SM Mr. Roshan Singh. Mr. Hemant Gandhi had instructed the appellant that he should talk and introduce with Mr. Sanjay Kumar Singh regarding clearance of consignments to be imported by Roshan Singh and Company at ICD/TKD, New Delhi, over phone introducing himself as Nitin Chadda, as brother of Roshan Singh. Accordingly, appellant met Mr. Sanjeev Kumar Singh introducing himself as Nitin Chadda brother of Roshan Singh for clearance work of goods to be imported by Roshan Singh and Company. Accordingly, he communicated to Mr. Hemant Gandhi that Mr. Sanjeev Kumar Singh agreed to do the clearance work. At the behest of Mr. Hemant Gandhi appellant got the signature of Mr. Roshan Singh on import documents and Mr. Hemant Gandhi used to forward the documents to the CHA- M/s Promod Logistic Services. Thereafter, two bills of entry were filed no. 8200884 &8200883 both dated 12.10.2012, declaring the goods as 'E-glass off Spec Chopped Strand Mat (B grade)' through the CHA.
3. On specific information, the DRI Headquarters, New Delhi, intercepted the containers and upon inspection, goods were found to be fire crackers. In the front, chopped strand mat was placed and behind the mat, fire crackers had been concealed. Thus, the importers had attempted to import prohibited goods-fire crackers, by resorting to mis-declaration, amounting to smuggling. Punchnama was drawn on 15.10.2012 & 17.10.2012. On demand the CHA could not produce any licence/valid document for import of fire crackers, which was restricted item for import. Accordingly, the goods were seized after re-stuffing the containers, representative samples were 3 C/52392/2019-SM drawn. During investigation, statement of several persons including this appellant was recorded.
4. The seized fire crackers, total valued at Rs. 44,47,200/- had been imported in contravention of law, by resorting to mis-declaration. As per Section 2(33) of Customs Act, prohibited goods means any goods of export or import, which is subject to any prohibition under the Customs Act or any other law in force. Further, the part of the goods being E-glass of spec chopped strand mat (B-grade) valued at Rs. 3,88,500/- used for concealing the smuggled fire crackers, also were liable for confiscation alongwith the packing materials. Further, it appeared to revenue that Anti-dumping duty was payable on 'E- glass off Spec Chopped Strand Mat (B grade)' classifiable under CTH 7019 @ 40.91% under Notification No. 30/2011-Cus. Thus, there was also attempt to evade Anti-dumping duty by mis-declaration. It further appeared that the aforementioned attempt to smuggle fire crackers was made by syndicate in a well organized manner. The entire scheme of illegal import was planned in advance, firstly to do the import-export, formed company/firm, solely for the purpose of fraudulent import. Various persons as members of this syndicate had jointly forged document as well as resorted to mis-representation before the CHA and the Customs. M/s Roshan Singh & Company, Shahabad, a proprietary firm of Roshan Singh, resident of District Kurukshetra, Haryana, was registered as traders under Central Sales Tax. Mr. Hemant Gandhi, one of the key persons had instructed as the appellant, to find any person having IEC and promised to pay Rs. 20,000/- for each import. In turn, this appellant persuaded Mr. Roshan Singh and lured him to use his IEC at Rs.10,000/- for each 4 C/52392/2019-SM import, in the name of his company, to which Mr. Roshan Singh readily agreed and also signed various documents and the behest of the appellant. Thereafter, IEC No. 3312003423 in the name of Roshan Singh and Company was obtained and a bank account was also opened in ICICI Bank, Shahabad, district Kurukshetra.
5. The overseas payment/remittance towards the imports in the name of M/s Roshan Singh and Co. Were made through non-banking channels, as is evident from the Bank A/c statement of M/s Roshan Singh and Co. Maintained with ICICI bank, Shahbad, which does not contain any such debit entry from the said A/c, clearly indicating the total involvement of the syndicate in the fraudulent imports.
6. S/Sh. Deepak Rishi and Hemant Gandhi, joined the investigations at a later stage, only on the directions of the Hon'ble Court and again did not cooperate with the investigation by deliberately avoiding their appearance before the investigating officers on the pretext of one excuse or other. Similarly Sh. Roshan Singh joined the investigation only after five summons were issued to him. Sh. Narinder Kumar in his statement dated 06.04.2013 nhas stated that regarding business of firecrackers/fireworks he could state only after discussing with Sh. Roshan Singh and Sh. Deepak clearly indicate his association with the syndicate and with the fraudulent import.
7. Accordingly, show cause notice was issued on 12th April, 2013 on Roshan Singh and Company and Narinder Kumar jointly in February, as to why not the seized fire crackers be not confiscated alongwith seized E-glass chopped spec mat (B grade) valued at Rs. 30,00,500/- alongwith the packing material. Further, penalty was 5 C/52392/2019-SM also proposed under Section 112(a), 114A & 114AA. Penalty was also proposed on other co-noticees including this appellant under Section 112(a) & 114AA of the Act. The SCN was adjudicated on contest by this appellant and vide Order-in-Original dated 19.03.2014 the aforementioned penalty was imposed.
8. Being aggrieved this appellant preferred appeal before Commissioner (Appeals) inter alia on the grounds:-
(a) The appellant had no stake in such imports and had nothing to do with the same.
(b) That he had neither done any positive act nor did he omitted to do any act with respect to the impugned imports which had rendered such goods liable for confiscation. The import was made in M/s Roshan Singh & Company allegedly by Shri Hemant Gandhi, Narinder Kumar, Deepak Rishi and Hemant Sachdeva. These four persons were individually or collectively under obligation to conduct themselves inconformity with the provisions of the Custorns Law.
The appellant nowhere is liable to discharge any obligation under the Customs Act and therefore penalty under Section 112 (a) and Section 114AA of the Custom Act is not sustainable
(c) There is no allegations in the Show cause notice that appellant had any knowledge about the illegality of the import.
9. The Commissioner (Appeals) vide ex parte Order-in-Appeal dated 02.07.2019 was pleased to dismiss the appeal, confirming the penalty.
10. Being aggrieved the appellant is before this Tribunal.
6 C/52392/2019-SM
11. Learned Counsel for the appellant Ms. Priyanka Goel urges as follows:
11.1 That the Appellant was only an employee of main accused Sh.
Hemant Gandhi on a monthly salary of Rs.10,000/-. His role attributed in the case was that he helped co-noticee / importer Roshan Singh in getting IEC and also helped him for finding a CHA for firm M/s. Roshan Singh & Co. to get the import documents filed and consignments to get cleared. Appellant was genuinely assisting his employer in course of employment for the import of the goods of "E Glass Off Spec Chopped Strand Mat (B Grade)" without having any knowledge about the malafide of the co-noticee to defraud the Customs by importing restricted items i.e. fire crackers. 11.2 It is an admitted fact on records that the Appellant was not aware about the import of restricted goods i.e. fire crackers in the guise of import of "E Glass Off Spec Chopped Strand Mat (B Grade)".
(a) Sh. Deepak Rishi in his statement dated 15/16.10.2012 in para 7 (A) (xvi) had categorically stated that:-
"(xvi) neither S/Shri. Nitin/Nikhil nor Sh. Sanjeev Kumar Singh and Sh. Pramod Kumar (CHA) were aware about the concealment of the fire cracker/fireworks in the containers"
(b) Further, it is also an admitted fact that Sh. Hemant Sachdeva, Sh. Deepak Rishi and Sh. Hemant Gandhi were mastermind behind the importing and clearance of alleged goods. The Adjudicating authority itself had accepted this fact:-
"Para 40.3 .............. I find that Sh. Hemant Gandhi was one of the master mind in the clearance of the illegally imported goods".
(c) Further in para 40.7 of the impugned OIO it was observed that: -
"Para 40.7 ........It clearly indicated that the clearance process was controlled by Sh. Narinder Kumar. It was Sh. Narinder Kumar who promised to pay to Shri. Deepak Rishi Rs.10,00,000/- for clearance of one container posing as Roshan Singh [Refer statement dated 15/16.10.2012 of Shri Deepak Rishi recorded under Section 108 of the Customs Act, 1962] and it was Shri. Narinder Kumar (posing as Roshan Singh) who informed Shri. Deepak Rishi that in the container, beside the declared goods cracker/fireworks were also concealed behind 7 C/52392/2019-SM the declared items and they have to get the container cleared by any means"
(d) That in para 41.4 of the impugned OIO, the role of the appellant is observed by the Adjudicating Authority wherein no proper allegation against the alleged import and clearance of goods were made out against appellant. The Adjudicating authority merely stated that:-
"Para 41.4................Sh. Nitin Gandhi confirmed that the photograph on the above two documents were his photograph. By his aforesaid acts omission and commission which have rendered the goods liable to confiscation hence he rendered himself for penalty u/s 112(a). by knowingly causing the bills of entry and other fabricated documents to be filed which contain incorrect information, he rendered himself for penalty u/s 114AA".
11.3 For the purpose of imposing penalty under Section 112(a) and Section 114AA, the onus is upon the department to establish mens rea/ malafide intention on the part of the Appellant. On the contrary, the reason for imposing such hefty penalty on the appellant is completely frivolous and has no legal backing.
(i) There is absolutely not an iota of evidence which can suggest that appellant was aware about the illegal action of his employer i.e Hemant Gandhi (mastermind).The perusal of whole show cause notice, OIO and OIA makes it abundantly clear that appellant has not committed any violation of the provisions of Customs Act, 1962 for imposition of penalties under Section 112(a) and Section 114AA of the Act.
(ii) The Commissioner (Appeals) also observed that on the behest of Sh.Hemant Gandhi Appellant used to get signature on the papers from Sh. Roshan Singh therefore he was involved in the acts of omission and commission which rendered the goods liable for confiscation hence rendered himself for penalty u/s 112 (a) & 114AA. But no malafide intention or mens rea has been proved against the Appellant which suggest that Appellant was having knowledge that there was any import of restricted goods or has deliberately acted to import the restricted goods i.e. fireworks by defrauding the customs department.
(iii) Obtaining IEC for any person is not an offence under the customs Act. It is not the case of department that IEC was obtained on forged documents. Therefore, imposition of penalty on the appellant is not justified. Refer case:
Vikram Singh Dahiya vs. Commissioner of Customs (Export), New Delhi, 2008 (233) ELT 619 (Tri- Delhi) Commissioner of Customs vs. Sanjay Aggarwal, 2011 (269) ELT 153 (Guj)
(iv) Absence of mens rea and no abetment of offence of importing restricted goods, renders the imposition of penalties under Section 112(a) and 114AA of the Act as wrong, erroneous and not in accordance with law.
8 C/52392/2019-SM Penalty under Section 114AA of the Act is imposed for the use of false and incorrect material. The Appellant herein was not involved in defrauding the Customs by way of submitting any wrong information intentionally or knowingly. The information about the import of goods were true and correct as per his knowledge and belief. Refer case:
o Shri D.Sahil, Proprietor of M/s. Maahdev Granites vs. Commissioner of Customs, Chennai, 2021 (9)TMI 814- CESTAT Chennai.
o M/s. Sree Ayyanar Spinning & Weaving Mills Ltd. Vs. Commissioner of Customs, Tuticorin, 2019 (7) TMI 1305- CESTAT Chennai o Premax logistics vs. Commissioner of Customs, Chennai- II, 2017 (4) TMI 483- CESTAT Chennai Penalty under Section 112(a) is imposable where the person has conducted any act or omits to do any act or omission which renders the goods liable for confiscation. In the present case, the allegation against the Appellant do not establish the case of the department which shows act of omission or commission rendering goods liable for confiscation. Appellant acted in a bonafide manner to assist his employer Hemant Gandhi to import glass items in accordance with the customs provisions. Refer cases where penalty under S.112 set aside due to want of mens rea:-
o Amritlakshmi Machine Works vs. Comm. Of Customs (import) Mumbai, 2016 (335) ELT 225 (Bom.) o Bhuler India Pvt. Ltd. Vs. Commissioner of Cus. & ST, Banglore, 2014 (310) ELT 593 (Tri-Bang) Reliance is placed on the decision of Arya International vs. Commissioner of Customs, Kandla, 2016 (332) ELT 726 (Tri. Ahmd) as well as in Mohammed Iliyas vs. Commissioner of Customs, Jaipur-1, 2018(360) ELT 570 (Tri-Del) wherein it was held that penalty under Section 114AA is improper when penalty is imposed under Section 112(a).
(v) None of the co-noticee has deposed that there was any knowledge or connivance of Appellant in import of any restricted items i.e. fire crackers in violation of the provisions of Customs Act.
11.4 Appellant has duly co-operated with the department and provided all the relevant information as available to him. Appellant himself is the victim of fraud by his employer Hemant Gandhi and his associates who used his name, photograph and identity for obtaining unknown numbers without his knowledge.
9 C/52392/2019-SM 11.5 Learned Counsel further urges that the case of this appellant is on equal footing as the case of CHA-Promod Logistic Services. This Tribunal in the case of Promod Logistic Final Order No. 53688/2017 dated 29.05.2017 have set aside the penalty under Section 112(a) and 114AA of the Act, taking notice of the findings of the court below, that the CHA had cooperated in the investigation and have actively and diligently kept the revenue informed at each and every stage, and there was no case of absence of due diligence on the part of the CHA.
12. Learned AR for revenue relies on the impugned order.
13. Having considered the rival contentions and after perusal of the record, I find that this appellant was mostly acting at the instructions of his employer Mr. Hemant Gandhi. Further it appears from the facts and circumstances and the evidence on record that this appellant was not aware that fire crackers (restricted goods) are being imported under the guise of E-glass of spec chopped strand mat (B-grade). However, it appears that this appellant had some inkling that Mr. Hemant Gandhi is resorting to dubious means or unethical practice, as he instructed the appellant to represent himself as Niting Chadda instead of Nitin Gandhi before the CHA. Further, Hemant Gandhi had promised to give Rs. 20,000/- per container to the person who will allow import in their name by using their IEC. Thereafter, this appellant contracted Mr. Roshan Singh and arrange for the use of his IEC in the name of Roshan Singh and Company, for which this appellant promise to give Rs. 10,000/- per container to Mr. Roshan Singh and thus was making Rs. 10,000/-
10 C/52392/2019-SM per container out of the amount of 20,000/-. In this view of the matter, it is evident that this appellant was also receiving 10,000/- for making the arrangement for import through Mr. Roshan Singh. I further find that this appellant have not resorted to use of any documents knowing it befalls or forged. In this view of the matter, the penalty under Section 114AA is set aside and the penalty under Section 112(a) is reduced to Rs. 1 lakh.
14. Thus, the appeal is allowed in part and the impugned order stands modified accordingly with consequential benefits.
(order pronounced in the open Court on 17.03.2023) Anil Choudhary Member(Judicial) Sb