Madras High Court
Commissioner Of Customs (Export) vs M/S.Bansal Industries on 13 September, 2006
Bench: P.D.Dinakaran, P.P.S.Janarthana Raja
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 13.9.2006 CORAM: THE HON'BLE MR.JUSTICE P.D.DINAKARAN and THE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA C.M.A.No.430 of 2005 and C.M.P.No.2183 of 2005 Commissioner of Customs (Export), No.33, Rajaji Salai, Chennai-1. ... Appellant vs. 1.M/s.Bansal Industries, KN/B-11, Gali No.10, Upper Anand Parbat, New Delhi. 2.Customs Excise and Service Tax Appellate Tribunal, South Zonal Bench, Shastri Bhavan Annexe, 1st Flr. No.26, Haddows Road, Chennai 600 006. ... Respondents. C.M.A. Filed against the final order No.019 of 2004 passed by the second respondent dated 26.12.2003. For appellant : Mr.S.Udhayakumar For respondent : No appearance for R1. JUDGMENT
(Delivered by P.D.DINAKARAN,J.) This appeal is directed against the order of the second respondent, Customs Excise and Service Tax Appellate Tribunal, made in final order No.019 of 2004, dated 26.12.2003.
2. The brief facts relevant for the disposal of the appeal are as under:-
2.1. The assessee, the first respondent herein, imported Tin Free sheets Waste/Waste Defective sheets and the goods were originally assessed based on the declaration made by the assessee. But, on the basis of intelligence that the consignments contained prime quality Tinplate sheets, the consignments were intercepted, detained and re-examined in the presence of independent witnesses. The samples were tested and it was found that the consignments could not be classified as Tin Free steel sheets, but they could be classified as Prime sheets.
2.2. Since there was mis-declaration and under-valuation of goods, summons was issued to the assessee. The Proprietor of the assessee, by name, Vinay Bhansal appeared and stated that there was mistake in the despatch of goods at the port of loading and that the offence was committed by the overseas supplier and requested to take a lenient view agreeing to pay the differential duty.
2.3. A show-cause notice was issued to the assessee for which a reply was sent denying all allegations. As requested by the assessee, re-examination of the goods was done in which it was found that 70.261 MTS of the goods were Tin Free Sheets and the balance 198.673 MTS were Tin Sheets (secondary).
2.4. The original authority, Commissioner of Customs (Exports) even though accepted the second examination report, found that there was a deliberate mis-declaration of description which was an attempt to evade duty. Accordingly, the original authority ordered confiscation of 198.673 MTS Tin Plate waste/waste above 600 mm under section 111(m) of the Customs Act, 1962 (for short, "the Act") with permission to the assessee to redeem the same on payment of redemption fine of Rs.25,00,000/-. The original authority also arrived the differential duty at Rs.14,12,161/- and imposed penalty of Rs.5 lakhs under section 112 of the Act. Aggrieved by the same, the assessee preferred an appeal before the Customs, Excise & Service Tax Appellate Tribunal (for short, "the Tribunal").
2.5. The Tribunal, accepting the stand taken by the assessee that it was the supplier who by mistake loaded tin sheets waste, not ordered by the assessee and finding that the Revenue has not shown that the assessee wilfully suppressed the facts and misdeclared the goods with intention to evade duty, set aside the order of the original authority. Challenging the same, the Revenue has preferred this appeal raising the following questions of law:
1. Whether Section 112 of Customs Act 1962 by which the penalty is levied, the burden of proof that the importer had acted bona fide is on the importer and that the importer cannot be heard to say despite misdeclaration it would be upto the Department to prove that there was deliberate intention on the part of the importer to misdeclare?
2.The Tribunal failed to note that the Commissioner had, on an appreciation of facts and materials available on record, clearly held that the loading at two different places could not be said to be a mistake by the leaders and the mistake projected by the importer was pre-planned and not a coincidence and that in view of the difference of the duty on the goods declared in the bill of entry and the goods actually imported clearly proves the intention of the importer to deliberately mideclare and to evade the duty. Ultimately it is question of appreciation of the evidence by the original authority.
3.Whether in the absence of the finding that the Appellate Tribunal in the exercise of its appellate jurisdiction came to the conclusion that such an appreciation of evidence by the authority below namely the original authority was perverse or unreasonable, the Appellate Tribunal could be said to have its power to set aside the order of the original authority? The Tribunal failed to note that in all the decisions of the Supreme Court holding to the effect that mens rea would be necessary before a penalty is levied was preceded by a factual finding as to the existence or non-existence of the mens rea and that the said principle cannot be applied in the abstract without reference to the finding of the original authority which had not been reappreciated in the manner in which an Appellate Authority should exercise its jurisdiction."
3. The first respondent/assessee, though entered appearance through a counsel, has not chosen to defend its case when the matter came up for final hearing and hence, we are constrained to proceed with the case. Heard Mr.S.Udayakumar, learned counsel appearing for the appellant and perused the order of the second respondent as well as the original authority.
4. At the outset, we are of the view that the questions of law referred to above have not been happily framed, as the entire issue in this appeal revolves on the intention of the assessee in making such a misdeclaration with a view to evade duty, and accordingly, we reframe the question as under:
"Whether the element of mens rea is required for imposition of punishment under the Customs Act?"
5. Learned counsel appearing for the appellant submits that the Tribunal has failed to consider the reasonings given by the original authority on the basis of evidence on record, but, on the other hand, the Tribunal has merely observed that it is inclined to accept the reasonings given by the assessee and hence, the order of the Tribunal is liable to be set aside.
6. We have gone through the order of the Tribunal. It is true that the Tribunal has recorded a finding of fact that it is inclined to accept the reasons given by the assessee that it was the supplier who by mistake loaded tin sheets waste which were not ordered by the assessee and that the Revenue has not shown that there was any flow back of funds for the purpose of tin sheets waste. However, a perusal of the order impugned shows that the Tribunal proceeded on the basis that the assessee had no intention to evade duty. We are deliberately quoting the order of the Tribunal in the following words:
".... the Revenue has not shown that appellant had wilfully suppressed the facts and had mis-declared the goods with intention to evade duty and the fact that he had consciously committed the act of misdeclaration..."
7. It is oft-repeatedly held that mens rea is not an essential ingredient for contravention of the provisions of a civil law. The Apex Court recently in CHAIRMAN, SEBI v. SHRIRAM MUTUAL FUND [(2006) 5 SCC 361] held as under:-
"Mens rea is not an essential ingredient for contravention of the provisions of a civil Act. Unless the language of the statute indicates the need to establish the element of mesn rea, it is generally sufficient to prove that a default in complying with the statute has occurred and it is wholly unnecessary to ascertain whether such a violation was intentional or not. The breach of a civil obligation which attracts a 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."
8. Applying the above ratio to the facts of the case, we find that though the Tribunal has recorded a finding of fact that it was the supplier who by mistake loaded tin sheets waste which were not ordered by the assessee, the Tribunal rendered its decision on the basis that the Revenue has not shown that the assessee had wilfully suppressed the facts and had misdeclared the goods with intention to evade duty. The order of the Tribunal mainly proceeded on the footing of intention of the assessee to evade duty, which, in our view, is not correct in the matter of breach of a civil obligation attracting levy of penalty. Therefore, the order of the Tribunal is liable to be set aside.
9. Accordingly, the question as reframed by us is answered in the negative and against the assessee. The appeal is allowed and the order of the Tribunal is set aside and the matter is remitted back to the Tribunal for fresh disposal on merits and in accordance with law. No costs. Connected C.M.P. is closed.
na.
To The Customs Excise and Service Tax Appellate Tribunal, South Zonal Bench, Shastri Bhavan Annexe, 1st Flr. No.26, Haddows Road, Chennai 600 006.
[vsant 7997]