TMI Blog2019 (7) TMI 1987X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the goods at time of importation were having counter signatures which were forged. From the wording of the Notification, it is abundantly clear that the Joint Secretary, countersigning the certificate certifies the same thing which has been stated by the executive head. The certificate produced, continues to be the one which has been given by the executive head of Project Implementing Authority. Hence even after countersignature by the Joint Secretary, it cannot be said to be the certificate issued by him, but is only certifying the authenticity of the certificate issued. Penalty - HELD THAT:- Appellant 2 had acted under a bonafide belief, and the charge of negligence cannot be upheld this decision of tribunal cannot be applied to the facts of present case. Thus, the penalty imposed on Appellant 2 under Section 112 (a) cannot be sustained. The appeals filed by Appellant 1 and Appellant 2 against the impugned order allowed. - HON BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) AND HON BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) For the Appellant : Shri D.B. Shroff, Sr. Advocate, with Shri M.S. Bodhanwala and Ms. Sakshi, Advocates. For the Respondent : Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Yadav, who was a Govt. Servant at the time of commission of the offence, the fact has been kept in mind that he has undergone detention under COFEPOSA and he would also be liable for action under departmental proceedings including possible prosecution by the CBI. S No Name and Designation Amount of Penalty 1 M/s Uhde India Ltd. 9,33,38,944 (9,26,89,304 + 6,49,640) 2 M/s Rashtriya Chemicals Fertilizers Ltd. 1 crore 3 M/s ICICI Bank Ltd. 50 lakhs 4 Shri M Sunderraman, Director (Finance), M/s RCF 10 lakhs 5 Shri Ravindra Prakash Srivastava Chief Manager, Liaison, M/s RCF 10 lakhs 6 Shri Rakesh Yadav 4 lakhs 7 Shri Anand T Kusre, Gen.Manager, ICICI Bank Ltd. 5 Lakhs 8 Shri Zarasp Irani, Manager, ICICI Bank Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instituted in the matter. 2.4 The officers of Commissionerate of Customs (Import), Mumbai seized 26 packages claimed to be containing Air Compressor, Expander Train Steam Turbine Package System including accessories and spares meant for up-gradation of HP Nitric Acid Plant of Appellant 1 for which Bill of Entry No: 480059 dated 22.7.2004 was filed by contractor claiming exemption under Notification No. 84/97-Cus.,dated 11.11.97, as amended on the basis of forged PIAC, under panchnamas on 28.7.2004. The declared CIF value of the consignment was Rs. 22,95,67,164/-. 2.5 The office premises of M/s. Rashtriya Chemicals Fertilizers Limited (Appellant 1) situated at H-9, Green Park Extension, New Delhi were searched by the officers of DRI on 29.07.2004 and documents relevant for investigations were resumed under Panchnama. Thereafter statements of various persons related with the filing of this Bill of Entry along with the forged documents was recorded. 2.6 Thereafter contractor deposited a sum of Rs. 9,26,89,303/- towards custom duty in respect of the imports covered by this bill of entry vide TR6 Challan No. 20315915 dated 19.08.2004. The seized goods were provisionally rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the goods sought to be cleared through Mumbai AirPort, Mumbai, under Bill of Entry No: 931881 dated 26.07.2004 as to why: (i) the benefit of Notification No. 84/97-Cus. dated 11.11.97 as amended should not be denied in respect of goods mentioned under Bill of Entry No 931881 dated 26.07.2004 which were assessed provisionally and the assessment should not be finalized accordingly; (ii) the said goods having declared CIF value of Rs. 15,93,058/ released provisionally should not be held liable for confiscation under Section 111(o) of the Customs Act, 1962; (iii) Customs duty amounting to Rs. 6,49,640/- should not be demanded and recovered from them under proviso to Section 28 (1) read with Section 18 of the Customs Act, 1962; (iv) penalty under Section 112(a)/114A of the Customs Act, 1962 should not be imposed upon them for their acts of omission and Commission as aforesaid; (v) the amount of Rs. 6,49,640/-deposited and bank guarantee of Rs. 31,86,117/- submitted during investigation should not be appropriated towards payment of duty and penalty; 2.10 The notices mentioned in para 2.8 2.9 also called upon Appellant 2, and other co-noticees to show cause in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry. Appellant 2, under cover of two letters dated 11.6.2004 addressed to the Joint Secretary Ministry of Finance requesting for counter signature, handed over the two certificates to Appellant 1 representatives for pursuing the matter. Appellant 1 representative submitted the certificate in the office of Joint Secretary in the last week of June 2004 they requested the Under Secretary to issue the said certificates duly countersigned by the Joint Secretary. The Under Secretary in the DEA Ministry of Finance later informed Appellant 2 that the certificate had to be signed by an officer not below the rank of Joint Secretary in the GOI in the concerned LINE Ministry without specifying which the appropriate Ministry was. Appellant 1 returned the original certificates to Appellant 2 and requested them to issue a fresh certificate for counter signature by the Joint Secretary (Fertilizers, Department. Of Fertilizers, Ministry of Chemicals and Fertilizer, GOI). Request made by the Appellant 1 was not acceded to by the Appellant 2 as for them being a Bank the appropriate LINE Ministry was the Ministry of Finance. As the goods had already sailed from the Karachi port, Appellant 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification and what has not been complied with is the merely a procedural condition. It was incumbent on the Government to notify and clarify as to which ministry was line ministry, for counter signing these certificates. Appellant 1 had throughout sought clarification and guidance from the concerned ministries without any success. The Commissioner failed to appreciate that it was the bureaucratic approach of the Ministry in driving genuine importers like Appellant 1 from pillar to post, which compelled them to seek the assistance of Junior Finance Officer, in the Ministry of Finance to get the certificates countersigned. Appellant 1 had no reason to doubt or believe that the counter signature on the certificates, forwarded along with the letter signed by the Director (ADB) in the Ministry of Finance was forged. If they would have known about it they would have not produced the certificate to Customs and would have approached the Ministry for proper counter signature. From the various correspondences it can be shown that no Ministry was nominated as Line Ministry by the Department of Economic Affairs and it was only after the direction given by the Hon ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leave from the Hon ble Bombay High Court, for permitting them to allow filing of these additional documents before this tribunal. On the basis of leave granted by the Hon ble High Court, they filed the Miscellaneous Application for production of these additional documents before this tribunal which was allowed. In view of the fact that the counter signed certificate has now been provided, the demand for duty made and the confiscation of the goods should be set aside. From the facts as narrated no ill intention can be attributed to them and they had throughout acted bonafidely complying with the provisions of law and notification, no penalty as imposed by Commissioner can be sustained. 3.3 Arguing for revenue learned Authorized representative submitted that- Following are the Questions to be decided by the Hon'ble Tribunal in these appeals Whether in view of Hon'ble High Court Order and the documents produced by the appellants to claim the notification benefit, which was claimed on a forged certificate can be extended, whereas the notification clearly states that the certificate has to produce to the jurisdictional Assistant/Deputy Commissioner at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of conjecture is not correct as the order discussed in length the evidence of committing/abating fraud in obtaining forged signature of Joint Secretary on PIA certificate. Appellants' plea that they are not aware of the forgery is also not correct. These facts have been discussed in the SCN and order in original which led to imposition of penalty under the Customs Act 1962. There is no change in this fact by submitting a new certificate. In view of this no penalty can be waived. Appeals be dismissed 4.1 We have considered the impugned order along with the submissions made in appeal and during arguments. 4.2 In the present case we are concerned with Notification No. 84/97-Customs dated 11.11.1997. The text of Notification as amended from time to time till the date of importation is reproduced below: In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), read with sub-section (4) of section 68 of the Finance (No. 2) Act, 1996 (33 of 1996), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all the goods imported into India for execution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct financed (whether by a loan or a grant) by the World Bank, the Asian Development Bank or any other international organisation, other than those listed in the Annexure and the said project has been approved by the Government of India for implementation by the Government of a State or a Union Territory, a certificate from the executive head of the Project Implementing Authority and countersigned by the Principal Secretary or the Secretary (Finance), as the case may be, in the concerned State Government or the Union Territory, that the said goods are required for the execution of the said project, and that the said project has duly been approved by the Government of India for implementation by the concerned State Government. Explanation. - For the purposes of this notification, - (a) international organisation means an international organisation to which the Central Government has declared, in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), that the provisions of the Schedule to the said Act shall apply; (b) Line Ministry means a Ministry in the Government of India, which has been so nominated with respect to a project, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import through Air Cargo Complex, Sahar, Mumbai. The dispute relates only to the identification of the correct LINE Ministry in the GOI whose officer (not below the rank of Joint Secretary) was required to counter-sign the project implementing authority certificate. All the noticees have contended that since they were so advised by ICICI Bank they genuinely believed that the LINE ministry was the Ministry of Finance. 39. To appreciate this defence point it is necessary to examine the definition of LINE Ministry as given in the Notification. It clearly says that the Line Ministry would be a Ministry in the Govt. of India which has been so nominated with respect to a project by Govt of India in Ministry of Finance (Deptt. Of economic Affairs). In this case none of the noticees have been able to show any letter, order or notification from the Deptt. Of Economic Affairs, GOI, nominating the concerned Ministry as LINE Ministry for the instant project. It is clear that the line Ministry had to be nominated with respect of each project. There is also no evidence in the form of correspondences or otherwise to show that any of the notices, particularly ICICI Bank, the project Implementat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place with the Ministry directly and vice-aversa, which goes to confirm that the responsibility of getting the countersignature was that of the PIA, ICICI Bank in this case. If they handed over these letters to some other agency (RCF/Uhde in this case) they did so at their own peril and they cannot now come back and say that they were under a bonafide belief that the forged signatures were genuine. This can be best illustrated by taking the example of the issue of a passport. A citizen is required to apply for the passport directly to the passport office. If for his own convenience or otherwise, he hands over the application to another person or tout and later on the passport is found to be forged, he cannot claim ignorance/innocence. 42. It is also not the case of ICICI Bank that M/s RCF or Uhde India were authorized agents of MOF and they were therefore well within their rights to hand over the certificates to these agents. 43. Another interesting point to note is that when the under secretary for MOF informed ICICI Bank vide letter dated 5.7.2004 that MOF was not the LINE Ministry for the Project, it is not understood how and on what basis did they allow/authorize M/s RCF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the line of credit or not and also whether the equipments proposed to be procured /imported are necessary for the said project. In any case this is only an assumption and it is not necessary for DRI to indicate the significance of the signature by a Joint Secretary. This burden was cast on the notices which they have not discharged. 45. Further the Hon'ble Supreme Court of India in the matter of Eagle Flask Industries Ltd. Vs. Commissioner of Central Excise, Pune in Civil Appeal No.4647 of 1998 decided on 02.09.04 [2004 (171) ELT 296(SC)] held that condition of exemption notification has to be strictly complied with for availing its benefit and condition of filing declaration/ undertaking under exemption notification is not merely procedural. Hence exemption to be denied for nonobservance of said conditions 46. Another point made by the noticees is that they had nothing to gain by trying to get forged signatures of the officers of the MOF. This is too simplistic an assertion. It is on record that Mr Rakesh Yadav who forged the signatures was paid a bribe of Rs.1.5 lakhs and that this money was arranged by M/s Uhde India Ltd. the contractor/importer and it was in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponded stating as follows: Please refer your letter no UEIF/2854 dated June 11, 2004 regarding countersigning of Project Implementing Authority Certificate for availing of the customs duty exemption against the procurement of goods under the ADB Urban Environment Infrastructure Facility Project (Ln No 1720-IND) by M/s Rashtriya Chemicals and Fertilizer Ltd. As per DOR s order no 84/97-Cus dt 11..11.1997, as amended by 85/99-Cus dt 2.11.1999, 75/2001-Cus dt 8.7.2001 and 107/2001_Cus dt 12.10.2001, the above certificate has to be issued by an officer not below the rank of a Joint Secretary to the GOI in the concerned Line Ministry in the GOI. With regards. This letter of the Under Secretary (ADB) in the Department of Economic Affairs, speaks a lot of the bureaucratic attitude of the officers in the Ministry while handling the requests made by the citizen. As per Notification No 84/97-Cus as amended from time to time, it was the Department of Economic Affairs which had to nominate the Line Ministry for countersignature of project implementation authority certificate. However, from this letter, it is not difficult to infer that said Ministry and Department was totally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o go into that aspect. After receiving this letter dated 29.8.2006, the petitioner has approached the Department of Economic Affairs again but the grievance of the petitioner is that no action has been taken by the said Department of Economic Affairs. The immediate difficulty being faced by the petitioner is on account of notices issued by the department of Central Excise and the department of Customs on the ground that the counter signed certificates have not been submitted to the said department by the petitioner. Although the learned counsel for Union of India has prayed for time for instructions, but we are of the opinion that considering the immediate problem being faced by the petitioner, it would be appropriate in the interest of both parties to dispose of this writ petition with the following directions. Within two weeks of the date on which certified copy of this order is presented before the Finance Secretary by the petitioner, the Department of Economic Affairs will nominate another Line Ministry after consulting the said Line Ministry so that the said ministry does not express the inability expressed by the Ministry of Urban Development. The nomination of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be prepared as per the format prescribed, if any, and send the original to MoUD with following, for further action as agreed: (a) Details of project/ sub-project, (b) List of items imported, cost, date of import etc, and reasons why implementation of project required import of these specific Item(s), (c) Whether PIAC was issued earlier in r/o same items(s), if so, whether PIAC was one of those found to be forged one and where case is under investigation. 3. A copy may also be endorsed to DEA. 4.9 The matter did not rest with this order of the Hon ble High Court. Hon ble High Court passed yet another order dated 29.4.2016 in Writ Petition No 1055 of 2012 stating as follows: Triveni Engineering Industries Limited having its registered office at Deoband and Corporate Office at NOIDA has filed this petition for quashing the order dated 13 August 2012 passed by the Joint Secretary in the Ministry of Urban and Development, Government of India refusing to countersign the Project Implementing Authority Certificates and for a direction to the said officer to countersign the PIA Certificates. It transpires from the records of the writ petition that the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Project was commissioned. However, after the receipt of goods it transpired that the counter-signatures of the Joint Secretary in Ministry of Finance on the PIA certificates were forged. Information was thereafter given by the petitioner to the Central Board of Excise and Customs. The petitioner, accordingly, not only deposited Rs.2.85 crores under project, being the full amount of excise duty and customs duty exemptions availed, but made a request to the ICICI Bank to issue true copies of the PIA certificates so that the same could be re-submitted to the Line Ministry for counter-signatures of the Joint Secretary. The ICICI Bank by letter dated 2 December 2004 provided true copies of the 43 PIA certificates to the petitioner. According to the petitioner, these 43 PIA certificates were sent to the Ministry of Urban Development which was the Line Ministry for the counter-signatures of the Joint Secretary. However, as no action was being taken, the petitioner filed Writ Petition No. 1516 of 2006 which was disposed of on 5 October 2006 with a direction that the nomination of the Line Ministry will be intimated to the petitioner and upon submission of certificates by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Ministry of Urban and Development, however, declined to countersign the signatures on the PIA Certificates on the ground mentioned in paragraph 25 which are reproduced below:- Hence, in the above case no Government approval of the said sub-project has been furnished to the Ministry of Urban Development. The Ministry of Urban Development was not provided an opportunity to examine and approve the case at the time of extension of loan for the sub-project or the import of the said equipment and presently the TEIL refuses to co-operate with the Government to facilitate inspection of their site and thus the Ministry is unable to obtain a certificate from the Government of Uttar Pradesh that the equipment has been installed and used for the sub-project for which financing had been obtained through ADB. In view of the above stated facts the Ministry of Urban Development is not in a position to countersign the PIACs. When the matter was taken up on 25 August 2015, the Court directed the Ministry of Finance as well as ICICI Bank Limited to file their counter affidavits. A ground that was taken in the impugned order is that Government approval of the subject was not furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement provided for a US$ 80 Million Line of Credit for financing various projects of the borrowers who meet the eligibility requirement stipulated by Asian Development Bank according to the agreement. 9. That for the execution of the agreement the ICICI had received a letter dated 21.02.2000 from the Department of Economic Affairs, Ministry of Finance, Government of India, an in principle approval for the entire ADB-UEIF Project. Each project of the borrower has to be approved by the ADB as stipulated in the Agreement between ADB and ICICI. A counter affidavit has also been filed by the Ministry of Urban and Development. The main issue that has been raised in the counter affidavit is that though the Government of Uttar Pradesh was requested on 20 January 2012 to furnish complete information regarding the equipment installed on the site but complete information was not sent. In this connection, the request made to the Uttar Pradesh Power Corporation Limited to furnish certain details has been emphasized upon and a copy of the letter dated 25 May 2012 sent by the Government of Uttar Pradesh to the petitioner stating that despite several requests, the petitioner instead of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inders dated 20.01.12, 19.03.12, 27.03.12, 03.04.12, 20.04.12 and 07.06.12. The Govt. of U.P. approached TIEL for information vide their letter no. 80 CE/PPA dated 30/04/12. The TIEL instead of providing the Govt. of U.P., the information sought for, wrote to the MoUD vide letter dated 17.05.12 demanding, the Ministry rely on the borrower to provide the necessary information. A copy of this letter was also endorsed to the Govt. of U.P. As the TIEL had not provided the necessary information the Govt. of U.P. Has been unable to take any further action on the subject. In view of the stand taken by the respondents in the counter affidavits, it is clear that there was no requirement of approval by the Ministry of Finance with regard to the loan taken from Asian Development Bank for the said Project. The main dispute, however, is with regard to the inspection and certain clarifications that have been raised by the Ministry of Urban and Development, which is the Line Ministry . According to the respondents, the petitioner is not cooperating with the inspections as a result of which it was not possible for the Officer to countersign the PIA certificates. However, according to the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of Project Implementation Authority Certificate (PIAC) for availing customs duty exemption for goods imported under ADB loan reg. This has reference to DEA s OM No 9/15/2004-ADB-I dated 08.10.2010 informing that PIAC for availing custom duty benefit would be countersigned by Ministry of Urban Development (MoUD) who would continue to be the Line Ministry. RCF approached to the MoUD for countersigning the Project Implementation Authority Certificate (PIAC) issued by ICICI (the Project Implementation Authority). However, MoUD refused to countersign the PIAC stating that MoUD have no expertise to certify the import of such goods from the necessity point of view. MoUD has also informed that they were not consulted by RCF at the time of loan negotiation. Therefore, they are not in position to sign on PIACs. 2. A detail status note is enclosed as per Annexure-I 3. Department of Economic Affairs is requested to suggest the way forward in the matter. 3. This issues with the approval of Secretary (Fertilizers). 4.12 Secretary, Ministry of Chemical and Fertilizers thereafter took a meeting on 27th July 2016, which was attended by the representative of Department of Economic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rank of the Joint Secretary in the concerned Line Ministry, in the Government of India. c) RCF had complied with all these conditions including the countersignature of Joint Secretary (M FI) in the Dept. of Economic Affairs, Ministry of Finance on the PIAC and were forwarded to Commissioner of Customs. d) However, Commissioner of Customs (Import) seized all 26 imported packages on the ground that countersignatures of the Joint Secretary on the PIAC were forged. Goods were finally cleared through Mumbai Port after provisional assessment pending investigation of PIAC's and upon execution of Bond of Rs.22,95,67,164/- with revenue deposit of Rs. 5,75,00,000/- and payment of custom duty of Rs.9,26,89,304/- Similarly, Goods imported through Air Cargo Complex, Sahar were seized and RCF got it cleared through Air Cargo Complex after provisional assessment, pending investigation of PIAC's and upon execution of a Bank Guarantee of Rs. 31,86,117/- and payment of custom duty of Rs.6,49,640/-. e) RCF was served with a Show Cause Notice dated 09.03.2005 by Additional Director General, DRI, as to why benefit of the Notification as amended should not be denied, why goods should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requisite certificate as requested by RCF. l) The MOUD vide its OM. No. K-14011 /130/2014 -UDII dated 18.01.2016 addressed to Department of Fertilizers has turned down the request for countersignature on PIAC on the ground that they did not have an expertise to certify the import of such goods from the necessity point of view. They have further stated that MOUD was also not consulted at the time of loan negotiation and therefore, MOUD is not in a position to sign on PIACS. m) It is informed that there was no such stipulation in the relevant notification about obtaining prior approval/confirmation/consultation from MOUD. In fact, RCF was not even aware that the line Ministry in this case was MOUD until it was informed by the Ministry of Finance vide letter dt. 08.10.2010. Hence no prior consultation with MOUD was possible, n) It was further informed that in an identical case pertaining to M/s. Triveni Engineering and Industries Limited wherein MOUD was the Line Ministry and refused to countersign the PIAC, the party had approached Hon'ble Allahabad High Court by filing Writ Petition. While disposing of the said petition, Hon'ble Allahabad High Court in its judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts as follows: 15. As stated above, the 2nd Respondent has been appointed as the Line Ministry. The 2nd Respondent however refused to sign the certificates and requested the Ministry of Finance to withdraw the order nominating them as the Line Ministry on the alleged ground that it was inconsistent with the mandate of their Ministry. Despite the same, the Ministry of Finance informed the 2nd Respondent that it would have to continue as the Line Ministry. This was as far back as 8 October 2010. Based on this communication the ICICI bank sent the certificates to the 2nd Respondent for its countersignature. The matter was regularly followed up for countersignature on the 2nd Respondent. Nearly 4 years later the 2nd Respondent directed the 1st Petitioner to submit all relevant details to the 3rd Respondent Ministry of their verification before countersigning the certificates. The 1st Petitioner submitted the relevant details to the Department of Fertilizers, who by their letter dated 13th April 2015 recommended to the 2nd Respondent to issue the said certificates as requested for by the 1st Petitioner. The 2nd Respondent vide his communication dated 18 January 2016 addressed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Notification No.85/99 dated 6.7.1999 which exempts the goods imported into India for execution of the Project financed by, World Bank, Asian Development Bank or any other international organization subject to the condition that: I. The project has been approved by the Government of India; II. Such equipment's are intended to be used in a project financed by World Bank, Asian Development Bank or any other international organization; III. A certificate is issued by the Executive Head of the Project Implementing Authority (i.e. ICICI Bank in this case) that the said goods are required for the execution of the said project and the said project has duly been approved by the Government of India; IV. The above certificate of ICICI Bank is required to be countersigned by an officer not below the rank of the Joint Secretary in the concerned Line Ministry, in the Government of India. 3. In this context, I am directed to say that it has been decided to engage Quality Council of India (QCI) for a third party verification of the goods imported by RCFL for the said project including the same are required for execution of the project and are being used for the said purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficates. In their letter they stated as follows: Sub: Issue of Project Implementing Authority Certificate (PIAC) for availing Custom Duty Exemption for goods Imported under ADB Loan. Sir, With reference to your letter No Nil dated 8th August 2018 on the subject noted above and to say that DoF has initiate the action to engage Quality Council of India (QCI) for carrying out third party verification of the goods imported by RCFL, after obtaining the approval of Ministry of Urban Development and Department of Economic Affairs vide their OMs No !4011/30/2014-UD-II dated 8.9.2017 and No. 9/11/2017-ADB-I dated 20.12.2017 respectively (copy enclosed). QCI was engaged vide Dof letter No 18016/4/2015-FCA (vol.II) dated 5/7.1.2018 to carry out the third party verification of goods imported by RCFL. 2. On the basis of the report submitted by QCI, I am directed to convey the approval of the competent authority on issue of Project Implementing Authority Certificate (PIAC) for availing Custom Duty Exemption for goods Imported under ADB Loan. The true copy of the Project Implementation Authority Certificate (PIAC) counter signed by ICICI Bank limited has duly been signed by the Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the additional documents were taken into record for consideration and deciding the appeal filed by the applicant. 4.20 From the facts as narrated above we find that the Commissioner has in his order in para 38, acknowledged that the Appellants fulfill all the conditions as laid down by the Notification No 84/97-Cus as amended from time to time and there is no dispute in this respect. The only dispute which is there is the manner in which the project implementing authority certificate, which is the basis for claiming and allowing the benefit of exemption, has been countersigned. Investigations conducted by DRI, establish beyond an iota of doubt that the signatures on the certificates submitted by the importer at the time of importation were forged. The Commissioner found these signatures as forged and has proceeded against the importers and all others concerned with importation. 4.21 There is no dispute about the finding recorded by the Commissioner that the certificates produced before the Customs Authority for clearance of the goods at time of importation were having counter signatures which were forged. Commissioner has strongly relied upon the decision of the Apex Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsider another Constitution Bench decision in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal, (2011) 1 SCC 236 = 2010 (260) E.L.T. 3 (S.C.) [hereinafter referred as Hari Chand case for brevity]. We need not refer to the facts of the case which gave rise to the questions for consideration before the Constitutional Bench. K.S. Radhakrishnan, J., who wrote the unanimous opinion for the Constitution Bench, framed the question, viz., whether manufacturer of a specified final product falling under Schedule to the Central Excise Tariff Act, 1985 is eligible to get the benefit of exemption of remission of Excise duty on specified intermediate goods as per the Central Government Notification dated 11-8-1994, if captively consumed for the manufacture of final product on the ground that the records kept by it at the recipient end would indicate its intended use and substantial compliance with procedure set out in Chapter 10 of the Central Excise Rules, 1944, for consideration? The Constitution Bench answering the said question concluded that a manufacturer qualified to seek exemption was required to comply with the preconditions for claiming exemption and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be described as the essence or the substance of the requirements. Like the concept of reasonableness , the acceptance or otherwise of a plea of substantial compliance depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleased if a clear statutory pre-requisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means actual compliance in respect to the substance essential to every reasonable objective of the statute and the Court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. 33. A fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s already concluded in para 50 above, we may reiterate that we are only concerned in this case with a situation where there is ambiguity in an exemption notification or exemption clause, in which event the benefit of such ambiguity cannot be extended to the subject/assessee by applying the principle that an obscure and/or ambiguity or doubtful fiscal statute must receive a construction favouring the assessee. Both the situations are different and while considering an exemption notification, the distinction cannot be ignored. 4.23 From both the decisions being relied upon by the revenue, it is quite evident that the law as laid down by the Hon ble Apex Court, requires making the distinction between the substantial conditions and procedural conditions prescribed by the exemption notification. The substantial conditions need to be strictly interpreted and no latitude is available for interpreting the same, to allow the benefit of exemption in case of the non compliance with these conditions. However Hon ble Apex Court clearly holds that non compliance with the procedural conditions should be viewed liberally and substantial benefit of exemption otherwise available should not be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the existing instructions, Asstt. Collectors have to check assessments on Bill of Entry and Shipping Bills up to a certain percentage. After assessment by the Appraisers, the Bill of Entry and Shipping Bills are required to be put up to the Asstt. Collectors for check and counter signature as prescribed. The question whether in such cases where assessments are countersigned by the Asstt. Collectors, the refund procedure under Section 27 of the Customs Act, 1962 would be appropriate, has been examined by the Board in Consultation with the Ministry of Law. The Ministry of Law have opined that if the Asstt. Collector while he countersigns the Bills of Entry checks the relevant entries and applies his mind to determine the duty leviable under the Act and passes an order accordingly (whether such an order is passed separately or on the Bill of Entry itself so long as the duty liability is determined thereby), then an appeal lies under Section 128 of the Customs Act, against such order. As the Appraisers make the assessment and the counter signature of the Asstt. Collector is merely a token of a check exercised by him, it cannot be said that this check makes the assessment order t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing rights and duties recognized by substantive law and for justly administering redress for infraction of them. Sims v. United Pacific Ins. Co., D.C.Idaho, 51 F.Supp. 433, 435. (Blacks Law Dictionary, Revised Fourth Edition, page 1367, St Paul Minn West Publishing Co.) 4.24 Merriam-Webster.com Legal Dictionary, defines the Procedural Law , as follows: Procedural law: law that prescribes the procedures and methods for enforcing rights and duties and for obtaining redress (as in a suit) and that is distinguished from law that creates, defines, or regulates rights Merriam-Webster.com Legal Dictionary, Merriam-Webster, https://www.merriam-webster.com/legal/procedural%20law. Accessed 3rd August 2021. 4.25 From the definition of Procedure and Procedural Law, as referred to in the above dictionaries, it is quite evident that the manner in which the certificate needs to be produced is nothing but the matter of procedure and procedural law. The manner in which the certificate is signed and countersigned is a matter of procedural law, while the contents of the certificate is substantive law. In this case Commissioner, do not find any discrepancy in the contents of certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of any such prescription of procedure and manner of countersignature, what value can be assigned to such a countersignature. Further what is the manner for verification of the countersignature by the assessing officer, notification is totally silent in this respect. In our considered opinion, such countersignatures can be obtained for a bribe, wine or women. This exactly is what happens in this case, a Junior Finance Officer, in the Department of Economic Affairs, Ministry of Finance finds the gold mine in this notification and makes use of the same by assuring the representatives of Appellant 1, who desperately were pursuing their cause for the countersignature on the Project Implementation Authority Certificate genuinely and properly issued by the Appellant 2, that he is in position to arrange for the countersignature against gratification he demands. Such sharks have their eyes wide open searching for such opportunities, which occur and reoccur on account of bureaucratic red tapism and vague conditions as this one in the exemption notification. 4.28 We observe from plain reading of notification, that the intention of the notification is to exempt the goods imported f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be expected to fulfill the condition of making the refund application within limitation, at the same time, produce a certificate of the Ministry within the time envisaged under the section. In other words, if the concerned Ministry consumes substantial time in issuing certificate, the assessee cannot be non-suited on the ground that the refund application was not filed within the period of limitation. Any other view would expose this provision to the vice of arbitrariness. Thus read, we need not hold the provision unconstitutional. Reading down a statutory provision in order to save it from the vice of unconstitutionality, is a well known interpretative technique often times employed by the Court. Even otherwise, the interpretation that we have adopted is reasonable. No person can be expected to perform a task beyond his control. On one hand, the statute requires the certificate of the concerned Ministry before exemption from duty can be claimed, at the same time, the statute mandates that the refund application must be made within a certain time frame. We are, therefore, of the opinion that the time consumed by the ministry in processing and granting certificate, as referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the certificate with forged countersignature was arranged by Mr Rakesh Yadav, Junior Finance Officer. Interestingly this certificate with forged countersignature was forwarded under the cover of forged letter directly to the Commissioner of Customs and not to the Appellant 1 or Appellant 2. 4.34 Appellant 1 has in his appeal challenged the order of confiscation under Section 111 (o) of the Customs Act, 1962 and penalty imposed under Section 112 (a), ibid. These sections read as follows: SECTION 111. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscation: - (o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer; SECTION 112. Penalty for improper importation of goods, etc.- Any person, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificates had been procured only after paying bribe. Mere suppression of fact resulting in short levy or non levy is sufficient to invoke section 114A and this suppression need not be willful since the word 'willful' qualifies 'misstatement' only and not 'suppression of facts'. 53. As regards M/s RCF though they were not the importers - in the sense that they did not file the B/E-but they were the direct beneficiaries of the exemption notification. As per the terms of the agreement between M/s Uhde India Ltd and M/s RCF the burden of customs duty, if imposed, was to be passed on to RCF. Therefore, M/s RCF had as much interest in getting the consignment cleared expeditiously without payment of duty as did M/s Uhde India Ltd , if not more. They were also a party to giving of bribe to Shri Rakesh Yadav to get the forged/fabricated certificates. But not being the direct importers their role becomes secondary compared to that of M/s Uhde India Ltd. They are clearly abettors in this case liable for penal action u/s 112 (a) of the Customs Act 1962. 55. As regards the role of M/s ICICI bank Ltd. though they might not have been directly involved in the act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. In the case where the goods have been imported for the project approved by the Government of India, against a funding from an international organization, by the Appellant 1 who is an Central Government Undertaking, the fine equivalent to 25 % of CIF value of the imported goods cannot be justified. 4.37 As discussed earlier, Appellant 1 had approached the Department of Economic Affairs for getting countersignature on the Project Implementation Authority Certificate. It is not even the case against them that they had themselves forged the countersignatures on the certificate. They were given assurance by the officers in the Ministry of Finance, Department of Economic Affairs, that the countersignatures on these certificates will be arranged. Thereafter the countersignatures were forged in the Department of Economic Affairs, with the Appellant 1 and Appellant 2 having no means to find out about the forgery done. Further after the impugned order was passed by the Commissioner, a lot of correspondence has been placed on record by the Appellant 1, through their miscellaneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneficiary of the Acts of contractor and Shri Rakesh Yadav, forging the countersignature, cannot be the reason for imposition of penalty under Section 112 (a). Section 112 (a) as worded requires leading more positive evidence to establish the act of omission or commission or abetment on the part of the person which made goods liable for confiscation, for imposition of penalty. In this case where we find that Appellant 1, have acted bonafidely throughout and made all efforts to comply with conditions of notification, the penalty under Section 112 (a) cannot be justified. So we set aside the penalty imposed on Appellant 1 under Section 112 (a). 4.39 As evident from para 55 of impugned order, the Commissioner has imposed a penalty under Section 112 (a) on the Appellant 2, by charging him for negligence . As discussed earlier, the forged signatures on the Project Implementation Authority Certificate were done by the officer in the Department of Economic Affairs. In absence of any nomination of line ministry by the Department of Economic Affairs, the Appellants were left with no other option but to approach them for getting the countersignature on the Certificates issued by them. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the missing goods could be demanded from the appellants and no penalty could be imposed, cannot be accepted. Since the goods, in our view, were liable to be confiscated and the appellants had abetted in the removal of those goods without payment of duty, the provisions of Sections 112 (a) and (b) are also fully attracted, apart from their liability to pay the duty under Section 45 of the Act (with which we are not concerned in the present appeal). The appellants had been rightly penalized under the said provisions. The ratio of the law laid down in the above referred cases, relied upon by the learned Counsel, in our view, is not attracted to the facts of the present case. In the case of P.K. Abraham, supra, it has been only observed that inefficiency of the port trust or negligence in the functioning of the system, could not justify penalty under Section 112 of the Act and this very view has been expressed in the case of Air India, supra. Similarly, the law laid down in the case of Central Warehousing Corpn., supra, is not of much avail to the appellants, as in that case the deliberate negligence on the part of the appellants was not proved. But in the instant case, as observed ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.43 While considering this case we have been guided by what David Osborne and Ted Gaebler have in their book Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector stated, shunning the bureaucratic institutions and have spoken about citizen centric/ client centric approach toward handling governance. They state, modern government should express more confidence in market rules and procedures than bureaucratic rules and procedures. The bureaucratic rules and procedure lead to more rent seeking behaviour on the part of the officers responsible for implementing those bureaucratic rules and procedures. This is something which we observe in the present case. However we would be happy if the Czars of bureaucracy and polity, Czars of bonds and filed formation challenge this order before the Apex Court and then Apex Court pronounces on what is best for liberalized economy in this country. Whether bureaucratic chains and shackles which provide for half hearted approach to liberalization, in form of the condition of countersignature by the un-nominated line ministry or market regulation which shuns this approach? 4.44 Certain officers of Appellant 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such goods liable for confiscation and they had also abetted in acts which they knew or had reasons to believe that the goods are liable to confiscation under Section 112(i) of the Act and rendered themselves liable to action under Section 112(a) of the Act. Accordingly penalties as noted above were levied on respondents 2, 3 and 4. 45. As. regards the Departmental Officials (respondents 5 to 7) the Commissioner took note of several factors. (1) As regards Sri S.P. Chaudhuri it was noted that notwithstanding specific direction of Superintendent (Tech). Jamnagar to the effect that date of cancellation should be taken to be the date of actual removal of goods from warehouse . It was concluded that Sri Chaudhuri failed to ensure actual removal for the purpose of cancellation of warehouse licence. All the three officers failed to take note that physical removal of approximately 20.000 Mts. Cargo covered under 84 Bills of Entry from the bonded warehouse could not have been possible in a short span of one day. The officers acted in undue haste and resorted to backdating as accepted by them in their statements. It was noted that the three officers were located far apart from each ..... X X X X Extracts X X X X X X X X Extracts X X X X
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