2023 (9) TMI 194 - AT - Customs

Levy of penalty u/s 112 of CA - Allegation against the employees of ICICI Bank - Forged letters - issuance of project implementation authority certificate - recovery of duty foregone by recourse to notification no. 84/97-Cus dated 11th November 1997 on imports - principal plea of the appellants is that the Tribunal had in appeal of both M/s Rashtriya Chemicals Fertilizers Ltd and M/s ICICI Bank Ltd held that duty was not leviable owing to substantive compliance with the intent of the said notification - HELD THAT - Imposition of penalties under section 112 of Customs Act 1962 on persons is triggered by finding that in relation to goods liable to confiscation under section 111 of Customs Act 1962 acts of omission and commission have rendered such outcome. The role of individuals must therefore be subjected to scrutiny in relation to the facts that have rendered the goods liable for confiscation. Undoubtedly on that the Tribunal is categorical. It appears that the factual matrix therein is inextricably enmeshed with the project implementation authority certificate and the relevance of that certificate to legal consequence of its validity has been decided by the Tribunal in the appeals of M/S. RASHTRIYA CHEMICALS FERTILIZERS LTD. M/S. ICICI BANK LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI. 2019 (7) TMI 1987 - CESTAT MUMBAI . There is thus material alteration of the narrative of the case and consequence. The roles of the appellants would need to be evaluated within the rubric of the altered narrative and it could well be that the impugned order in such circumstances lacks detail that may be necessary to decide the present appeals. It would therefore be appropriate for the allegation against the two appellants to be considered afresh in adjudication for which purpose the impugned order is set aside and matter remanded to the original authority for fresh decision. The two appellants herein should be afforded an opportunity to be heard in person in accordance with law. Appeal remanded.

Summary

Issues involved: Challenge to penalty imposed under section 112 of Customs Act, 1962 for duty foregone on imports; Consideration of duty exemption notification requirements; Liability of employees for penalties imposed on the employer organization.

Summary:
1. The appellants, employees of a bank, challenged penalties imposed under section 112 of Customs Act, 1962 for duty foregone on imports. The Tribunal had previously held that duty was not leviable due to compliance with a notification. The impugned notification required a certificate countersigned by a Joint Secretary in the line ministry, which was not complied with, leading to denial of exemption and confiscation. The Tribunal, while granting relief, delinked the appeals of others and upheld confiscation but reduced the redemption fine to zero and set aside penalties. The appellants argued they should not be liable for penalties as employees. The Tribunal noted the confiscation was upheld but set aside penalties for the appellants. Another opportunity to present their defense was offered in the interests of justice.

2. Imposition of penalties under section 112 is triggered by acts rendering goods liable for confiscation. The Tribunal found the appellants, employees of the bank, equally responsible for offenses committed. One employee forwarded certificates to the Ministry of Finance despite knowing the ministry was not the line ministry, displaying gross negligence. The other employee prepared certificates despite knowing the ministry was not the line ministry, demonstrating responsibility for acts rendering goods liable for confiscation. The Tribunal decided the case based on the altered narrative and lack of detail in the impugned order, remanding the matter for fresh decision and affording the appellants an opportunity to be heard in person.

3. The Tribunal remanded the appeals, considering the factual matrix and relevance of the project implementation authority certificate. The roles of the appellants need to be evaluated within the altered narrative, and the impugned order lacked necessary detail for deciding the appeals. The matter was remanded to the original authority for a fresh decision, with the appellants to be heard in person in accordance with the law.