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Vijay Venkatrao Kamat Versus Commissioner of Customs, Kandla

2017 (9) TMI 603 - GUJARAT HIGH COURT

Penalty u/s 112(a) of the Customs Act, 1962 - mens rea - Whether the penalty on the appellant u/s 112(a) of the CA, 1962 is justified when the appellant was an employee working as executive director and he had no reason to believe that goods were liable for confiscation? - Held that: - It appears quite undisputable that the appellant had signed the necessary documents for import of goods, the goods upon import though were required to be utilized for manufacture of export product at the factory o .....

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, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act. In such a case, the penalty that could be imposed would be an amount not exceeding the value of goods or ₹ 5000/whichever is greater. Even if therefore, invoking this provision would require mens rea on the part of the noticee, the same was duly established on record. - Penalty upheld - appeal dismissed - decided against ap .....

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appellant was an employee working as executive director and he had no reason to believe that goods were liable for confiscation ? (B) Whether the penalty under Section 112(a) of the Customs Act, 1962 was correct without examining mean rea in the facts of the present case? 2. Brief facts are as under. 3. Appellant was the Executive Director and an employee of one M/s. Sheshanka Sea Foods Pvt. Ltd. (hereinafter to be referred to as 'the Company'). The Company imported 666.750 MT of HDPE gr .....

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reached the factory of the company situated at Karnataka. On such basis, a showcause notice was issued by the competent authority on 31.07.1998 alleging inter alia, that the present appellant and other directors of the company had jointly diverted the goods in the local market which were meant for reexport. The competent authority therefore, primafacie, found the following breaches: Therefore, from the above facts and narration it appears that M/s SSFPL has violated the following conditions of N .....

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w cause notice, the company and its directors including the present appellant were called upon to state why: (1) the imported goods i.e. HDPE granules / Moulding powder weighing 666.75 Mts and valued at ₹ 71,86,128/should not be confiscated under section 111(d) & 111(o) of Customs Act, 1962. (2) customs duty amounting to ₹ 89,61,999.00 (BCD ₹ 20,01,750.35; Addl. ₹ 32,33,757.75 and CVD ₹ 37,28,490.90) payable on the goods imported should not be demanded under the .....

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. After completing the proceedings, the adjudicating authority passed its order in original dated 27.08.2007, in which, he held the company liable for the alleged breaches on account of which the goods would be liable for confiscation under section 111(d) and 111(o) of the Customs Act, 1962, imposed penalty of ₹ 50 lakhs on the company under section 111(a) of the Act in addition to confirming the duty demand. He imposed a personal penalty of ₹ 10 lakhs against the assessee under sect .....

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th the alleged breaches. He was an employee and was acting entirely under the instructions of Shri R.N.Shetty, the Chairman of the Company. There is nothing to suggest that the appellant had either diverted the goods to the local market or even had knowledge thereof. In any case, the department had to establish mens rea before invoking section 112(a) of the Act. The same has not having been done in the present case, imposition of penalty was not permissible. 9. We have perused the documents on r .....

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f the day to day affairs of the company which was being carried out with the knowledge of Shri R.N.Shetty. The adjudicating authority had also referred to the statement of the appellant himself recorded on 03.07.1997 in which, he had admitted that the application for advance licenses for import of the goods was submitted to the licensing authority under his signature and that he looked after the day to day affairs of the company and he reported directly to Shri R.N.Shetty, the Chairman. In fact, .....

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