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TMI Blog2023 (7) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... ort/TKD dated 05.09.2019, whereby the learned adjudicating authority has imposed penalty of Rs. 10 lakh on each of the two appellants under Section 112 and 114AA of the Customs Act, 1962. 3. Briefly, the DRI/DZU, based on a specific intelligence in respect of five containers no. MRKU 2371072/40, MRKU 2806832/40, MRKU 3022964/40, MRKU 5180716/40 and MSKU 1859790/40 imported at Inland Container Depot, Tughlakabad, New Delhi under masterbill of lading no. 958926604 dated 13.01.2017, (said to contain 13000 cartons of A4 paper reams consigned to M/s Codognotto Logistics India Pvt Ltd), upon contacting the freight forwarding firm found that the said consignment was originally booked in the name of Ashtvinayak International, Delhi, however later changed to Global World Traders, Delhi. This was based on E mail instructions sent by Shri Anil Batra. The House Bill No. WST1612256 dated 30.12.2016, mentioned the consignee name as Ashtvinayak International. The other two sets of house bill produced before the authorities dated 05.01.2017, however indicated the consignee name as 'Global World Traders'. DRI upon examination of said containers found that concealed behind the declared cargo of pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signee M/s Hong Kong Jofa Paper Limited and M/s Guangzhou BMPAPER Paper Company Limited. It is emphasised that the lapse was deliberately undertaken to help Anil Batra and the clearance of the said containers under the guise of a new IEC, so as to avoid the alerts imposed by the department on Ashtvinayak International. Accordingly, both Codognotto Logistics India Pvt Ltd and Sarvesh Sharma, Sales Executive of Codognotto Logistics India Pvt Ltd vide their acts of omission and commission have rendered themselves liable to imposition of penalty under Section 112 and 114AA of the Customs Act. 6. The learned Adjudicating Authority in his findings as regards the appellants, has inter alia held as under : 32. Lastly on the question of penalty on various persons I find that it is not disputed fact that the original Master bill of lading was in the name of M/s Codognotto Logistics India Pvt. Ltd., as consignee and M/s Sun Star Industrial Limited as Shipper but as per the freight forwarder M/s Codognotto Logistics India Pvt. Ltd., the containers were booked in the name of consignee M/s Ashtvinayak International as evident from HBL No. WHT1612256A and WHT1612256B both dated 30.12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of Shri Sarvesh Sharma dated 24.04.2017 "that Sh. Anil Batra also submitted KYC documents for M/s. Global World Traders (IEC No.0514062037) and stated that this is also his company and Sh. Vinod Kumar is his relative. Then as per Anil Batra's request he managed to get the consignee name changed at his company's agent's end in China since IGM was not filed till then. On demand Sh. Sarvesh Sharma could not produce the KYC of M/s Ashtvinayak International. On being asked as to why the mandatory documents were not taken when the consignment was booked in the name of M/s. Ashtvinayak International, he stated that since they had already worked for Sh. Anil Batra and there was enough time to hand over the delivery Order (D.O.) and that in a very short span of time the consignee name was changed from M/s. Ashtvinayak International to M/s. Global World Traders, they did not take any document related to M/s. Ashtvinayak International. He further stated that they had received Rs. 3 lakhs in cash as freight payment in mid- February 2017 from an elderly person whom he believed to be Sh Anil Batra's father at his residence at Rohini and Rs 5,61,000/- was still outsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a helped him to look after the day to day affairs of his firm and was the undeclared equal partner in the firm, M/s Ashtvinayak International, owned by him on paper". So from the facts of the case it appears that Shri Praveen Batra has not co-operated in investigation and not divulged anything deliberately though Shri Anil Batra said that Shri Praveen Batra being actual owner of impugned goods. Therefore, Shri Praveen Batra is equally responsible for such forgery and act of importation of goods which are liable for confiscation under section 111 of the Customs Act, 1962. I find that they caused the freight forwarder to made forged documents which are to be dealt in transaction with Customs purposes so I find for such act the Shri Praveen Batra as liable for penalty under section 112 and 114AA of the Customs Act 1962." 7. Based on the said findings a penalty of Rs. 10 lakh has been imposed on Sarvesh Sharma and also a penalty of Rs. 10 lakh on M/s Codognotto Logistics India Pvt Ltd under Section 112 under Section 114AA of the Customs Act. 8. The learned Commissioner (Appeals) in appellate proceedings did not find any infirmity with the impugned order and therefore upheld the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he adjudication order, the learned Advocate contends that mere asking the freight forwarder to change the consignee's name in the HBL cannot be concluded to hold that Sarvesh Sharma was aware of the misdeeds of Anil Batra and had therefore undertaken the exercise of the amendment of the Bill of lading. He submits that this is a contrary finding of the Adjudicating Authority viz. a claim to issuance of the forged and manipulated HBL. He therefore pleads that the penalty imposed on them are not sustainable and needs to be quashed. 10. The learned DR on the other hand pleads on the fact of collusion and deliberate manipulation of the HBL amendment on the instruction of Anil Batra by Sarvesh Sharma. It is his submission that the fact that the HBL status gets changed from to collect to prepaid basis speaks volumes and is suggestive about the imputation of knowledge on the part of Sarvesh Sharma and also through the freight forwarder. He therefore substantiates the imposition of penalty both under Section 112 and 114AA. 11. For greater clarity on the subject and the circumstances of imposition of penalty under Section 112 and 114AA it would be necessary to reiterate the two sections vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and the value thereof or five thousand rupees], whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty Substituted (w.e.f. 11-5-2001) for the words "not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees" by s, 107 of the Finance Act, 2001 [not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty Substituted (w.e.f. 11-5-2001) for the words "not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees" [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest.] SECTION [114AA. Penalty for use of false and incorrect material. - If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the latter informing Sarvesh Sharma that Vinod Kumar who owned Global World Traders (IEC No. 0514062037) is his relative. It is on strength of this proposition that Sarvesh Sharma in view of the directions received from Anil Batra got the consignee name changed at his companies agent's end in China as the IGM had not been filed by then. Thus it is wrong to infer, contrary to what has been done by authorities below that the said change in consignee name, meant to deceive the authorities is clearly a case of connivance. In fact, as it comes out from the testimonies of the various persons including Sarvesh Sharma, Anil Batra & others, this change is clearly on account of misrepresentation by Anil Batra and there is not a fig leaf of evidence led in the show cause notice to conclude the same is attributable to connivance. The authorities below have failed to disengage what they indicate as a failure in exercising due diligence with what they conclude as connivance. Any failure, if so, of due diligence certainly cannot be a case of connivance. Connivance is required to be led by positive evidence and mere surmise or presumption or the failure to do a particular thing leading automat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rately dealt with in the order of the Adjudicating Authority, there is nothing of substance with regard to the sustenance of penalty on the two appellants. It may be noted that the subject goods (fire crackers being prohibited concealed in A4 paper reams), were certainly liable for confiscation and mere change of the consignee name in the Bill of Lading or facilitating such a change or getting such a change would have been is of no material consequence on this legal consequence of the import of prohibited goods. The said goods imported in whichever consignee name are liable to confiscation and continue to remain liable to confiscation, and therefore unless there is anything in the show cause notice to impute specific knowledge about import of said goods on the part of the appellants and that such change was being undertaken in order to con/ defy the authorities (as later separately also admitted by Anil Batra in his statement) no penalty is imposable. Thus, there can be no ground, for subjecting the appellants to penalty under Section 112 of the Customs Act. Existence of conscious knowledge on the part of the accused on whom such penalty is levied is therefore essential to be demon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The time lag in the two dates and the utilisation of the intervening time to make the requisite payments to the overseas shipping line, are said to account for the difference in description of the freight, as stated above. 15 (i) This Tribunal in the case of V. Lakshmipathy vs. Commissioner of Customs -2003(153) E.L.T. 640T in respect of invocation of penalty under Section 112 had held the existence of mens rea as an essential ingredient to invoke the same. This pre supposition is non-existing in the present matter as show cause notice leads no evidence to indicate a guilty mind on part of the appellant. (ii) In the case of Mohd. Iliyas vs. Commissioner- 2018 (362) ELT A 218 SC the honourable Apex Court had held the penalty under Section 114AA, as not leviable (among other reasons) for no discussion being made as to the type of false /incorrect material. Similar is however the position in the present case. (iii) Moreover, in the case of Parag Domestic Appliances vs. Commissioner of Customs, Cochin 2018(360) ELT 547 Tri- Bang, it was held that for subjecting one to penalty under Section 114AA, the existence of knowledge or intention on the part of such person while carrying out a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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