CESTAT | Penalty imposed under S. 112 read with S. 114AA of the Customs Act, 1962 set aside; Tribunal allows appeal stating absence of mens rea

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal which was filed against the impugned order wherein the penalty of Rs 50,000 had been imposed under Section 112 read with Section 114AA of the Customs Act, 1962.

The appellant was a customs broker and handled import consignment of the importer, namely, Inder International. The appellant had filed 4 Bills of entry declaring the goods as cold-rolled coil (non-alloy) alongwith invoices, test certificate and other relevant documents for clearance of the same. After filing bills of entry, the importer filed a declaration that the exporter had intimated to the appellant that the goods is of prime in nature. Thereafter, the goods were examined and found to be prime in nature, therefore, a case had been booked against the importer for mis-declaration of the goods to evade payment of duty on the said goods. It was alleged that the appellant has made a false declaration in respect of the said consignments.

The Counsel for the appellant, Mr Sudhir Malhotra submitted that the appellant had filed bills of entry as per the directions of the importer who had imported the said goods on high-seas sale basis the relevant documents, namely, invoices, high-seas agreement, test certificate were also filed by the appellant alongwith the bills of entry and the appellant had never examined the goods before filing the bills of entry, in that circumstances, it cannot be alleged that the appellant had knowingly mis-declared the goods on behalf of the importer. Therefore, there was no mens-rea of the appellant to have undue benefit of mis-declaration, in that circumstances, the penalty cannot be imposed on the appellant.

The Tribunal observed that no where it had been placed on record that the appellant was having prior knowledge of defective/secondary material. In fact, in the invoices, high-seas agreements, test certificates, it was mentioned that the material was of prime nature. It further held that the Revenue had further failed to establish the fact that the appellant about the doing omission of the act which would render the goods liable for confiscation.

The Tribunal while allowing the appeal held that act of filing the test certificate showed that the appellant had no mens rea and filed the documents being a bonafide facilitator and in view of the same no penalty was imposable upon the appellant, therefore, the penalty imposed on the appellant under Section 112 along with 114AA of the Customs Act, 1962 was set-aside.[MS Exim Services v. C.C. Ludhiana, 2021 SCC OnLine CESTAT 14, decided on 04-02-2021]


Suchita Shukla, Editorial Assistant has put this story together

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