The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that penalty under sections 112 and 114AA of the Customs Act, 1961 is not leviable when the assessee did not know prohibited goods concealed in subject imports of A4 paper reams.
The appellant, Sarvesh Sharma Sales Executive Codognotto Logistics India Pvt Ltd challenged the Order-in-Appeal passed by the Commissioner of Customs (Appeals), New Customs House, New Delhi, in respect of the show cause notice.
Based on specific intelligence in respect of five containers imported at Inland Container Depot, Tughlakabad, New Delhi under the master bill 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 other two sets of house bills produced before the authorities, however, indicated the consignee name as ‘Global World Traders’. DRI upon examination of said containers found that concealed behind the declared cargo of paper reams were firecrackers of Chinese origin that were seized vide panchnama dated 22/23.04.2017 along with other goods imported.
Shri Sarvesh Sharma in his voluntary statement recorded by the authorities under Section 108 of the Customs on 24.04.2017 admits that based on the E-mail referred to supra, received from Shri Anil Batra, requesting to change the consignee name, he managed to get the consignee name changed at his company’s end in China.
Neither Shri Sarvesh Sharma nor the freight forwarder asked for KYC of M/s. Ashtvinayak International nor asked much about M/s Global World Traders which creates doubt on their submissions. It was stated by the appellant that they have collected 3 lakhs as freight and Rs. 5,61,000/- is still outstanding which shows that the freight was collected by the freight forwarder in cash in India but on perusal of the HBL amended by the freight forwarder it is evident that the said HBL are issued with freight prepaid
A single-member bench comprising Rajeev Tandon, Member (Technical) observed that the existence of conscious knowledge on the part of the accused on whom such penalty is levied is therefore essential to be demonstrated. Unfortunately, there is nothing in the adjudication order to even remotely suggest that the appellant had prior knowledge of the confusability of the import goods while undertaking the exercise of change in the consignee name at the behest of the original importer.
In the case of Parag Domestic Appliances vs. Commissioner of Customs, 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 any or all of the necessary actions stated therein is a must. Without demonstrating such an existence of knowledge no such penalty is leviable.”
While allowing the appeal, the CESTAT set aside the penalty and the order.
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