The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT)has held that no penalty under section 114A of the Customs Act, 1962 on goods imported as per declaration in the bill of entry.
The appellant, M/s Vanick Oils & Fats Ltd. have imported 2,26,800 kgs of Hydrogenated Vegetable oils (Vanaspati Ghee) and filed a bill of entry no. 1203 dated 11.07.2007. Based onthe test report, a quantity of 45,120 Kg was found to be adulterated and unfit for human consumption as it was found to be not conforming to the standards laid down under item No. A-19 of Appendix B of the PFA Rules, 1955’.
On the request of the importer, a show cause notice was waived and Order-In-Original was passed confiscating the impugned quantity of Vanaspati and imposing a penalty of Rs. 18,10,851/- under Section 114 A of the Customs Act, 1962, an appeal filed by the appellant Tribunal vide order dated 27.03.2012 set aside the fine & penalty.
Revenue challenged the order of the Tribunal in the High Court of Punjab and Haryana where the court set aside the Tribunal’s order and remanded the case back to the Tribunal. The importer filed an application for restoration of appeal which was dismissed by the Tribunal.
It was submitted that during the relevant period i.e. April 2006 to September 2008 they had imported as many as 159 consignments of Hydrogenated Vegetable oils, and bakery Shortening; they submitted a list of bills of entry. On going through the list it can be seen that there are more than 150 consignments imported by the appellants.
It was stated that some consignments arenon-conforming to the standards as per PFA Act and are being tested by National Food Laboratory. The National Food Laboratory certified some consignments to be unfit for human consumption only because the reading in respect of one or two parameters is at variance. The different parameters can be attributed to the temperaturein the importing country, storage, samples taken and the methodology oftesting.
Further contended that in case any goods do not conform to the standards, they are required to be re-exported as per the PFA Rules; there is no reason whatsoever to impose any penalty or redemption fine as there was no men rea on the part of the importer appellant.
It was established that the appellant has not violated the provisions intentionally and that there was no mens rea or any motive that can be attributed to the appellant. We find that neither section 111 nor section 112 of the customs act prescribed mens rea to be a pre-condition for the imposition of penalty. It is sufficient if, by the acts of commission or omission on the part of the importer, goods are rendered liable for confiscation.
A two-member bench comprising Mr S S Garg, (Judicial) and Mr P Anjani Kumar,(Technical) observed that no redemption fine has been imposed and the goods were allowed to be re-exported imposing a penalty under section 114 A has been imposed.
It was viewed that penalty under Section 114 A is invariably linked to the quantum of duty evaded and therefore penalty under Section 114 A cannot be imposed in isolation. Since there was no demand of duty in the impugned case, the imposition of penalty under Section 114 A cannot be sustained. While partially allowing the appeal, the CESTAT restricted the redemption fine to Rs. 3,00,000/- (three lakhs) and the penalty under Section 112 to Rs. 1,00,000/- (One lakh).
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