Page 112 - ELT_3rd_1st May 2020_Vol 372_Part

334 EXCISE LAW TIMES [ Vol. 372

the Duty Exemption Certificates were found to be forged, notwithstanding the
fact that the importer had handed over such certificates and affirmed the correct-
ness and genuineness thereof, it was necessary for the CHA to have gone into the
question of validity and the genuineness of the said documents. The CHA cannot
take the plea of innocence and acting in good faith. Having failed to practice dili-
gence in ensuring submission of correct information and proper documents, it
was held that Section 112(b) and Section 114AA of the Act would be attracted in
respect of the show cause notice dated 6-3-2013. However, vis-à-vis show cause
notice dated 8-7-2011, penalties were imposed only under Section 112(a) of the
Act.
4. The aforesaid order was challenged in appeal by the importer as well
as the CHA. The said appeals were decided by a common order dated 10-8-2017,
whereby the Customs, Excise and Service Tax Appellate Tribunal (hereinafter as
‘CESTAT’), allowed the appeal of CHA in respect of both the show cause notices
and set aside the penalties, holding that there was nothing on record to show
that the CHA had any role to play in forging the certificates and misleading the
customs authorities.
5. In the present appeal, the Customs Department impugns the order of
the CESTAT allowing the appeal of the CHA, on the ground that the Tribunal
was not justified in dropping the penalties, without considering the merits of the
case. The Tribunal has failed to consider the failure on part of the respondent in
discharging its duties and responsibilities as a CHA. Mr. Kailash Gupta, the
Managing Director of the respondent company in his statement dated 5-3-2009
admitted that he knew that exemption certificates were signed by the General
Manager, OEF, Kanpur and as per the relevant notifications, the certificates
ought to have been issued by an officer not below the rank of Joint Secretary to
Government of India, Ministry of Defence. Despite being aware of the above le-
gal position, he did not exercise due care in checking the genuineness of the ex-
emption certificates and carelessly accepted the version of the importer that the
General Manager of the OEF was equivalent in rank to the Joint Secretary of
Government of India. The CHA was obligated to verify whether the goods were
eligible for exemption or not. Since it failed to discharge its statutory obligations,
it is liable to the imposition of the penalty under of the Act.
6. We have heard Mr. Harpreet Singh, Learned Senior Standing Coun-
sel for Customs Department at considerable length.
7. The relevant provision under the Act relating to imposition of penal-
ty on the CHA are as follows :
“Section 112. Penalty for improper importation of goods, etc. - Any per-
son, -
(a) who, in relation to any goods, 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, or
(b) who acquires possession of or is in any way concerned in car-
rying, removing, depositing, harbouring, keeping, concealing,
selling or purchasing, or in any other manner dealing with
any goods which he knows or has reason to believe are liable to con-
fiscation under Section 111,
shall be liable, -
(i) in the case of goods in respect of which any prohibition is in
EXCISE LAW TIMES  1st May 2020  112