Case Law Details
Nachiket Satishbhai Mavalankar Vs C.C (CESTAT Ahmedabad)
The appellant faced penalties of Rs. 7 lakh under Section 114(3) and Rs. 3 lakh under Section 114AA of the Customs Act, 1962, based on allegations of issuing an erroneous valuation certificate for export cargo. The Department initially alleged involvement in mis-declaration of export cargo, resulting in the imposition of penalties. The appellant’s advocate highlighted that the original adjudicating authority had examined statements from other individuals, particularly Gaurav Dilip Panwar, Director of RRPL, which indicated that the appellant had no knowledge of the alleged mis-declaration. Statements from other noticees referenced the appellant’s involvement only in routine valuation, without any indication of awareness or participation in the alleged mis-declaration or conspiracy.
Despite these findings, the penalties were imposed by the original authority and later upheld by the Commissioner of Appeals. The appellate authority’s order stated that the appellant “knowingly and intentionally signed Valuation Certificate which was false and incorrect in material particulars,” thereby rendering the appellant liable under Section 114AA. The appellant contended that this finding was factually incorrect and directly contradicted the original authority’s conclusions regarding the lack of knowledge or involvement in the mis-declaration.
In support of the appeal, the appellant cited judicial precedents emphasizing that knowledge of mis-declaration is a necessary condition for imposing penalties under Sections 114 and 114AA. Key cases referenced included Anchor Logistics v. C.C., 2013 (290) ELT 334 (Guj.), Bhatia Shipping Pvt. Limited, 2024 (19) Centax 347 (Tri. Amd.), and HRMM Agro Overseas Pvt. Ltd., 2013 (292) ELT 68 (Tri. Amd.), all of which underscore that penalties cannot be sustained in the absence of knowledge or participation in wrongdoing.
The CESTAT Ahmedabad examined the factual record and found that the adverse finding on the aspect of knowledge cited in the impugned order was factually incorrect. Since the original adjudicating authority had specifically recorded that the appellant had no knowledge of the mis-declaration, the appellate authority’s contrary finding lacked basis. The Tribunal concluded that knowledge is an essential prerequisite for imposing penalties under the relevant provisions of the Customs Act, and the findings against the appellant did not meet this requirement.
Accordingly, the appeal was allowed, and the penalties under Sections 114(3) and 114AA were set aside. The Tribunal granted consequential relief, confirming that imposition of penalties without establishing knowledge or intent is legally unsustainable.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
In this matter a penalty of Rs. 7 Lakh under Section 114(3) of the Customs Act, 1962 and Rs. 3 Lakh under Section 114 AA has been imposed on the appellant. The department initially found that the appellant might have been involved in issuing erroneous certificate, consequent penalties, fine imposed against them. The advocate for the appellant drew our attention to order-in-original which inter alia, in para D observed as follows:
“In Para 9.14, 9.15, 9.16, 9.17, 9.19, of SCN, the Statements of Gaurav Dilip Panwar, Director of RRPL was recorded on different dates is reproduced, “If the same is perused, the sald Statements supports the case of the present noticee since it is Stated that “Shri Rajesh Gangan took the export cargo to Shri Nachiket Mavalankar, Government approved valuer….” and it further states that He left for Mumbai on 22.5.2019. On 22.5.2019, he received a call from Shri Rajesh Gangan (he did not remember the cell number as he had destroyed his cell phone on 23.5.2019) informing him that DRI had stopped the consignment. Since Both of them knew, the Truth, both fled separate ways….”
The said noticee has named the names of other noticees and their alleged role, whereas it nowhere stated that the present notice was having any knowledge about the said mis-declaration of export cargo. This fact recorded by the Department, itself proves the case of the present noticee beyond a shadow of doubt that the present noticee was not having any knowledge with regard to the alleged mis-declaration of export cargo and the same is even affirmed from the Statements recorded by DRI of other noticees.”
1.1 Despite noting no knowledge and finding that he was not part of conspiracy, still the aforesaid penalties were imposed and same were sustained by Commissioner (Appeals) vide impugned order.
2. It was also pointed out by the appellant’s advocate that despite the findings of the original authority of not having knowledge by the appellants, the Commissioner (Appeals) in contrary findings as contained in para 10.1 notes that:
“…………………I also agree with the findings of the adjudicating authority that the Appellant No. 5 has knowingly and intentionally signed Valuation Certificate which was false and incorrect in material particulars. Therefore, the appellant No. 5 have rendered himself liable for penalty under Section 114AA of the Customs Act, 1944.”
This as per appellant is incorrect finding and contrary to what has been recorded by the original adjudicating authority as indicated above.
3. Confronted with this factual inaccuracy in the impugned order, learned AR reiterates the findings of the impugned order.
4. The advocate in support of his contention in rejoinder relies upon the decision of Anchor Logistics vs C.C. 2013 (290) ELT 334 (Guj.) as well as Bhatia Shipping Pvt. Limited 2024 (19) Centax 347 (Tri. Amd.) on the point of absence of knowledge, not justifying the penalties invoked. He also relies on various other case laws on different points.
5. This court finds, that the deicions quoted by the appellants are on exactly on the point of knowledge required for imposition of penalty under Section 114 and also another decision quoted by the appellant reported in 2013 (292) ELT 68 (Tri. Amd) in HRMM Agro Overseas Pvt Ltd. on the aspect of knowledge for imposition of penalty under Section 114AA.
6. Collectively this court therefore, finds that the knowledge is required to be established before imposition of penalty and as there was adverse findings on this aspect, as reproduced above, therefore, the same could not have been sustained vide the impugned order, writing a contrary position which is factually incorrect. In view of foregoing, appeal is allowable. The same is allowed with consequential relief.
(Dictated & Pronounced in the open court)
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