Case Law Details
Commissioner of Customs Vs Sarang Wadhawan (CESTAT Delhi)
Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Delhi dismissed the department’s appeal against Sarang Wadhawan, a director of M/s Privilege Airways Private Ltd. The case involved allegations under Section 114AA of the Customs Act, which penalizes knowingly false or incorrect declarations. The department claimed that an aircraft imported for non-scheduled operator services was privately used by directors of Privilege Airways and Housing Development Infrastructure Ltd. However, the Commissioner found no evidence of a false declaration, as the undertaking signed at importation stated the aircraft’s intended use accurately.
The tribunal upheld the Commissioner’s decision, confirming that the aircraft’s use under a tripartite agreement did not violate the Customs Act. Although the aircraft was used by directors, there was no intentional or knowing falsification of declarations at the time of importation. Consequently, the proposed penalty under Section 114AA was deemed unwarranted. The CESTAT emphasized that penalties must be based on proven false statements, not speculative interpretations of later usage.
FULL TEXT OF THE CESTAT DELHI ORDER
The department has challenged the order dated 30.07.2010 passed by the Commissioner that drops the penalty proposed upon Sarang Wadhawan, Director of M/s Privilege Airways Private Ltd. and Managing Director of Housing Development Infrastructure Ltd. under section 114AA of the Customs Act, 19621.
2. The Commissioner held that the aircraft imported by M/s Privilege Airways Private Ltd.2 as non scheduled operator (passenger) permit was used privately by the Director of Privilege Airways. The records also indicate that aircraft was actually purchased by M/s GE Capital Services India but ultimately a tripartite agreement dated 22.02.2008 was entered between Housing Development Infrastructure Ltd., M/s Privilege Airways and GE Capital Services India for exclusive use of the aircraft for Housing Development Infrastructure Ltd., but it was actually used by the common Directors of Privilege Airways and Housing Development Infrastructure Ltd. The Commissioner, after referring to the provisions of section 114AA of the Customs Act, has recorded a categorical finding of fact that though Sarang Wadhawan may have signed the undertaking at the time of importation of the aircraft declaring that the same will be used for providing non scheduled operator (passenger) services, but it cannot be said that the undertaking that was given was false or incorrect.
3. Section 114AA of the Customs Act stipulates that if a person knowingly or intentionally makes, signs or uses or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of the Customs Act, shall be liable to pay penalty not exceeding five times the value of goods.
4. As the appellant had not filed any false undertaking, the Commissioner correctly refrained from imposing penalty under section 114AA of the Customs Act.
5. There is, therefore, no merit in the appeal. It is, accordingly, dismissed.
(Dictated and pronounced in open court.)
Notes:
1. the Customs Act
2. Privilege Airways
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