| SooperKanoon Citation | sooperkanoon.com/41849 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT |
| Decided On | Feb-17-2006 |
| Judge | S Peeran, J T T.K. |
| Appellant | Mr. A.P. Sales and Vasudev A. Naik |
| Respondent | Commissioner of Customs |
Learned Counsel submits that both the officers of the Customs Department had followed the procedures laid down for examination of the goods. They are not required to make 100% examination and they had done their best in checking the goods. They did not find any initial error.
They contend that the Commissioner has clearly noted that there was only dereliction of duty. For which they can be proceeded under the CCS Rules and they cannot be charged for imposition of penalty under Section 114(i) as they have neither connived nor indulged in the fraudulent act. They contend that the judgments relied clearly apply to the facts of the case. Hence penalty is required to be set aside.
3. Learned counsel submits that the Inspector Mr. A.V. Naik has already deposited penalty and prays for allowing the appeal with consequential relief.
4. SDR reiterated the finding given by the Commissioner and prayed for upholding the impugned order.
5. On a careful consideration, it is seen that appellants were acting as Superintendent and Inspector in the O/O The Commissioner of Central Excise, Goa. They were charged to have involved themselves in the fraudulent exports made by the Globe Fashion (Exim) India Goa. The Commissioner has absolved them from this charge by holding that the Revenue has not proved that there are some extraneous consideration for their action. He has clearly noted that there is dereliction of duty.
For the purpose of imposing penalty under Section 114(i), the revenue has to prove that the appellants have abetted in the offence or have colluded with the exporters and CHA. This charge has not been made in the show cause notice. The charge is not explicit and the only ground made out is that the appellants ought to have examined the containers fully and discovered discrepancies in the documents vis-a-vis the contents in the containers. Ld Commissioner has clearly held that there is only dereliction of duty. In the circumstances, the charge of the revenue under Section 114 and consequence imposition of the penalties are required to be set aside. Further more on this very issue the citations relied by the appellants clearly apply to the facts of the case. In the case of CC New Delhi v. Hargovind Export , the Tribunal has clearly held that penalty cannot be imposed under Section 114 of the Customs Act on the mere charge of dereliction of duty and the benefit has to be given to the officers.
The Commissioner's dropping the demands have been upheld by the Tribunal. The finding recorded in para 6 of the order is reproduced herein below.
We have considered the submissions of both the sides. The show cause notice was issued to the Assistant Collector, Superintendent and Inspector who were posted at Air Cargo Complex, Indira Gandhi International Airport, New Delhi for imposition of penalty under Section 114 (iii) of the Customs Act on the ground that they had abetted the doing or omission of the act or mis-declaring the goods with a view to claim wrongful drawback amount which was not due to them. The Commissioner, under the impugned Order, after examining the evidences brought on record and referring to various statements came to the conclusion that the entire conduct of these Respondents would throw a serious doubt about discharging their duty properly but it is not sufficient to penalize them under Section 114 of the Customs Act. The Commissioner has given his findings that there is no evidence on record to show that any act or omission on the part of the Respondents has rendered the goods liable for confiscation under Section 113 of the Customs Act. In the appeal filed by the Revenue, it has not been highlighted that there is any material to show that the Respondents had connived with the exporter in misdeclaring the goods. What has been mentioned in the Memorandum of Appeal, filed by the Revenue, only highlights the dereliction of the duty by the Respondents which is not sufficient for imposing penalty under Section 114 of the Customs Act. The learned Advocate has emphasized that there is no allegation or proof of consideration having been demanded by the Respondents or paid or supposed to be paid by the exporter. We also observe that this aspect has also been mentioned in the impugned order. The exporter, Shri Kuldeep Singh, has clearly denied knowing any of the Respondents personally. In his statement, he has only mentioned that one Shri Akhilesh Kala knew the Assistant Collector. But Shri Akhilesh Kala has not. been traced out during investigation nor he has participated in the adjudication proceedings. Further again some allegation is that Shri Akhilesh Kala had told Shri Kuldeep Singh that he (Akhilesh Kala) knew the Assistant Collector which is not sufficient material to come to the conclusion that the Assistant Commissioner had abated the act of mis-declaration of the consignment for the purpose of claiming the drawback. The learned Advocate has relied upon the decision in the case of M. Vasi, Supra, wherein the Tribunal has held "Abatement presupposes knowledge of the proposed offence and also presupposes benefit to be derived by the abettors therefrom." Nothing has been brought on record by the Revenue to show the knowledge of and the benefit to, the Respondents. In view of this, we find no reason to interfere with the impugned order in so far as it relates to dropping of the charges against the three Respondents, namely, Shri W.L. Hang Shing, Shri M.I. Khan and Shri R.K. Sharma. All the appeals filed by the Revenue are thus rejected.
The Tribunal in the case of CC v. M.L. Khan (supra) on identical facts has dismissed the Revenue appeal by holding in para 12 as follows: We have considered the submissions advanced by both the sides. On the question whether the provisions of Section 155 would provide a bar to the initiation of adjudication proceedings against Officers of the Customs as in the present case we find that the Supreme Court decision in Costao fernandes case (supra) has gone into this question (though in that case the proceedings related to criminal prosecution). It was observed that in the facts of the case, it will not be proper to disallow the protection under Section 155 to the Officer. We also observe that the protection available under Section 40 of the Central Excise Act, 1944 had been allowed to Asst.
Collector of Central Excise acting in the exercise of his statutory powers. Section 40 of the Central Excise Act, 1944 is in pari materia with Section 155 of the Customs Act, 1962. Following the ratio of the Supreme Court decision in Costao Fernandes case (supra) and the High Court decision in G.H. Industries, we are satisfied that there is no legal infirmity in the order passed by the Commissioner dropping the proceedings against the Respondents in these three appeals. We therefore find no reason to interfere with the impugned order in so far as they concern with the three Respondents viz., S/Shri M.I. Khan, R.K. Sharma and Hangshing.P.K. Sharma v. CC New Delhi (2002 (148) ELT 658) has also allowed the appeal by setting aside the penalty on the Inspector. Finding recorded in para 5 is reproduced herein below: We have heard the rival submissions. We find that the Department's entire case is built on the date found in the computer entered against the number allotted to the appellant. We note that presently simultaneously data is recorded in the documents and fed into the computer. Thus, there should have been a hard copy of Bill of Entry where the examination report was recorded and was alleged to have been recorded by the appellant. We find that there is no mention whatsoever as to what happened to this hard copy of the Bill of Entry bearing the examination report under the signature of the appellant. Moreover, in the Customs Bills of Entries are not examined by the Inspector on their own but they are allotted the Bill of Entry and marked to the officers concerned. The Department has not produced any evidence to show that this particular bill of entry on which the impugned examination report was recorded, was allotted to or marked to the appellant.
6. The apex court in the case of Coasto Fernandes (supra) has clearly held that the Customs Officer is entitled to protection from under Section 155- read with Section 106 of the Customs Act. The ratio of this judgment would apply to the facts of the case. The Madras High Court in the case of Shri Vasudeva Bank v. UOI has analysed the phrase "good faith" in detail on this aspect and has given the protection to govt servants discharging their statutory duties. The finding recorded in para 20 to 32 as follows: 20. From the above exposition of Governmental liability, emerges the further question as to what constitutes good faith which would protect Government servants in the discharge of their statutory duties.
21.The meaning of the term "good faith" can be gathered from the following Law Lexicons: Good faith requires not, indeed logical infallibility but due care and attention.
"Good faith", therefore, means absence of knowledge that a preference was intended.
Funk & Wagnalls. (New Standard Dictionary of the English Language (1953).
Good faith - the observance of, or the intention to observe, honesty and fair dealing; absence of intention to deceive.
In good faith" Bankruptcy Act, 1883, would seem to mean innocent of the knowledge, and of the means of knowledge, that there is an adverse bankruptcy.
A thing is to be deemed to be done in good faith, within the meaning of this Act, where it is in fact done honestly, whether it is done negligently or not.
That section is obviously founded on the distinction pointed out in Jones v. Gordon (1877) L.R. 2 App. Cas. 616, by Lord Blackburn, between the case of a person who was 'honestly blundering and careless', and the case of a person who has acted not honestly, that is, not necessarily with the intention to defraud, but not with an honest belief that the transaction was a valid one, and that he was dealing with a good bill.
Sale of Goods Act, 1893: A thing is done "in good faith" when it is, in fact done honestly, whether it be done negligently or not.
A statutory definition of the term is, an honest intention to abstain from taking any unconsientious advantage of another, even through the forms and technicalities of law, together with an absence of all information or belief of facts which would render the transaction uconscientious.
As applied to the holder of a forged cheque, to establish good faith there must not only be an absence of knowledge of any invalidity, but an absence of circumstances which would put an ordinarily prudent man upon inquiry.
As an element tending to rebut malice in libel and slander, good faith requires proper consideration for the character and reputation of the person whose character is likely to be injuriously affected by the publication. There must be absence, not only of all improper motives, but of negligence.
Good faith in adverse possession.--In the law of adverse possession, whether general or statute the term means free from a design to defraud those who appear to have a better title than the claimant's.
His possession must be free from stealth.
Good faith in stock issue.--In the valuation of property for which stock in a corporation is issued, "good gaith" consists in the belief that a prudent and sensible man would hold in the ordinary conduct of his own business affairs.
Good Faith" defined. Act XLV of 1860, Section 52; Act IX of 1908, Section 2(7); Act X of 1897, Section 3(20); Bengal Act I of 1899, Section 3(17); Bombay Act I of 1904, Section 3(20), Burma Act I of 1898, Section 2(25) E.B. & A. Act I of 1909, Section 5(21); Madras Act I of 1891, Section 3(11); Punjab Act I of 1898, Section 2(22); U.P. Act I of 1904, Section 4(17).
Nothing is said to be done or believed in good faith which is done or believed without due care and attention. (Penal Code, Section 52).
A thing shall be deemed to be done in "good faith" where it is in fact done honestly, whether it is done negligently or not. Act X of 1897 (General Clause) Section 3(20); Eng. Bill of Exchange Act, 1892, Section 90.
Nothing shall be deemed to be done in good faith which is not done with due care and attention. Act IX of 1908. (Limitation) Section 2(7).
25. Under the definition of the term in the Limitation Act "nothing shall be deemed to be done in good faith which is not done with due care and attention". This is a stricter definition than the one adopted in Section 3(20) of the General Clauses Act, 1897, under which "a thing shall be deemed to be done in "good faith" where it is in fact done honestly; whether it is done negligently or not".
The words "good faith" have no technical legal signification, but are to be taken in their ordinary acceptation, and mean simply, honestly in belief, purpose, or conduct. Cf. Butcher v. Stead (1875) L.R. 7H.L. 839; In re. Avery (1887) L.R. 36 Ch. D. 307 Exparte Watson L.R. (1888) 21 Q.B.D. 301.
26. Bearing these principles in mind, if we examine the facts of this case, the points which fall for consideration are three in number viz., whether, when the cheroot tobacco had been pledged to the plaintiff bank, the defendant or its servants broke open the lock of the godown; secondly, whether the action of the Government in attaching the cheroot tobacco pledged to the plaintiff bank for the amount due on the beedi tobacco, is illegal and male fide; and thirdly, whether by reason of any act or omission on the part of the Government servants negativing good faith, after the disposal of the claim petition preferred by the State in favour of the plaintiff bank, the defendant would be liable in damages. In all these points I have come to the same conclusion as both the Courts below and here are my reasons.
27. Point 1: Both the Courts have found that the defendant or its servants did not break open the godown of Rahamatullah and remove the goods to Sundaram Pillai's godown and that what happened was that on the application of the surety Sundaram Pillai the Excise authorities permitted the transfer of the excisable goods which were slowly purloined from the godown of Rahamatullah, to the well-protected godown of Sundaram Pillai. Point 1 raised by the plaintiff bank rightly failed.
28. Point 2: I have already reproduced Rule 215 of the Central Excise Rules which states that the provisions of Sections 168,189 and 192 of the Sea Customs Act has to be applied mutatis mutandis.
Therefore, for the words "customs house" we have to substitute the words "bonded warehouse". The cheroot tobacco was in the bonded warehouse of Sundaram Pillai. On the date when the Government attached the cheroot tobacco for the duty payable on the beedi tobacco, the Government was well within its rights to attach the same. The tobacco belonged to Rahamatullah but was in the custody of Sundaram Pillai and the Excise Department attached the tobacco.
There is nothing illegal or unlawful in the conduct of the Excise Department. It has power under Section 11 to attach the goods, viz., the cheroot tobacco for duty due on other tobacco for which duty had not been paid by Rahamatullah. Section 11 completely gives power to the Government to take the action it did. Therefore the defendant is not liable either for the resultant deterioration or for the lesser price which the tobacco fetched in the Court sale. Point 2 also fails.
29. Point 3: Both the Courts below have found that first of all the order of the learned Subordinate Judge who disposed of the claim petition did not amount to an adjudication in regard to the Government's right to enforce the realization of the duty on the beedi tobacco by attaching the cheroot tobacco. The learned Subordinate Judge himself in paragraph 7 of his order (Exhibit A-11) states "Whether the pledge will affect the Government's right to claim duty or not is another matter". Again in paragraph 9 he states: 'The next question is whether the petitioner gets any charge by virtue of the attachment effected under Section 11 of the Act.
That question does not however arise for consideration in this matter in view of my finding that the respondent bank has got a charge on the goods attached". Secondly, both the Courts below have found that after the dismissal of the claim petition the Department did not object to the plaintiff in any way proceeding against the attached tobacco and that the plaintiff completely failed to show that the Department unnecessarily and improperly withheld the tobacco and that the detention of the goods was the direct cause of the alleged deterioration of the tobacco and its fetching a low price. Therefore, point 3 also rightly failed.
30. The plaintiff has throughout failed to show want of good faith on the part of the Excise Officials. It is not for the Union Government to establish its good faith but it is for the plaintiff bank to establish its want of good faith. On the failure of the plaintiff bank to establish want of good faith on the part of the Union Government, the two consequences follow, viz., that the plaintiff bank is barred from filing this suit under Section 40(1) of the Central Excises and Salt Act, 1944, and that this suit instituted for an act done or ordered to be done, after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of, which has been the case here because the attachment was effected certainly long prior to six months of the date when the suit was instituted, would be barred by limitation under Section 40(2).
7. In view of the above noted judgments, the penalty under Section 114 of the Customs Act is not sustainable, as the appellants have not done or have omitted to do any act which act or omission would render such goods liable to confiscation, nor they have abetted in doing or in omission of such act which shall attract penalty provisions or imposing penalty on them. Both the appeals are allowed with consequential relief by setting aside the impugned order in so far as these appellants are concerned.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)