CESTAT: Penalty Under Section 114 A Of The Custom Act Is Invariably Linked To The Quantum Of Duty Evaded

The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal in the case M/s Vanick Oils and Fats Pvt. Ltd. Versus Commissioner of Central Excise, Delhi- III, Gurgaon in the case observed and has held that the penalty under Section 114 A of the Customs Act is invariably being linked to the quantum of duty evaded.
The bench comprising of Judicial Member, S. S. Garg and the Technical Member, P. Anjani Kumar in the case observed and has stated that the appellant in the case has not violated the provisions intentionally and that there being no mens rea or any motive that can be attributed to the appellant. Therefore, the bench stated that neither Section 111 and nor Section 112 of the Customs Act prescribed mens rea as a pre-condition for imposing the penalty in the case.
In the present case, the appellant or assessee has imported 2,26,800 kg of hydrogenated vegetable oils, the Vanaspati ghee and had filed a bill of entry no. 1203 dated 11.07.2007. Therefore, on the basis of the test report which is being given by the Central Food Laboratory, a quantity of 45,120 kg was found to be adulterated and the same being unfit for the consumption of human.
The bench in the case issued a show cause notice was waived on the request of the importer and an another order was passed confiscating the quantity of Vanaspati and the bench imposed a penalty under Section 114 A of the Customs Act, 1962.
It has also been contended by the appellant that if any goods do not conform to the standards, the said goods are required to be re-exported as per the PFA Rules. Therefore, there being no such reasons whatsoever in order to impose any penalty or redemption fine, as there being no men rea on the part of the importer appellant. Thus, bench in case imposed a penalty as stated under Section 114A of the Customs Act, 1962 and the court can impose such a penalty when there being an evasion of duty. As there being no such evasion of duty and further, as there being no demand of duty and the court imposed a penalty under Section 114 A, the same is not at all maintainable.
Further, it has also been contended before the court by the department in the case that the appellants have violated the conditions of the PFA Act, and therefore the goods have become liable for confiscation. The bench stated that when the goods in the case are held liable for confiscation, no mens rea is being required to be established in terms of Section 112 of the Customs Act, 1962.
The Tribunal in the case observed and has held that the quantum of the penalty and fine should be commensurate with the offense committed. Therefore, if the said product failed the test, it will be ensured by the custom authorities that the goods are re-exported out of the country by following the usual adjudication procedure or destroyed as it is required under the relevant rules.
Naveen Bindal appeared for the appellant.
Swati Chopra represented the respondent.