COMMISSIONER OF CUSTOMS-NHAVA SHEVA-I v. Smt. Sayali Lotankar

2. It appears that the consignments had been assessed provisionally, on importer's own declaration of description and value, before being cleared for home consumption. Ongoing investigations had culminated then in eliciting that the goods were, in fact, 'high speed diesel' warranting finalization of assessment attended upon by differential duty. The investigating agency claimed to have unearthed an elaborate conspiracy to mask the identity of 'high speed diesel', with intent to overcome import restrictions and to evade duties of customs by undervaluation, which involved discharge of remnant consideration through illegal, but identified, channels. The minutiae of that 'web of intrigue' is not germane to the present proceedings as the confirmation of the proposals against the commercial interests left out the two customs officials, who too had been placed on notice, under section 124 of Customs Act, 1962, of proposal to impose penalty under section 112 of Customs Act, 1962 on them, with the finding that '104. From the statements and submission of the officers, I find that the officers were under tremendous pressure of work to liquidate the provisional assessments during that period as per the Board's Instructions and to complete the target for the finalization of provisional assessment of 300-500 on every week other than the routine work of Groups ie, assessment of live consignments, cancellation bonds etc. Due to this work pressure, they have failed to do the detailed scrutiny/ examination of the Test reports Nos. vis-a-vis Bill of Entry No. before finalization of the assessment of goods, which are restricted in nature as per the DYCC Test Report. Further,

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both the officers have denied any mala-fide intention and/ or receiving of any remuneration for overlooking the procedure set out.

105. Upon carefully examining the allegations made against the officers and replies placed, I am of the opinion that, in order to attract Section 112(a) & (b) of the Customs Act, 1962, the SCN has to establish some act by which these officers have abetted the offence. Further, examining the term "abetment" I place reliance on Section 107 of Indian Penal Code, wherein abetment is defined. As the third limb of this definition, if a person "intentionally aids, by any act or illegal omission, the doing of that thing', it would be abetment of an offence. However, MENS REA is the main ingredient as the third limb uses the word "intentionally". I find nothing that has been brought out in the nature of evidence to establish that these officers had done or omitted to do any act intentionally. From the records I also find that there is no allegation/evidence in the SCN that officers have any ulterior motive/collusion/ abetment with the importers to defraud the revenue.

106. Further, these officers by virtue of being officers of Customs are officers of Central Government and any process for the alleged act against them should have been governed under Section 155 of the Customs Act, 1962, however, the same is not followed in the instant case.

107. In view of the above, and as the Investigating Agency could not produce any evidence corroborating the involvement of these officers in the abetment of the clearance of above mentioned consignments, which rendered the consignments liable for confiscation under Section 111(d) of the Customs Act, 1962, penalty under Section 112(a) &(b) of the Customs Act, 1962 cannot be imposed upon them. However, it is made clear that this decision by the undersigned shall not prejudice

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any action or inquiry initiated by the department against these officers, under the CCS (Conduct) Rules, 1964 or other applicable rules.

108. I also find that disciplinary action has been initiated against the above named officers under the CCS Conduct Rules and it is a settled law that a person should not be punished twice for the same offence. I hold that the same ratio is squarely applicable in the instant case. Hence, I am inclined to accept the contention made by Shri Sahil Seth and Smt. Sayali Lotankar, and hold that the charges levelled against them in the Notice does not sustain.'

3. It is against this conclusion that the Committee of Chief Commissioners found itself in disagreement on several grounds. It is interesting to observe that the prayer in this appeal of Principal Commissioner of Customs, NS-I, JNCH, Nhava Sheva is not for imposition of such penalty as is warranted by the facts and allegations in the show cause notice but to discharge the finding of absolution in the impugned order for remand back to the adjudicating authority. This is noteworthy in the light of certain preliminary submissions by the respondents on the review exercise having resorted to afterthought, prompted by hindsight and of prejudiced pre-determination, in the decision not to accept the findings in their favour. These aspects were not pressed and we, therefore, desist from traversing in that direction; we restrict ourselves to evaluation of the grounds that, to the extent of statutory obligation devolving on reviewing authority, are set out as advancing the contention that the impugned order is not legal and

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proper.

4. The grounds preferred by the review authority are that, with the investigation having unearthed illicit gratification received by the officers for clearance of goods belonging to the 'syndicate', the adjudicating authority was, in the context of the finding that goods were liable to confiscation, bound to impose consequential penalty under section 112 of Customs Act, 1962, that the protection of section 155 of Customs Act, 1962, which the adjudicating authority found itself in agreement with, was unavailable in the light of facts, of illicit gratification and improper finalization of provisional assessment, and that the relief, extended on grounds of disciplinary proceedings tantamount to double jeopardy, from the present proceedings is incorrect appreciation of law. These aspects were urged for acceptance by Learned Authorized Representative who also enlarged upon the facts and circumstances.

5. The respondent-officials had finalized several provisional assessments, including the six in the present proceedings, on declarations which is the norm only upon test results conforming to description in bills of entry. It had been alleged that the test reports indicated these to be 'high speed diesel' on which higher duty was leviable and goods subject to confiscation for also having breached 'canalizing' prescription leading to the charge of abetment and proposal

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to impose penalty for abetment in acts of omission and commission that rendered the goods liable to confiscation under section 111 of Customs Act, 1962. Learned Counsel for the respondents argued that the issues raised in the notice had been dealt with in the impugned order and that the present appeal is devoid of merit on supporting fact and legal foundation.

6. The adjudicating authority found in favour of the respondents herein, who had been placed on notice only in relation to finalization of provisional assessment and, that too, only in (6 nos.) bills of entry no. 8506996/18.10.2018, 8571103/23.10.2018, 8528745/20.10.2018, 8529061/20.10.2018, 8625593/27.10.2018 and 8982527/24.11.2018 wherein the assessment was closed without taking cognizance of reports indicating that the representative samples had tested as 'high speed diesel' for remedial action, after taking into consideration the practicalities of the Board-induced drive for disposal of provisional assessments and possibility of unintended errors that have had no consequence to the exchequer except by way of having to invoke section 28 of Customs Act, 1962. The adjudicating authority has held that 'abetment', which was the allegation upon which the show cause notice proposed imposition of penalty under section 112 of Customs Act, 1962, implied intention which has not been established by evidence.

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7. Furthermore, we find that the case for confiscation of the imported goods rests upon 'mixed hydrocarbon oil' having been 'high speed oil' and, it being nobody's case that substitution had taken place at some stage after arrival in India, the finding of the adjudicating authority that the goods were, indeed, 'high speed diesel' would attend upon the goods from the moment of import; consequently, the cause for liability to confiscate was present even upon declaration in the bill of entry that 'mixed hydrocarbon oil' had been imported - well before any act, if any, on the bills of entry and assessment thereto by customs officials. No further step in assessment and clearance would have contributed to enhancing, or mitigating, the gravity of that act of declaration in the bill of entry. Had it been otherwise, an appeal would surely have been instituted against the finding of ab initio misdeclaration as also the contributory role of the respondent-officials to subsequent invalidation of proper import. Hence, in the light of intent of section 112 of Customs Act, 1962, the respondents could not have been charged with contributing, by act of omission or commission, to confiscation of the impugned goods owing to crystallization of liability on the goods with the declaration. As the finding of the adjudicating authority remains unchallenged except to the extent that review has contended that 'illicit gratification' should have sufficed as reason enough to fasten the finding of abetment, we turn to that aspect first.

8. Before doing so, and in context of attitude to discharge of review

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function manifest in neglecting to examine the charge in the show cause notice upon which the proposal to invoke the penalty provisions rested, it would be appropriate to take note thereof that '35.12.3 It, thus, appeared that both, Smt. Sayali Lotankar and Shri Sahil Seth had, by their acts of commission and omission allowed clearance of High Speed Diesel which is restricted for import as per the Import Policy (Foreign Trade Policy) and thus had rendered the subject goods laible to confiscation under Section 111(d) of the Customs Act, 1962. Hence, they appeared liable to penalty under Section 112(a) of the Customs Act, 1962.'

emerging from

'35.12.1 As per the assessment practice, these goods were assessed provisionally under second check appraisement by Customs. However, even on receipt of the report from DyCC stating that the above goods conformed to the parameters of HSD, Smt. Sayali Lotankar, Appraiser and Shri Sahil Seth, Deputy Commissioner assessed the goods finally without initiating the remedial measures i.e. issuance of scn in respect of offending goods and adjudication thereof. Further, it appears that Test Report numbers in resepct of three of these consignments were also incorrectly fed in the ICES systems. On verification it appears tht these Test Report numbers pertained to altogether different consignments which had nothing to do with the consignments of goods imported by the syndicate.'

and

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'35.12.2 Shri Sahil Seth, Deputy Commissioner who is the

"proper officer" under Section 18 of the Customs Act, 1962 for final assessment of the goods has admitted that he had not gone through any of the impugned six Test Reports before finalizing the provisional assessments in the system. He has also confirmed that he had never called for the original test reports to verify the test results. It can be seen from the above table that finalisation of the provisional assessments of the impugned six Bills of Entry was done on two different dates i.e. on 12.12.2018 and 14.12.2018. It appears that, on both the occasions, neither the Appraiser nor the Deputy Commissioner had bothered to verify the test reports and they had gone ahead and finalized the assessments of restricted goods, and had released the Test Bonds without initiating the remedial adjudication measures. Thus the Department has not been left with the option to impose redemption fine on the restricted goods. It, therefore, appeared that both, Smt. Sayali Lotankar and Shri Sahil Seth had done or omitted to do certain acts which had rendered the goods liable to confiscation, by their failure to properly discharge their duties as Customs Officers.' makes no reference to 'illicit gratification' let alone of such having been received by the respondent officials. Clearly, this appears to be an attempt at altering the contours of the notice at the appellate stage which appears to dovetail fittingly with the prayer for remand. That our inference of the review committee being sensible only to the contents of notice as grafted into the impugned order, and not the notice itself, appears unimpeachable from this feigning of injured innocence compounded by lack of any tracing of contents of show cause notice as pattern for evaluation of that which was not legal and proper. Or

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perhaps, there was sufficiently adequate familiarity with the contents of the notice as to be aware of absence of such allegation in the proposal to impose penalty on the respondent-officials. Perusal of the notice may throw further light that may be blindingly illuminative but that need not detain us. We merely restrict ourselves to observing that critique of the impugned order was entrusted to the very hands that found it necessary to proceed against the respondent-officials in the show cause notice. We are certain that this may not have been cause of lack of the show cause notice in the appeal filed by the appellant-Commissioner.

9. It has been suggested in the grounds of appeal that 'illicit gratification' allegedly resorted to by the alleged 'syndicate', whose activities were found by the adjudicating authority to suffice for holding that the goods were liable to confiscation and eminently unmissable in the narration of the show cause notice, was overlooked by the adjudicating authority even while agreeing with correctness of the proposition that the goods belonging to the 'syndicate', and assessed by the respondent-officials, were liable for confiscation under section 111 of Customs Act, 1962. We have perused the relevant portions of the show cause notice comprising the depositions of Mr Kishan Pote and Mr Manish Thakkar, who did admit to some payment having been made over for each container to different levels in the customs hierarchy, but these are general allegations which do not name the respondent-officials as recipients. The other statements, too, are as

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deficient in specifics though it does appear that payment, if at all, was not made for finalization of provisional assessment. The appeal of the Principal Commissioner of Customs deputed for the purpose by the review committee is glaringly deficient in any factual submission that links the general averments in the depositions to the respondent- officials. The ground now pleaded does not add to the available records but seeks to widen the charge framed in the notice issued to the respondent-individuals.

10. That the adjudication should be restricted to the framework set out in the show cause notice has been enunciated by the Hon'ble Supreme Court in Commissioner Of Central Excise, Nagpur v. Ballarpur Industries Ltd. . [2007 (215) ELT 489 (SC)] thus '21. Before concluding, we may mention that, in the present case, the second and the third show cause notices are alone remitted. The first show cause notice dated 21-5-1999 is set aside as time-barred. However, it is made clear that Rule 7 of the Valuation Rules, 1975 will not be invoked and applied to the facts of this case as it has not been mentioned in the second and the third show cause notices. It is well settled that the show cause notice is the foundation in the matter of levy and recovery of duty, penalty and interest. If there is no invocation of Rule 7 of the Valuation Rules 1975 in the show cause notice, it would not be open to the Commissioner to invoke the said rule.'

We, therefore, are in full accord with the findings of the adjudicating authority that there is no evidence of any 'illicit gratification' having

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been received by the respondent-officials for any decision of theirs. We also hold that the attempt to insinuate padding, by invoking of appellate remedies, to a failed proposal is neither legally condonable nor procedurally validated.

11. A perusal of section 112 or, for that matter, any other provision of Customs Act, 1962 would not elicit reference to 'illicit gratification' which, it would appear, did not impress itself upon the review committee obligated to ascertain the extent to which adjudication order is legal and proper and seek remedy only to that end. The notice has suggested that finalization of assessment, and erroneous at that, triggered clearance of restricted goods owing to which the goods were liable for confiscation and that the failure of the respondent-officials to discharge their duties properly had excluded option of the department to impose redemption fine. We discern here a patent disinclination to spell out cause and effect - either owing to confusion further confounded or from contrivance to convict. A less than competent acquaintance with customs law suffices to comprehend that conformity to stipulated breach enables confiscation of goods and that penalty is invoked for contributing to confiscability of goods. Finalization of provisional assessment is neither the event that leads to confiscation or, for that matter, to clearance of imported goods. It is not in dispute that the impugned goods cleared in October 2018 were taken up for assessment in December 2018 and confiscation was to be invoked for

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misdeclaration and not either for clearance of goods or for erroneous finalization of provisional assessment. It was also suggested that the show cause notice issuing authority was peeved at having been deprived of option to impose redemption fine in lieu of confiscation. We fail to see such consequence upon finalization of provisional assessment. Fine in lieu of redemption arises from confiscation of goods that are available and fine is quid pro quo for release from confiscatory vestment with the Central Government. To anyone with peripheral familiarity of customs law and procedure, it should be apparent that cavil over non-availability of goods for confiscation, and redemption, at stage of finalization of provisional assessment is akin to crying for the moon as the law does not envisage retention of goods provisionally assessed. We do believe that the notice issuing authority would not have been callow enough to confuse section 110A of Customs Act, 1962, operating to enable conditions that permit imposition of redemption fine, with section 18 of Customs Act, 1962 that operates to remove goods from reach of availability for confiscation at the stage of provisional assessment. Therefore, we fail to see any role of the respondent-officials in not retaining the goods to enable collection of redemption fine; the law had already operated to alienate physical confiscation. It does not surprise us that the adjudicating authority found even less cause to consider imposition of penalty on the respondent-officials from such flimsy, and superficial,

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proposition in the show cause notice.

12. The other two issues preying upon the minds of the review committee can hardly be perceived as primary cause of the adjudicatory outcome that is challenged before us. The findings in the impugned order and our scrutiny of the charges in the notice leave no room for doubt that the proposals in the show cause notice issued to the respondent-officials had as much odds of survival as a snowball in a fireplace. The plea of protection of section 155 of Customs Act, 1962 and 'double jeopardy' had been raised by the officials in their response to the notice and it was incumbent on an adjudicating authority to dispose of all pleas. That he did so is not a fault. That he did so in a manner which has aggrieved the committee of review sufficiently to plead for re-determination in remand proceedings is to accord it gravity beyond that evident from a reading of that portion of the impugned order.

13. Section 155 of Customs Act, 1962 is intended as safeguard against initiation of suits, prosecution or legal proceedings for acts in pursuance of official responsibilities. The bar on initiation of proceedings for acts undertaken in good faith and espousal of notice as essential pre-requisite for initiation of proceedings relating to acts purporting to be in pursuance of the statute merit attention for wrongful application only when invoked for release, at the threshold, from being

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proceeded against. That has not occurred here given that the impugned order has dropped proceedings on merit and not by resort to procedural breach. That the impugned order referred to, and held forth, on the plea of protection claimed by the respondent-officials without acting upon it is not the deficiency, of not being 'legal and proper', contemplated in section 129A of Customs Act, 1962 warranting remedial action. We find the inconsequential reference thereto is not reason enough for us to embark upon evaluation of a relatively obscure, and little attended, provision of Customs Act, 1962 as the dropping of proceedings remains unalterably in place.

14. So it is with the finding on 'double jeopardy' in the impugned order. It is settled law that proceedings under different laws enacted for different purposes are no grounds for preferring one over the other. The adjudicating authority has not decided on the outcome on such preferential progression and has not concluded therefrom that only this would suffice for dropping of proceedings. As we have premised in relation to plea for statutory protection, the adjudicating authority was obliged to dispose of this plea too. That such disposal may have evinced his sympathy over the initiation of multiple proceedings, or even his conviction that they should not have been, does not alter the lack of any effect on the findings on merit that remain unimpeached for reason of absence of valid challenge in appeal and our own observations supra on the deficiencies in the notice issued to respondent-officials. That the

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impugned order referred to, and held forth, on the plea of 'double jeopardy' claimed by the respondent-officials without acting upon it is not the deficiency, of not being 'legal and proper', contemplated in section 129A of Customs Act, 1962 warranting remedial action.

15. In view of the above, we find no reason to accede to the prayer for the notice to be re-determined in remand proceedings. We also do not find any reasons in the grounds of appeal to modify the order of the adjudicating authority. Appeals are dismissed.

(Order pronounced in the open court on 27/02/2024)

(AJAY SHARMA)

Member (Judicial)

(C J MATHEW)

Member (Technical)

*/as

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