In Customs Appeal No. 12900 of 2013-DB-CESTAT- Lack of mens rea for the offense: CESTAT (Ahmedabad) sets aside penalty imposed under section 112(a) of Customs Act
Members Raju (Technical) & Somesh Arora (Judicial) [28-04-2023]

Read Order: Mgm Tradelink Pvt Ltd v. C.C.-Kandla

Chahat Varma

New Delhi, May 2, 2023: While partly allowing the appeal filed by MGM Tradelink Pvt. Ltd (appellant), the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the Commissioner should not have imposed penalty under Section 112(a) of the Customs Act, 1962, while giving finding of the non- imposition of penalty under Section 114A of the Customs Act, despite finding that there was no mens rea for the offense.

The two-member bench of the Tribunal also observed while imposing redemption fine, no market inquiry to arrive at the correct quantum was done in the said case. The higher side of the imposable redemption fine as per Section 125 of the Customs Act,1962 is dependent upon such determination. The Tribunal was of the view that the statutory course of ascertaining the market price and reducing it by duty chargeable may not be feasible at this belated stage, by placing reliance on the decision rendered by the Apex Court in Commissioner of Customs Mumbai Vs. Mansi Impex [LQ/SC/2011/1580], wherein it was mentioned that no hard and fast rule can be laid down for fixing quantum of redemption fine but the same has to be done, depending upon facts and circumstances of each case and cannot be done arbitrarily.

The bench observed that there was a wrong dispatch of goods, but eventually, the goods were cleared at the enhanced value at the request of the appellants. This indicated that there was a margin of profit even after paying duty. Therefore, the bench was inclined to reduce the redemption fine to Rs. 4 Lakhs, while upholding the confiscation of offending goods. However, the penalty of Rs. 4 Lakhs imposed under Section 112(a) by the order of Commissioner (Appeals) was set aside, as this penalty was unjustified, given the lack of mens rea.