The present Tax Appeal is directed against common order dated 25.08.2009 of Custom, Excise and Service Tax Appellate Tribunal, West Zonal Branch, Ahmedabad in Appeal No.C/1335 to 1337 of 2005 and C/868 and 868, in so far as it relates to the present respondent, who was one of the appellant before the Tribunal. By the impugned order, the Tribunal has set aside the penalty of Rs.25 lacs imposed on the respondent under section 112(a) and 112(b) of the Customs Act, 1962. 2.0 The appeal of the Revenue was admitted on the following substantial question of law formulated by the Court.
“Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in setting aside penalty of Rs.25 lacs under section 112(b) of the Customs Act, 1962 on the respondent?”
3.0 We heard learned senior standing counsel Mr. R.J.Oza assisted by learned advocate Ms. Rujuta Oza for the Department, and learned advocate Mr. Paritosh Gupta holding the brief for learned advocate Mr. Paresh M. Dave for the respondent.
4.0 The relevant facts are that the respondent was working with M/s Kandla Clearing Agency and was attending daytoday clearance work. He was authorized by the Power of Attorney for clearance of goods of one Shri Nopaji Lakhamaji Charitable Trust, Mumbai and used to sign in such capacity the Bills of Entry and other papers of the Trust. The Central Government had issued notification dated 27.01.2001 and amended by notification dated 17.07.2001 after the earthquake of 26th January, in public interest, exempting number of goods from levy of the custom duty.
4.1 The intelligence investigation revealed that M/s Nopaji Trust, Mumbai and one M/s Shivam Development Trust, Bhuj were involved in misusing the benefit under the notifications and they were diverting duty free imported goods meant for relief and rehabilitation work, into the open market. The Director of Revenue Intelligence investigated the clearances made by the said Trusts and the officers, by intercepting transport vehicle on DelhiJaipur Highway, seized the goods comprising of old and used woolen and synthetic readymade garments.
4.2 After further investigation, a show cause notice dated 26.03.2002 was issued to ten persons including Nopaji Trust, and also to the respondent herein individually. The respondent did not file reply to the show cause notice, nor attended the personal hearing despite opportunity given, but appeared to have submitted written submissions subsequent contending that he was not involved. The adjudicating authority concluded that the respondent had played active role in misappropriation of the imported goods.
4.3 As per the case of the Department, respondent was authorized to act on behalf of said Trust, but he had no authority to sign on behalf of the Shivam Development Trust. The respondent had confessed in his statement that he used to put white ink on the names of the importers replacing those names either by Radha Textile, Mumbai or Radha Textiles Pvt. Ltd., Panipat, according to the Department. It was also the case that he had knowingly forged the documents of Bills of Entry and that for the acts of omissions and commissions, he was in connivance with trustee one Shri Shantilal Jain and one another Shri Motilal Sharaf, who had approached seeking the consignments of goods for himself for distribution. As against that the respondent stated in his statement before the authority that he was receiving the papers from anther person attending the work relating to duty free clearance in the name of the Trust and after clearance he was handing over the copy of bills of entry. According to him, he was not aware of any misdeeds and was not party to any conspiracy.
4.4 The adjudicating commissioner imposed penalty of Rs.25 lacs by his order dated 31.03.2005, against which order the respondent preferred an appeal. The Commissioner confirmed the penalty. A further appeal before the Tribunal at the instance of respondent along with other persons culminated into the impugned order.
5.0 We noticed from the order of the Tribunal that it interalia made following observations.
“3. During the course of investigation it was revealed that the said goods were diverted from Kandla with an intention to sell the same in the open market. It also came on record that the actual importer of the goods was one Shri Motilal Saraf, who has pressurized Shri Shantilal Jain to allow him to use the name of Trust Shri Nopaji Lakhmaji Charitable Trust. However, the statements also revealed that Shri Shantilal Jain was aware of the facts that Shri Motilal Saraf after importing the goods would divert the same in the market. Instead of distributing the same to the earth quake affected people.”
“5. As regards imposition of penalty on M/s Nopaji Lakhmaji Charitable Trust and Shri Shantilal Jain, Trustee, learned advocate Shri P. M. Dave fairly agrees that there is enough material on record to show that Shri Shantilal Jain allowed one Shri Motilal Saraf to Import the goods under the claim of exemption in the name of his trust M/s. Nopaji Lakhmaji Charitable Trust with the full knowledge that a part of the said goods so imported would actually be sold. In fact, Shri Shantilal Jain was aware of the fact that even prior to the said import that it is with an ulterior motive of making profits. He was also aware of the transportation of goods from Kandla to Delhi.”
“8. As regards penalty of Rs. 25 lakhs imposed on Shri Dev Kumar Kapta, we find that he filed two bills of entry in the name of the Trust as he was duly authorized by a power of attorney in respect of M/s. Nopaji Lakhmaji Charitable Trust but he was not authorized to file bill of Entry in the name of Shivan Development Trust. During the course of statement, he has admitted thathe used to put white link on the names of the importers and was retyping the name of the Radha Textiles, Mumbai. The Commissioner has held that he has knowingly forged the documents and dealt with the goods in such a manner which made the goods liable for penalty.”
5.1 Ultimately, the Tribunal arrived at its conclusion on the following reasoning.
“We find that the contravention committed in respect of the imported goods is a post import contravention. Merely because Shri Dev Kumar Kapta filed bills of entry for clearance of the goods, he cannot be held to be aware of intentions of Shri Motilal Saraf or Shri Shantilal Jain to sell the goods in the market instead of distributing the same. We find no evidence or record involving Shri Dev Kumar Kapta in the subsequent sale of the goods in the market. We also note that he was a paid employee of the CHA Firm, drawing a salary of Rs.5,000/ As such, we find no reason to impose any penalty on him”
6.0 From the order of the Tribunal considered in the context of the fact on record and the case of both the sides, it could be noticed that the Tribunal's reasoning for the conclusion it arrived at, is not satisfactory both in its extent and content. Whatever conclusion the Tribunal may reach, it has to spell out in support of its order proper and adequate reasons.
6.1 Reasons are a soul of any judicial order and good and proper reasoning makes its body strong. That being lacking in the impugned order, we hereby remand the matter to the Custom, Excise and Service Tax Appellate Tribunal, West Zonal Branch, Ahmedabad directing it to decide the matter afresh after giving notice to the parties and hearing them. The Tribunal is directed to pass a reasoned order.
6.2 As per above discussion, we hold that the Tribunal committed an error in passing the impugned order. The question formulated above is accordingly answered in affirmative.
7.0 The appeal stands allowed in aforesaid terms.
[V. M. SAHAI, J.] Amit [N. V. ANJARIA, J.]