J. Mitra & Bros. vs Commissioner Of Customs
2013 Latest Caselaw 4742 Del

*IN THE HIGH COURT OF DELHI AT NEW DELHI

%              Judgment reserved on :  18 th September, 2013
               Judgment pronounced on: 11 th October, 2013

+                    CUS.A.C. 1/2013

J. MITRA & B ROS.                                     ..... Petitioner

                             Through    Mr. Jaspreet Singh Kapur,
                                        Advocate.

                             Versus

COMMISSIONER OF CUSTOM S       ..... Respondent
                Through Mr. Kamal Nijhawan, Sr.
                        Standing Counsel with Mr.
                        Sumit Gaur, Advocate.

       CORAM:
       HON'BLE MR. JUSTICE SANJIV KHANNA
       HON'BLE MR. JUSTICE SANJEEV SACHDEVA

SANJEEV SACHDEVA, J.

1. This is an appeal filed under Section 130 of the

Customs Act 1962 (hereinafter referred to as "the

Act") against the order dated 01.11.2012 passed by

the Customs, E xcise & Service Tax Appellate

Tribunal (CE STAT) dismissing the appeal of the

appellant M/s. J. Mitra & Bros. against the imposition

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of penalty of Rs.25 lakhs imposed by the

Commissioner (I & G).

2. The appellant M/s. J. Mitra & Bros. was the sole

indenting agent of M/s. Intuitive Surgical Inc. , US A.

in India. M/s. Intuitive Surgical Inc. was/is a firm from

which the equipment surgical system in issue was

imported.

3. By order dated 11.09.2013, the following substantial

question of law was framed:

"Whether the Tribunal was right in holding that the appellant had abetted and was liable to pay penalty under Section 112(a) of the Customs Act, 1962 and the quantum of penalty is justified?"

4. One M/s. Cardiac Research and Education Foundation

(hereinafter referred to as "CARE") had filed bill of

entry dated 15.09.2003 at Hyderabad through their

Custom House Agent (CHA), M/s. Hansa Services (P)

Ltd. M/s. CA RE in the bill of entry had declared the

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item as "Da Vinci Surgical System (Endoscopic

system)" classifying the said system under Custom

Tariff item 90189011 and claimed the benefit of

concessional rate of Custom s duty under S.No.363(A)

- List 37 - Item No.82 of Notification No.21/2002 -

Cus dated 1.03.2002 , which covered fiber optic

endoscopes of different kinds. The said item reads as

under:-

"(82) Fibre optic endoscopes including, Paediatric resectoscope/audit resectoscope, Peritoneoscopes,Arthoscope, icrolaryngoscope, Fibreoptic Flexible Nasal Pharyngo Bronchoscope, Fibreoptic Flexible Laryngo Brochoscope, Video Laryngo Brochoscope and Video Oesophago Gastroscope, Stroboscope, Fibreoptic Flexible Oesophago Gastroscope."

5. Alongwith the Bill of Entry, M/s. CA RE had submitted a

commercial invoice dated 04.09.2003 of M/s. Intuitive

Surgical Inc. for " IS 1200 Da Vinci Surgical System" ,

amongst others a copy of brochure published by M/s.

J. Mitra & Bros. for the said system in which

description of the said system was mentioned as

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"Endoscopic Coronary Artery Bypass System" was

filed.

6. M/s. CARE declared the assessable value of the said

equipment at Rs.5,8 0,75,000/- and paid duty of

Rs.29,03,750/- at the concessional rate of 5%. Since

the goods, prima facie, appeared to be misdeclared,

the system imported was seized by the officers of

SIIB, Hyderabad. M/s. CARE voluntarily paid an

amount of Rs.2,05,58,550/- in installments in addition

to the amount of Rs.29,03,750 paid initially for

clearance of the surgical system towards full amount

of Customs duty of Rs.2,34,62,300/- payable on the

said surgical system at rate of 40.40% . On payment of

the said duty, the surgical equipment was provisionally

released to M/s. CARE.

7. Investigation was conducted by the respondent vis -à-

vis the nature of the system and its classification for

the purpose of assessment of the Customs duty.

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8. Consequent to the inve stigation, a show cause notice

was issued to M/s. CA RE Foundation, its Chairman,

Secretary, Bio Medical Engineer and the appellant

M/s. J. Mitra & Bros. M/s. J. Mitra & Bros. was called

upon to show cause as to why penalty as provided

under Section 112 be not imposed on them for

violation of the Customs Act.

9. By the order-in-original dated 11.07.2007, the

Commissioner of Customs held that the goods

imported by M/s. CA RE described as "Da Vinci

Surgical System (Endoscopic S ystem)" in the Bill of

Entry was, in fact, a complex robotic surgical system

and was not entitled to concessional rate of duty as

originally declared . The Commissioner of Customs

held that M/s. CA RE (importer) had attempted to

evade the customs duty by misdeclaration and had

thus rendered itself liable for penal action. The

Commissioner of Customs held that M/s. CA RE had

manipulated the description of the surgical system in

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connivance with the appellant M/s. J. Mitra & Bros.,

the indenter to evade customs duty. The appellant

M/s. J. Mitra & Bros. had played a significant role in

misdeclaration of the imported goods and had

submitted to M/s. CARE a published brochure

describing the equipment as a "Fiber optic endoscopic

system" whereas the manufacturer ‟s literature and

documents described the product as a "surgical

system". The appellant had advised M/s. CA RE to

submit the brochure which would have entitled M/s.

CA RE to make a claim of concessional rate of duty

and had even suggested to M/s. CA RE to add the

words "Endoscopic System" to the description "Da

Vinci Surgical System" in the Bill of Entry. He further

held that the appellant had suggested to M/s. CARE to

claim concessional rate of du ty as they had imported

two such systems under similar classification with

concessional rate of duty. The Commissioner of

Customs held that even though it was CHA , who had

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filed the bill of entry on behalf of CA RE, the appellant

had an important role in making declaration or

clearance of the goods. In view of the evidence and

submissions recorded, he held that the appellant M/s.

J. Mitra & Bros. alongwith M/s. CARE had planned to

misdeclare the goods to wrongly avail the exemption

and it was the appellant M/s. J. Mitra & Bros. who had

published the brochure of the said goods in such a

manner that M/s. CA RE could declare the product as

an endoscope .

10. The Commissioner of Customs noted the sub mission

of a partner of the appellant M/s. J. Mitra & Bros. that

the brochure printed by them was for distribution

among the delegates of ISMICS (International Society

for Minimally Invasive Cardiac Surgery) but found that

the said brochure was also submitted to M/s. CARE

and formed the basis of the declaration in the B ill of

Entry.

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11. The Commissioner of Customs imposed a penalty of

Rs.2,34,62,300/- on M/s. CARE under Section 114 of

the Act. However, no penalty under Section 112 was

imposed on M/s. CARE. A penalty of Rs.5,00,000/-

each was imposed on the Secretary and Chairman of

M/s. CA RE Foundation under Section 112(a) of the

Act for their active role in misdeclaration . No penalty

was imposed on the Bio Medical Engineer . Penalty of

Rs.25,00,000/- was imposed on the appellant M/s. J.

Mitra & Bros. for their active role in misdeclaraton of

the description of the goods under Section 112(a) of

the Act.

12. The appellant M/s. J. Mitra & Bros. filed the appeal

before the CEST AT impugning the order-in-original of

the Commissioner of Customs. The order was also

impugned by M/s. CARE Foundation and its Secretary.

13. CEST AT, after examining the literature on the

equipment and the manufacturers catalogue and

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invoice and two medical experts, who had opined that

the instrument was not a fiber optic endoscope , held

that the equipment could not be considered as a fiber

optic endoscope eligible for exemption . CESTAT has

noted the fact that the issue whether the equipment

was an endoscopic equipment and eligible for

exemption was not pressed hard by the appellant M/s.

J. Mitra & Bros. and the submissions were primarily

qua the penalty imposed on the appellant M/s. J. Mitra

& Bros.

14. Finding of fact has been arrived at by the

Commissioner of Customs and the CE STAT after

detailed examination of the evidences, literature,

brochure of the manufacturer and the opinion of the

experts that the system was not an endoscopic system

and it was not qualified for exemption. Reasoning

given by the Commissioner and the CEST AT are

justified and cannot be questioned . We would not like

to interfere with the concurrent finding of fact, indeed

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the appellant has not contested the said finding.

15. Learned counsel for the appellant relied upon the

judgment of the Supreme Court in M/s. Northern

Plastics Ltd. Vs. Collector of Customs & Central

Excise (1998) AIR 2371 (SC) to contend that whether

the appellant was entitled to the benefit of exemption

under a notification was a matter of belief and not a

matter of „any other particular‟ with regard to goods. It

was in the nature of claim made on the basis of a

belief entertained and could not said to be a

misdeclaration. The judgment relied upon by the

learned counsel for the appellant is not applicable in

the facts of the present case. This is not a case of a

bonafide belief that the appellant had entertained or

that he was uncertain about the applicability of the

notification for exemption or otherwise . It was a clear

case of misdeclaration. Benefit of exemption was not

available and therefore the description of the system

was deliberately altered. Brochure did not correctly

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describe the equipment for the purposes of availing

the exemption. The statements of the officers of M/s.

CA RE show that the appellant was instrumental in

wrong description of the system to bring it within the

purview of the classification. All this was done

deliberately to claim exemption that was otherwise not

available. This is not a case of a belief that the

appellant may have entertained but a deliberate and

conscious effort to wrongly claim exemption. The said

judgment is not applicable.

16. The only issue that arises then for consideration is as

to what role can be ascribed to the appellant M/s. J.

Mitra & Bros. in terms of the

declaration/misdeclaration of the goods so as to return

a finding whether the appellant M/s. J. Mitra & Bros.

has abetted the misdeclaration and wa s liable to

penalty under Section 112(a) of the Customs Act and

the quantum of penalty.

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17. Section 112 of the Customs A ct lays down as under: -

"112. Penalty for improper importation of goods, etc. - Any person,-

(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or

(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, con-cealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section

shall be liable,-

(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding five times the value of the goods or one thousand rupees, whichever is the greater;

(ii) in the case of dutiable goods, other than prohibited goods, to a penalty [not exceeding five times the duty sought to be evaded on such goods or one thousand rupees], whichever is the greater;

(iii) in the case of goods in respect of which the value stated in entry, made, under this Act or in

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the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding five times the difference between the declared value and the value thereof or one thousand rupees, whichever is the greater;

(iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding five times the value of the goods and or five times the difference between the declared value and the value thereof or one thousand rupees, whichever is the highest;

(v) in the case of goods falling both under clauses (ii) and (iii) to a penalty not exceeding five times the duty sought to be evaded on such goods or five times the difference between the declared value and the value thereof or one thousand rupees, whichever is the highest.

18. Section 112(a) makes any person who does or omits

to do any act which act or omission would render the

said goods liable for confiscation under Section 111 or

any person who abets in the said omission or action

liable for penalty of varying degrees.

19. Section 111 specifies the goods that are liable fo r

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confiscation. Section 111(m) makes the goods that do

not correspond in respect of value or in any other

particular with the declaration or transshipment liable

to confiscation under Section 111(m). A person who

does or has omitted to do any act which makes the

goods liable for confiscation or abets in such doing or

omission makes himself liable under Section 112(a) of

the said Act.

20. During investigation, statement of Sh. Arun K. Tiwari,

Secretary, M/s. CA RE was recorded. He had stated

that the appellant M/s. J. Mitra & Bros. had advised

them to submit a brochure which they would furnish for

customs clearance to avail concessional rate of duty.

He also stated that the description "Endoscopic

System" added in bracket to Da Vinci Surgical System

in the bill of entry was as per the suggestion of the

appellant M/s. J. Mitra & Bros. and it was the appellant

M/s. J. Mitra & Bros, who had mentioned that the two

said system s under similar classification had already

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been imported by them. The statement of Sh. C.

Krishna Kumar, Bio Medical Engineer, M/s. CARE

Hospital was also recorded, who categorically stated

that the appellant had given the details to be furnished

to the Customs and had guided them about the

technical write -up to be submitted to the Customs and

the classification to avail concessional rate of 5%

Customs duty.

21. Factual findings categorically returned is that the

appellant M/s. J. Mitra & Bros. has played a significant

role and an active participant in misdeclaratoin of the

imported goods and they had submitted to M/s. CARE

a published brochure describing the equipment as an

endoscope in contrast to the literature and documents

of the manufacturers which described the system as

Da Vinci Surgical System. It has been h eld that it was

the appellant who had advised the filing of the bill of

entry with the description „endoscope‟.

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22. The finding of fact of the role played by the appellant

M/s. J. Mitra & Bros. in the misdeclaration of the said

equipment by M/s. Care has been affirmed by the

Appellate Tribunal. Having examined the factual matrix

of the matter, we are also of the considered view that

the appellant M/s. J. Mitra & Bros. had clearly abetted

in the misdeclaration of the goods and has rightly been

held by the Commissioner of Custom s and the

CEST AT as liable to pay penalty under Section 112(a)

of the Customs A ct, 196 2.

23. Learned counsel for the respondent has relied upon

the case of Bhanabhai Khalpabhai v. Commissioner

of Customs 1994 (71) ELT 3 (SC) to contend that

presumption has to be drawn in respect of existence of

mental state, and Vishnu Kumar Vs. Commissioner

of Customs 2010 (260) ELT 356 (Del) to contend that

charge of abetment would stand substantiated where

instigation by abettor is proved and Additional

Commissioner of Customs V. Sitaram Aggarwal

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1999 (110) ELT 185 (SC) to contend that if one

consciously takes a step to promote the illegal object

then even if physical connection is not established, h e

would be guilty. There is no dispute with the

proposition of law laid down by the judgments relied

upon by the counsel for the respondent . We have held

that the appellant has by his conduct abetted the

offence. These judgments relied upon do not advance

the case of the respondent any further.

24. The issue that now remains for consideration is the

quantum of penalty imposed on the appellant M/s. J.

Mitra & Bros. The Commissioner of Customs in the

order-in-original had imposed a penalty of

Rs.2,34,62,300/- on M/s. CA RE Foundation for

misdeclaration under Section 114(a). However, no

penalty under Section 112 of the Customs Act was

imposed on M/s. CA RE, who were the importers. A

penalty of Rs.5,00,000/- each was imposed on the

Chairman and the Secretary for their active role in

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misdeclaration of the description of the goods under

Section 112(a) of the Customs Act. A penalty of

Rs.25,00,000/- was imposed on the appellant M/s. J.

Mitra & Bros. for its active role in misdeclaration of the

description of the goods.

25. CEST AT, vide the order dated 01.11.2012 , held that

as there was no demand under Section 28(8) of the

Customs A ct for duty short levied, so no penalty could

have been imposed under S ection 114A on M/s.

CA RE Foundation, the importer. The Tribunal,

accordingly, quashed the penalty imposed under

Section 114A. However, as no penalty under Section

112 was imposed on M/s. CA RE Foundation by the

adjudicating authority, the Tribunal also di d not impose

any such penalty.

26. As regards to the penalty imposed on the Secretary of

M/s. CA RE Foundation, CEST AT reduced the same to

Rs.2.5 lakhs on the ground that the Secretary had not

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misdeclared the goods for any personal gain. As

regards to the appellant M/s. J. Mitra & Bros., no relief

from the penalty imposed was granted. We may only

note that the Tribunal has not referred to the penalty

imposed on the Chairman of M/s. CARE probably

because the Chairman was not in appeal before the

CEST AT.

27. We are of the considered view that the quantum of

penalty imposed on the appellant M/s. J. Mitra & Bros.

is not justified and is disproportionate . No doubt that

the appellant M/s. J. Mitra & Bros. has abetted the

offence of misdeclaration and is liable to p ay penalty

under Section 112(a) . The statements recorded of the

Secretary and the Chairman during the investigation

clearly show that the Secretary and Chairman were

well aware of the fact that the goods were sought to be

misdeclared. It is not that the Secretary and Chairman

were driven up the garden path unknowingly by the

appellant M/s. J. Mitra & Bros. by the brochure. From

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the statements recorded, as extracted by the

Commissioner of Customs, it is apparent that the

Secretary and Chairman were well a ware of the

reason why the said system was being wrongly

declared as an endoscopic system. They were fully

aware that the system would only qualify for an

exemption in case it was declared in a particular

manner and words. They acted being fully aware of all

the facts and it was a conscious and well informed

decision. The actus reus was present and was

motivated by a common goal and with a common

purpose. All of them were aware as to why the system

was being declared as an endoscopic system and the

role played by each one was more or less similar and

as culpable. It cannot be said that the Secretary

played any lesser role than the appellant M/s. J. Mitra

& Bros. Even if the appellant M/s. J. Mitra & Bros. had

suggested misdeclaration of the equipment to save

duty, the Secretary and the Chairman could have

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easily declined. The fact that the Secretary and the

Chairman of M/s. CARE accepted the suggestion of

the appellant M/s. J. Mitra & Bros. makes their role

equal.

28. The evil consequences for an equal ro le should also

be equal. The appellant is being punished as an

abettor. The gravity of the role of the abettor and a

well informed principal offender cannot be different.

Where the degree of offence is same the scale of

punishment should also be equal. Applying principle

of parity of consequence , as all are ascribed the same

role and responsibility, the scale of punishment/

penalty should also be the same . The Chairman and

Secretary were awarded the penalty of Rs.5 lakhs

each, though the CEST AT has reduced the penalty to

Rs.2.5 lakhs for the Secretary, who had also filed an

appeal on the ground that he had not misdeclared the

goods for any personal gain. We are of the view that

the penalty imposed on the appellant M/s. J. Mitra &

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Bros. of Rs.25 lakhs is not justified. Applying the

principle of parity, we are of the view that the appellant

M/s. J. Mitra & Bros. should also be imposed the same

penalty as that of the Chairman. Accordingly, we

reduce the penalty under Section 112(a) from Rs.25

lakhs to Rs.5 lakhs.

29. The question of law as regards abetment and liability

is accordingly answered in favour of the Revenue and

against the appellant M/s. J. Mitra & Bros. and as

regards quantum of penalty partly in favour of the

appellant M/s. J. Mitra & Bro s..

30. The appeal is accordingly disposed of with no order as

to costs.

SANJEEV SACHDEVA, J.

11th OCTOBER, 2013                               SANJIV KHANNA, J.
st

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