The Ahmedabad Bench of Customs, Excise and Service Tax Appellate (CESTAT) has upholds Rs. 2 lakhs penalty against Business Development Associate (BDA) , Rajiv Sahni for abetting diversion for 460 High Speed Diesel (KL HSD) valued at Rs. 89,13,340 and having a duty liability of Rs. 23,08,357 and quashed the penalty against the customs broker.
The bench of Dr. Ajaya Krishna Vishvesha (Judicial Member) has observed that the BDA Rajiv Sahni played a key role in the diversion of the imported HSD cleared under PAC in collusion with the importer and the PAC holder M/s. Agrawal (J.V.) and thus aided and abetted in the diversion for 460 KL HSD valued at Rs. 89,13,340 and having a duty liability of Rs. 23,08,357. Therefore, the order of the Principal Commissioner imposed a penalty of Rs. 2,00,000 on Rajiv Sahni, Business Development Associate of M/s. Essar Oil Limited is sustainable and is liable to be confirmed.
The officer of the Directorate of Revenue Intelligence, Ahmedabad carried out search operations at various premises of M/s. Essar Oil Ltd. During the course of search, it was found that M/s. Agarwal (JV), a Joint venture of two companies is engaged in civil construction. M/s. Agarwal (JV) was awarded with a work contract from the Government of Gujarat which was aided by World Bank.
M/s. Agarwal (JV) by virtue of the contract were entitled to the exemption from Customs duty under Notification No.84/97-Cus. dated 11.11.1997 in respect of the materials to be used in the said project on the basis of Project Authority Certificate (PAC) issued by the competent authority of Gujarat Government. M/s. Dineshchandra R. Agarwal, Deesa (M/s. Agarwal (JV)) purchased 460 KL of HSD valued at Rs.89,13,340/- from M/s. Essar Oil Ltd which was imported by M/s. Essar Oil Ltd, following the “In Bond transfer” facility, and filed three ‘ex-bond Bills of Entry’ dated 24.12.2004, 09.02.2005 and 16.03.2005 respectively, claiming the exemption in terms of Notification No.84/97-Cus. dated 11.11.1997 on the strength of PAC issued to M/s. Agarwal (JV). M/s. Dineshchandra R. Agarwal, Deesa was not entitled to use the PAC issued to M/s. Agarwal (JV).
Out of the total quantity of 460 KL, the applicant/customs broker diverted 132 KL of HSD to projects other than the specified project and for the remaining quantity of HSD there have been discrepancies in the destination in the invoices raised by M/s. Essar Oil Ltd for which the PAC was issued and thereby violating the conditions of the Notification No.84/97-Cus. dated 11.11.1997. They were found liable to pay the Customs duty to the extent of the exemption availed i.e. Rs.23,08,356.
The Adjudicating Authority imposed a penalty of Rs.50,000/- on Shri Mahendra N. Thacker and Rs.2,00,000/- on Shri Rajiv Sahni.
Mahendra N. Thacker argued that the Adjudicating Authority has erred in appreciating the provisions of Section 117 of the Customs Act, 1962. He has also argued that for the violation of Customs House Agents Licensing Regulations, 2004 no penalty can be imposed under Section 117 of the Customs Act, 1962. No proceedings were initiated against the appellant Mahendra N. Thacker for alleged infractions of Customs House Agents Licensing Regulations, 2004. Therefore, penalty imposed upon the appellant Mahendra N. Thacker under Section 117 of the Customs Act, 1962 is liable to be quashed.
The tribunal held that the order of the Principal Commissioner imposing penalty of Rs. 50,000/- on M/s. Mahendra N. Thacker CHA under Section 117 of the Customs Act, 1962 is liable to be set aside whereas the Customs Appeal filed by Rajiv Sahni is liable to be dismissed.
Case Details
Case Title: Mahendra N Thacker Versus Commissioner Of C.-Mundra
Case No.: Customs Appeal No. 12304 Of 2019 – SMB
Date: 28.04.2025
Counsel For Appellant: Vikas Mehta
Counsel For Respondent: Sanjay Kumar
Read More: Customs Act | Pre-Deposit To Be Refunded Without Raising Issue Of Limitation: CESTAT
