ORDER
S.S. Sekhon, Member (T)
1. These two appeals are being disposed of by this common order, after hearing the Ld Advocate for the appellants and the Ld D.R. for the Respondent.
2. The issue involved is recovery of duty ordered on optical fibre cable laid around Bombay under sea pursuant to ‘Flag Project’, a point at Prabhadevi to the territorial waters limit and consequent penal liabilities arrived against the two appellants herein.
3. M/s VSNL, then a Public Sector Undertaking, filed a Bill of Entry for clearance of certain cables by declaring the length of the cable so imported based on invoices issued by the suppliers. However, no Bills of Entry were filed for the quantum of cables utilised in the repair and replacement work done to the existing cable network. The department, however, subsequently investigated the matter and demands of duties and penalties were made, consequent to this investigation, as it was learnt that the length of cable imported in the Flag Project on which duty was paid by Bills of Entry filed by M/s VSNL were not the correct length and the actual length of cable utilised was in excess. Duty demands of Rs 75.00 lakhs approx on this account were made and Rs 7.00 lakhs approx on the length of cable which was used as replacement and repairs and for which no Bills of Entry were filed were also effected. Penalty of Rs. 10.00 lakhs each on M/s VSNL and M/s Patvolk Agents of M/s A.T. & T. and M/s K.D.D, the foreign suppliers and principals who were also imposed penalties under the provisions of Section 112 of the Customs Act, 1962. Hence these appeals by M/s VSNL and M/s Patvolk.
4. We find there is no challenge to the quantum of duties determined and subsequently paid during the investigation. The challenge is only restricted to imposition of penalties.
5. As regards the penalty on M/s Patvolk, it is found that they are the agents of the foreign suppliers and were only concerned with supplying documents to M/s VSNL as received from their principals abroad and also the money received from the principals for payment of duty. There is no act of commission, omission or negligent act on their part as regards misdeclaration of cable lengths actually used and/or about the replacement length of cables in the repairs effected.
6. We also note that the plea of no mens rea and an innocent agent who has performed his functions pursuant to the agency made by the Ld Advocate for Patvolk are grounds enough to set aside the penalty imposed on Patvolk. We do not uphold the findings of the Ld Commissioner that M/s Patvolk, as agent appointed by M/s AT & T and M/s KDD, through their sub contractors. We find that penalty of Rs. 8237055/- has been imposed on M/s AT & T (now known as M/s Tyco Sub Marine Systems) and M/s KDD under Section 114A of the Customs Act, 1962, they are not in appeal in these matters. Principal and the agent cannot be penalised simultaneously for the same misconduct. Hence this appeal of M/s Patvolkis to be allowed.
7. As regards penalty on M/s VSNL, we find that they have declared the length of the cables to be led anew as per the documents provided to them and the subsequent actual length of cables on which duty demands have been made were not within their knowledge as also the Baseline as per Hydrographical certificate is not verified, and also the fact that duties have been subsequently paid on such length of cables as actually used. No penalty as regards the recovery of duty of Rs. 75.00 lakhs on this account is therefore called on M/s VSNL. As regards the duty liability of Rs 7.00 lakhs (approx) on cables replaced and repaired, it is an admitted position that M/s VSNL supervised the repairs and replacement of this length of cable and they therefore cannot be heard of not being aware about the repairs/replacement work being carried out with imported goods. They therefore knowingly dealt with the goods which they were aware are non duty paid and thus liable to confiscation, therefore they are liable to penalty under Section 112 of the Customs Act, 1962. We would consider upholding the penalty on this component of duty of Rs 7.00 lakhs approx. We would therefore reduce the penalty from Rs 10.00 lakhs as imposed to Rs 1.00 lakh and allow the appeal partially.
8. Appeals disposed of in above terms.
(Pronounced in Court)