Prathiba M. Singh, J.

1. The Plaintiff- Shri Anil Chaudhary was appointed as a CFO and Company Secretary of the Defendant company on 16th January, 2007. He continued in the employment of the Defendant company until September, 2010. The Defendant company is a joint venture between Yakult Honsha Company Ltd., Japan and Danone Probiotics, Singapore, which in turn is a subsidiary of Group Danone, France.

2. The brief background of the present suit is that imports of machinery were made by the Defendant in the year 2007-08. The Directorate of Revenue Intelligence (‘DRI’), Mumbai Zonal Unit, issued a show cause notice dated 25th April, 2012, to the Defendant company alleging evasion of customs duty to the tune of Rs.4,22,58,706/-.

3. The factory and office premises of the Defendant were searched in August, 2011 and during the said search, statements were recorded of Mr. Kiyoshi Oike, Managing Director of the Defendant company. Mr. Oike in his statement to the DRI stated that products such as tanks for culturing, storage and blending, water sterilizer, injection moulding machine, unscrambler selector, filling/sealing machine and refrigeration unit, were described as ‘dairy machinery’ on the advice of the Plaintiff who was the CFO and Company Secretary. The statement of Mr. Oike dated 25th August, 2011 reads as under:

“Statement of Mr. Kiyoshi Tatsuei Oike, Managing Director of M/s. Yakult Danone India Pvt. Ltd., aged 61 years; Date of Birth 04-10- 1949, having permanent residence at 3-21-6, room No.401, Miyanishi-Chou, Fuchu-City, Tokyo, Japan; residing at B-406, 1st Floor, New Friends Colony, New Delhi; recorded before the Senior Intelligence Officer, Directorate of Revenue Intelligence, Mumbai Zonal Unit under Section 108 of the Customs Act, 1962 on 25.08.11 at the office premises of Yakult Danone India P. Ltd. 52, Okhia Industrial Estate, Phase-Ill, New Delhi-20.

…

On being asked about the person who advised the company in the matters regarding import of the said machinery, I state that Shri Anil Chaudhry who was our Chief Financial Officer and Company Secretary since January 2007 advised us regarding classification of the imported machinery. Shri Anil Chaudhry had told me that if the machinery for the manufacture of Yakult was classified as dairy machinery we would be saving substantial amount in Customs duty. I accepted his advice and the machinery was classified accordingly. On being asked about the amount of duty saved on such Imports, I say that I have no idea about the total Customs duty saved, but I am aware that Shri Anil Chaudhry in his performance appraisal report for the year 2007-2008 (05 pages) has claimed that he was instrumental in saving Customs duty to the extent of Rs.362 lakhs in the import of machinery from Japan. I am submitting the original of the said performance appraisal report. The said report was reviewed by Shri Tomoshi Suzuki who was Senior Manager of the company to whom Shri Anil Chaudhry was reporting. I am also submitting the original performance appraisal report (05 pages) of Shri Anil Chaudhry for the year 2008-09.”

4. In a further statement on 12th September, 2011 Mr. Oike stated as under:

“On being as to how the goods covered under the bills of entry mentioned at Sr.No.2 & 3 of Table I were classified by us under CTH 843420, I state that we engaged M/s Deloitte Haskins & Sells, New Delhi as our consultant. The consignment mentioned at sr.No.21 of Table I was cleared under the advice of M/s. Deloitte Haskins & Sells. Thereafter, we employed some of employees including one Shri Anil Choudhary. Shri Anil Choudhary was our Chief Finance Officer Cum Company Secretary. Shri Anil Choudhary advised me to classify the goods covered under Sr.No.2 & 3 under CTH 843420 as dairy machinery. We did not consult M/s Deolitte Haskins & Sells. We asked our parent company to prepare the invoices for item no.1 & 2 of consignment mentioned at Sr.No.2 of Table I under CTH 843420 and had availed the benefit of exempt