IMPORTANT POINT
The judgment establishes the application of the strict liability principle under the Customs Act, emphasizing the absence of mens rea for contravention and the judicial exercise of discretion by the authorities.

JUDGMENT

Sanjeev Sachdeva, J. (Oral) - Appellants impugn judgment dated 18.08.2017 passed by the Customs Excise Service Tax Appellate Tribunal (hereinafter referred to as the Tribunal) whereby the appeals filed by the appellants arising out of order-in-original dated 16.05.2014 have been dismissed.

2. By order dated 01.08.2018, while admitting these appeals for hearing the following question of law was framed for consideration:

" Did the Tribunal fall into error in concluding that the appellants/assessees were culpable and/or were liable to the penalty imposed under Section 112 of the Customs Act and that the goods were liable for confiscation, in the circumstances of the case?"

3. Appellant are in the business of interalia supplying various types of Very Small Aperture Terminal (hereinafter referred to as "VSAT") and its components to various customers.

4. Appellants are authorized dealer of wireless equipment possessing a dealer possession license issued by Department of Telecom, Ministry of Communications and IT.

5. Appellants imported various components of VAST during December 2007 and March 2009.

6. It is not in dispute that the import was subject to production of a license from the Wireless Planning and Co-ordination Wing of the Department of Telecommunication (hereinafter referred to as the WPC Licenses). It is also not in dispute that subject import was carried out without a valid WPC license.

7. The issue arose when the Directorate of Revenue Intelligence found that the service providers to the appellants i.e. Alliance Strategies Ltd (ASL for short) which allegedly had the responsibility of obtaining the requisite WPC license, provided licenses that were forged and fabricated. Based on the said forged and fabricated license subject import was carried out. It is also not in dispute that custom duty as applicable was paid by the appellants.

8. Subject Show Cause Notice dated 06.09.2012 was issued to the appellants as also to ASL and other importers who had imported the goods using the forged WPC licenses obtained through ASL.

9. Appellants replied to the Show Cause Notice clarifying that there was no fraud played on their part and that they were not aware that the WPC licenses were forged. It was contended that the WPC licenses had been used by the appellants bonafidely believing them to be genuine.

10. By order dated 16.05.2014, the Commissioner of Customs adjudicated the Show Cause Notice and held that the goods that had been imported under the forged WPC licenses were liable for confiscation under Section 111(d) of the Customs Act, 1962 (hereinafter referred to as the Customs Act).

11. The Commissioner of Customs gave an option to the Appellants to redeem the goods under Section 125 (1) of the Customs Act on payment of redemption fine totalling to Rs.60 Lakhs. Further a penalty of Rs.15 Lakhs each was imposed on each of the appellants under Section 112 (a) of the Customs Act. In so far as ASL was concerned a penalty of Rs.1.25 crores was imposed on it and individual Directors/Managers/employees of ASL were imposed penalty ranging from Rs.6 lakhs to 20 Lakhs.

12. We may note at this juncture that the value of the goods that were imported using the forged WPC licenses was Rs.3.13 crores.

13. Pursuant to the said order appellants deposited/paid the redemption fine and subject consignment was released without prejudice to the rights and contentions of the parties.

14. Learned counsel for the appellants submits that as the appellants had no mens rea and had no knowledge of the WPC licenses being forged, no penalty could have been imposed on the appellants. He further submits that since the goods was imported and the customs duty payable has been paid, the same could not have been confiscated in the absence of any mens rea on the part of the appellants.

15. Appellants thereafter filed an appeal before the Tribunal which has been dismissed by the judgment dated 18.08.2017 upholding the redemption fine as well as the penalty imposed on the