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2015 (6) TMI 743 - AT - CustomsPenalty upon CHA and CFS u/s 114 - smuggling of red sanders - Misdeclaration of goods - Confiscation of goods - Held that:- Xharges levelled against the CHA is that he has failed to discharge the functions as a CHA and no other evidences have been brought out by the adjudicating authority to establish the role of the appellant in the attempt of smuggling of red sanders. By respectfully following the Hon ble High Court s decision (2015 (1) TMI 1032 - MADRAS HIGH COURT), I hold that penalty imposed on the appellant under Section 114 of the Customs Act is not sustainable. Impugned order in respect of this appellant is set aside. Appellant was appointed by the Govt as a Container Freight Station (CFS) in terms of provisions of Customs Act read with public notice issued by the Customs. It is abundantly clear that being a CFS as custodian they are responsible for the receipt, storage and clearance of import and export cargo in their CFS and equally responsible for safety and security of the cargo transshipped from CFS to the gateway port. It is one of the main conditions of appointing the appellant as custodian CFS which is evident as per the bond executed by the appellant before Customs. It is established beyond doubt that the sealed containers were tampered in transit and the goods were replaced with Red Sanders before the container reached the gateway port. Their contention that they are not responsible for change of cargo after exit from CFS is not justified and not acceptable. As per the terms and conditions of Custom House Public Notice No.5/2002 dt. 8.1.2002, it is clearly stipulated that the custodian (CFS) is responsible for any loss/damage/pilferage of cargo/container so moved. Therefore, they cannot plead ignorance. The CFS being custodian of cargo, he is responsible till delivery of the containers to the port. It is pertinent to state that the Govt. has entrusted the work of handling of cargo to a CFS only with a faith that Custodian will perform his duties diligently and in a dedicated manner. Prior to the concept of CFS entire operations of cargo clearance were done only at the port itself which is handled by Port Trust Authority appointed under Port Trust Act. - The role of CFS as custodian of cargo cannot be equated with the role of Custom House Agent and the CFS obligations and roles are entirely different from the role of CHA. For physical loss, no mens rea is required Appellant failed to deliver the sealed container from their CFs safely to the gateway port. Therefore, the adjudicating authority had rightly imposed penalty under Section 114 of the Customs Act. However, taking into overall facts and circumstances of the case, the penalty imposed on the appellant is reduced from ₹ 5 lakhs to ₹ 2,50,000 - Decision in the case of CC Vs Bansal Industries [2006 (9) TMI 58 - HIGH COURT, MADRAS] and Chairman, SEBI Vs Sri Ram Mutual Fund [2006 (5) TMI 191 - SUPREME COURT OF INDIA] followed - Decided partly in favour of appellants.
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