TMI Blog2013 (9) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the Customs authorities - in the absence of any evidence establishing the involvement of the appellant in the smuggling of red sander wood logs – it can be invoked only when any person, who in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation u/s 113 or abets the doing or omission of such an act - There was no such allegation against the appellant either in the show cause notice or in the order. - There was only an omission on their part in ascertaining the genuineness of the transaction and obtaining proper authorization. - Penalty reduced from Rs. 130 lakhs to 1 lakh. Penalty on freigh forwards - Held that:- the negligence on their part is very evident. They undertook the transaction on the basis of e-mail received from Shri Manoj Vichare of M/s. Sara logistics. The did not verify whether M/s. Sara Logistics existed at all. Being a freight forwarder, they are expected to know the existence or otherwise of M/s. Sara Logistics, which is also in the same business. However, the fact is that M/s Sara Logistics did not exist at all. They were not vigilant about the probable misuse of the container and the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x No.45676, Ajman, UAE 4 8038024 dated 11/01/10 EXP-052/2009 09/01/10 TCKU 2633170 Machinery Parts (Exhaust Pipe) 4,17,811.20 Al Manar Trading Est. PO Box 28435, Sharjah, UAE 5 8016003 dated 04/01/10 EXP-051/2009 01/01/10 PMLU 2035839 2,88,449.00 Razi Exports Imports, PO Box No.17220, Dubai, UAE 6 7973881 dated 22/12/09 EXP-050/2009 18/12/09 PMLU 2043710 Machinery Parts (Exhaust Pipe) 4,58,958.00 Al Falash Imports Exports, PO Box No.45676, Ajman, UAE 7 7910297 dated 02/12/09 EXP-049/2009 25/11/09 PMLU 2031999 Machinery Parts (Exhaust Pipe) 6,64,366.50 Global Vision FZE PO Box No.49493,Hamriyah Free Zone, Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and they had procured these containers from M/s. Prema Shipping Line (India) Pvt. Ltd. and handed over the same to one Shri Manoj Vichare of M/s Sara Logistics. The booking for the container was done through e-mail and the containers were delivered to Shri Manoj Vichare on the basis of the e-mail booking. M/s. Sungrace Logistics Pvt. Ltd. did not know Shri Manoj Vichare of M/s. Sara Logistics nor did they cause any enquiry about the existence of M/s. Sara Logistics. They also received the export documents in the name of M/s. Marvelous Engineers Pvt. Ltd. assuming that M/s. Sara Logistics represented M/s. Marvelous Engineers Pvt. Ltd. even though there was no authority letter from M/s Marvelous Engineers Pvt. Ltd. 2.4 On conclusion of the investigation, a show-cause notice dated. 07/07/2011 was issued proposing to impose penalty on M/s. Marvelous Engineers Pvt. Ltd., Shri Sanjay Rana, the CHA, and Sri. P.B. Gupta, employee of the CHA firm, M/s. Sungrace Logistics, the freight forwarder and its director Shri. Dattatray B Suryawanshi, under the provisions of Sections 114/117 of the Customs Act, 1962, amongst others. The case was adjudicated vide the impugned order and penalties o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been done under Central Excise supervision. They did not know that the entire documents were fabricated by forging the signatures of the Central Excise Officers and their rubber stamps and seals. Thus the CHA was an innocent victim and was not a party to the conspiracy for smuggling of red sanders. They had verified the existence of M/s Marvelous Engineers Pvt. Ltd. from the internet and relied upon the copy of the IEC issued by the DGFT. They were not aware of the contraband nature of the goods under export. Therefore, they cannot be alleged to have abetted the smuggling transaction. He relies on the decision of the Tribunal in the case of Swaroop Shipping Services Vs. CC (Seaport-Exports), Chennai, [2008 (227 ELT 555], Neptune s Cargo Movers Pvt. Ltd., Vs. CC (Export), Channai [2007 (219) ELT 673 (Tri-Chennai)] and U Sivasubramanian Vs. CC, Trichy [2004 (165) ELT 97]. He also relies on the decision of the Tribunal in the case of Natvar Parikh Co. Pvt. Ltd., Vs. CC, Chennai, [2012 (281) ELT 116 (Tri-Chennai)] wherein it was held that it is usual in international trade for logistics companies acting as importers or exporters and engaging CHA on their behalf. Further, in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 113, or abets the doing or omission of such an act, shall be liable, - (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding three times the value of the goods as declared by the exporter or the value as determined under this Act, whichever is the greater; In the present case, there was a ban on export of red sanders and the goods were mis-declared as automotive parts in the export documents. Therefore, the provisions of clauses (d) (i) of section 113 are clearly attracted and the confiscation of the goods is clearly sustainable in law. 5.3 Penalties have been imposed on the appellants under the provisions of clause (i) of section 114. The said section has two limbs. The first limb envisages commission of an act or omission to do any act which would render the goods liable to confiscation. The second limb is abetting the omission or commission. The first limb does not envisage any mens rea on the part of the person who undertook the commission of the act or omitted to do any act. Therefore, mere contravention without any intention is sufficient for i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and in respect of the 7th transaction, where the goods were seized, the shipping bill was filed on 08/02/2010, barely one week after the issue of public notice; the appellant situated far away in Kolhapur could not have been even aware of the said notice. The statute does not envisage monitoring of the import/export transactions on a daily basis and bringing any discrepancy to the notice of the Customs authorities. Therefore in the absence of any evidence establishing the involvement of the appellant in the smuggling of red sander wood logs, it cannot be alleged that there is an omission and commission on their part so as to attract the provisions of Section 114 (i) of the Customs Act. The said Section can be invoked only when any person, who in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 113, or abets the doing or omission of such an act. There is no such allegation against the appellant either in the show cause notice or in the impugned order. If somebody else misused their IEC code, the responsibility for the same cannot be passed on to the appellants. In the Prakash Freight Mover s ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rikh Co. Ltd., cited supra. We have perused all these decisions and they are all Single Member Bench decisions and are not binding on us and the facts of those cases were also different. In the case of U Sivasubramanian, the case was that the documents were signed by the CHA without verification of the contents of the goods. In the case of Neptune s Cargo Movers Pvt. Ltd. also the penalty imposed was set aside on the ground that the CHA had no active role in the transaction that led to confiscation of the goods. In the case of Swaroop Shipping Services, the goods were swapped after the let export order was given and the goods were no longer under the control of the CHA. It was in these circumstances, it was held that the CHA had no role to play and therefore, no penalty was imposable. In all these cases, the CHA had proper authorization to undertake the transaction and the documents were also received from the exporter. In the present case, the CHA did not receive any document from the exporters themselves nor did they receive any proper authorization from the exporter to undertake the transaction. M/s. Sungrace Logistics Pvt. Ltd. got the documents not from the manufacturer/expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Being a freight forwarder, they are expected to know the existence or otherwise of M/s. Sara Logistics, which is also in the same business. However, the fact is that M/s Sara Logistics did not exist at all. They were not vigilant about the probable misuse of the container and the seal provided by them by unscrupulous elements. By providing the container and the seal to persons who were neither the legal exporters nor to the CHA, they committed a grave error. Further, they received the export documents from M/s. Sara Logistics only on the basis of e-mail correspondence and this has happened not only once but in respect of seven transactions. Thus, there is a clear omission on their part as a result of which the container provided by them was misused for the smuggling of red sanders, which is a banned item for export. Therefore, they are liable to penalty under Section 114 (i) of the Customs Act. But the penalty has to be commensurate with the gravity of the offence committed. There is no evidence available on record to establish their active involvement in the smuggling activity. Taking into the facts and circumstances of the case and also noting the fact that there was no deliberat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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