TMI Blog2017 (10) TMI 1446X X X X Extracts X X X X X X X X Extracts X X X X ..... ant in lending his CHA license to a third party for usage without knowing the actual importer and the goods to be imported, is a serious issue and for the said purpose, since the appellant was admittedly get only ₹ 1,000/- for each consignment, the appellant has not only misused the CHA license but also very recklessly and carelessly lend it to some unscrupulous perons for facilitating smuggling activities and therefore such act on the part of the appellant shall be viewed seriously. Taking into account the said aspect of the issue, the imposition of penalty of a sum of ₹ 5 lakhs by invoking the provisions of the Customs Act, in the considered view of this Court, is not only justifiable but also acceptable as there was no excess imposition of penalty on the part of the revenue in this regard compared with the omission and commission of the appellant - the order-in-original as has been confirmed by the CESTAT through the impugned order is liable to be sustained and the substantial questions of law raised before this Court are to be answered in favour of the Revenue. Appeal dismissed - decided against appellant. - Civil Miscellaneous Appeal No. 2940 of 2017 and C.M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . From the documents obtained from M/s. CITPL, it was seen that the said three containers have been brought into terminal from M/s. Vishrutha CFS by three separate trailers. According to the shipping bill, the said three containers were found to be sealed with Customs OTS bearing the said numbers respectively. 7. Thereafter the officers of CZU-DRI in the presence of independent witnesses, one Shankar, Preventive Officer of Customs and one Parthasarathy, Superintendent, CITPL, broke open the seals of the said three containers. Out of the three containers, in container No. BMOU 2319149, it was found to be stocked with HDPE bags containing white colour powder like substance and it was labelled/printed as Potash Feldspar Powder 200 Mesh, Net weight 50 Kgs, mas on its top. 8. When the said goods were pulled out, the CZU-DRI officials found some material covered with grey colour plastic sheets at the back. On removing the plastic sheets, they found red coloured wooden logs inside. Since the terminal was not conducive to have a thorough and detailed examination, those containers were seized under mahazar proceedings dated 13-3-2014 and they were moved under the preventive escort to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to show cause to the Commissioner of Exports, Customs House, Chennai, within 30 days, as to why penalty should not be imposed on them under Section 114 of the Customs Act. 14. On receipt of the said notice, the appellant through his lawyer had given a reply on 14 [to] 17-10-2014, wherein the appellant had taken a stand that the goods stuffed into the containers impugned in the show cause notice at M/s. Vishrutha CSF under the supervision of the customs officers were declared goods and also there was no tampering of the said containers at the relevant point of time. Therefore it was submitted by the noticee that, the appellant herein was not responsible for any tampering which might have taken place after the proper goods were stuffed into the containers in the presence of the officers of the customs and duly sealed by them. 15. The respondent/revenue, after having taken into account the facts of the case, content made in the show cause notice, reply given by the appellant and other persons to whom such show cause notices were issued along with the appellant, had imposed penalty on the appellant for a sum of ₹ 5 lakhs under Section 114 of the Customs Act for the illega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, for imposition of penalty in terms of Section 114 of the Customs Act, 1962, when admittedly, the appellant did not do anything or omitted to do certain things or abetted in the same, which had rendered the goods in question liable for confiscation? 5. Whether the Tribunal misdirected itself in its enquiry in the appeal in holding that the appellant would be liable for penalty in terms of Section 114 of the Customs Act, 1962, when admittedly, no positive material has been placed to show overt acts of abetment with prior knowledge, especially when the Appellant had no reason to believe that the goods tendered for export was indeed the cargo which was stuffed in the container? 6. Whether the Tribunal is right in holding that the functions and obligations of the appellant extended beyond, the filling and processing of the Shipping bill in question, having regard to the limited role of the Customs Broker in only having access to the documents and not being a party to the inspection of the goods tendered for export, more so, when the case of investigation is that the offending goods were interpolated into the consignment after the out of charge and shut out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Learned Counsel appearing for the appellant would also contend that, at the time of stuffing the containers, it was only the declared goods and after having stuffed the containers, they were sealed by the customs authorities and thereafter if at all anything had happened where allegedly the customs seals of the container were tampered with, it could have been taken place beyond the customs area, for which the customs clearing agent cannot be held responsible. Therefore the Learned Counsel appearing for the appellant would vehemently contend that, the imposition of penalty, that too a huge sum of ₹ 5 lakhs on the appellant on the allegation that he had also abetted to attempt smuggling made by the other stakeholders in the case, which was detected by the revenue intelligence, is absolutely unjustifiable and hence the interference of this Court on the orders of the CESTAT, which confirmed the orders passed by the respondent in order-in-original is essential. 22. Per contra, Mr. A.P. Srinivas, Learned Standing Counsel appearing for the respondent/revenue made submissions that, it is based on the specific intelligence report from DRI, the containers in question were found a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper goods were stuffed in the containers. 26. The Learned Standing Counsel would further submit that the said defence taken through the reply given by the appellant was carefully considered by the respondent authority who after taken the entire records and evidence of the individuals/stakeholders including the statement of the appellant himself, had come to a right conclusion that the appellant also had been in aid of abetting the attempt of smuggling the prohibited goods namely Red Sanders and therefore, he is liable to pay the penalty by invoking the provisions of Customs Act and therefore the said order-in-original confirmed by the CESTAT requires no interference from this Court. 27. In support of his contention, the Learned Standing Counsel has relied upon the following judgment : 12. 2017 (346) E.L.T. 547 (Mad.), [K.V. Shivaraj v. CESTAT, Chennai]. 28. We have heard in detail the submissions made by the Learned respective Counsels appearing for the parties and we have given our anxious consideration to the issue raised in this appeal by having gone through the materials placed before this Court carefully. 29. The allegation made against the appellant by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and commission, which reads thus : Further, M/s. Rubicon Mineral Process, Shri Gopinath, Partner of M/s. Rubicon Mineral Process, Shri Litheesh of M/s. Flamingo Shipping Services and Shri Prabhakaran of M/s. Sowparnika Shipping Services have aided and abetted S/Shri Ravi Kumar and Krishna Prasad by allowing their respective firms to be used by these conspirators to smuggle red sanders in the guise of genuine customs cleared goods. They have failed to exercise due diligence in verifying the authenticity of the claims made by these people and have thereby aided the said smuggling of red sanders. S/Shri Litheesh and Prabhakaran have blindly accepted the documents given by Shri Krishna Prasad and filed shipping bill as well as arrange customs clearance of the said consignment. They have not even bothered to get the authorisation letter from M/s. Rubicon Mineral Process on whose name the shipping bill has been filed. Hence, for their acts of omission and/or commission, which have rendered the goods liable for confiscation, they all appear liable for penal action under Section 114 of the Customs Act, 1962. Accordingly the appellant was issued the show cause notice to give sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not the case of the appellant that he knew the exporter, from whom on getting the shipping bill, he was present at the time of initial stuffing of the containers and only in the presence of himself, the container were seized with proper declared goods from the exporter. When that being so, the appellant cannot claim knowledge that at the time of initial stuffing, only the declared goods were stuffed and subsequently only it might have been tampered. Since the appellant did not have any knowledge of the initial stuffing also, as he had stated that he had lent license only to the Litheesh of M/s. Flamingo, the said defence taken by the appellant in the reply to the show cause notice cannot be accepted. 36. This aspects had been considered in detail by the revenue in the order-in-original and in this regard, the following findings and the conclusion arrived at by the authority, who passed the order-in-original can be usefully referred to : 22.1 Shri K.V. Prabhakaran appeared for personal hearing before the Commissioner of Customs, Chennai-IV on 27-3-2015 and reiterated that failure to exercise due diligence or verify authenticity of documents or obtaining authorization falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso stated that the customs seals were found intact and the activity of replacement of goods by tampering the container took place outside the Customs area, and hence CHA cannot be held responsible for this. 38.2 Shri Prabhakaran in voluntary statement had admitted that he had allowed Shri Litheesh to use his CHA license and this act of Shri Prabhakaran is illegal and facilitated the attempted smuggling. His failure to ensure that proper procedure are followed for the clearances made in his firm s name confirms the omissions on his part which had rendered the goods liable to confiscation. While handling the export works, he should have taken adequate care as provided in the Customs Act, 1962 and the CHALR, 2004. He failed to note that persons not authorized by Customs cannot file Shipping Bill on behalf of an exporter and that his allowing Shri Litheesh to file Shipping Bill on behalf of him had facilitated the smuggling activities. Even, allowing his request for cross-examination will not prove his innocence in this act. Hence, Shri Prabhakan is liable to penal action under Section 114(i) of the Customs Act, 1962. 37. Accordingly the authority, who passed the order-in-origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investigation also brought role of Shri Prabhakaran who lent his CHA license to Shri Litheesh to aid and abet smuggling of red sanders. Both the appellants could not detach themselves from the smuggling racket. Plea of both the appellants that they were innocent could have received consideration had they brought out the illegal act to the knowledge of Customs. But they did not. They acted in connivance with the racket till the offending container was seized by the investigation resulting in discovery of smuggled goods. 11. The proceeding under the Customs Act, 1962 is quite different and independent of any proceeding under CHALR, 2004. Appellants when failed to detach themselves from the offence and endangered the interest of Customs, they were required to be dealt under the Act. Their role was also contributory to the confiscation of smuggled goods. Therefore, imposition of penalties of ₹ 5,00,000/- on each of them does not appear to be unreasonable when their role in abetting and aiding smuggling was proved by investigation successfully. 12. It may be stated that the law of Customs has object to curb mischief against Customs and deter smuggling. Preponderance of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, find no reason to differ with the finding of the Tribunal. 41. Since the facts of the said case is entirely different from the facts of the present case, where it was the finding that when there was no adverse finding against the assessee/licensee in that case, the imposition of penalty by invoking Section 114 of the Customs Act was not provided in that case. Therefore when the revenue preferred appeal before this Court, the decision made by the CESTAT was upheld. Thus, in view of the said facts, which are entirely different from the facts of the present case, the said judgment cannot advance the case of the appellant. Therefore it is distinguishable. 42. In respect of the second case, i.e., 2015 (317) E.L.T. 3 (Mad.) is concerned, in that case the declared goods was organic dye, namely, intermediate G-salt. However, the goods exported was original salt. But this issue was found by the authorities, only after having sent the goods in question, to the laboratory test and after having obtained the report from the authorities, the Customs Authorities found the goods which were exported or attempted to export were original salt, instead of intermediate G-salt. Therefore in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not attract punishment of cancellation of licence when no other grave charges made on the appellant therein. Only in that context, instead of cancellation of licence, penalty was directed to be imposed on the CHA and therefore that facts also can no way be compared with the present case, as in the case on hand, no action was initiated or concluded for revocation of the CHA licence itself from the appellant, instead only penalty of ₹ 5 lakhs had been imposed, for the proven charge of lending the licence to the third party, which paved the way for the others to join together and to attempt to smuggle prohibited goods. Therefore such move on the part of the appellant herein, i.e., the CHA licence holder, is to be depricated and therefore imposition of penalty by invoking provisions of Customs Act in this regard is fully justifiable. Hence, the order passed by the original authority, as confirmd by the CESTAT in the impugned order is not liable to be interfered with. 45. In the case cited by the Revenue side, i.e., 2017 (346) E.L.T. 547 (Mad.), it was the case of the assessee that he had obtained Import Export Code, however, since he could not carry the import and export ..... X X X X Extracts X X X X X X X X Extracts X X X X
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