2009 (10) TMI 698 - AT - Customs

Summary

Issues:
Penalties imposed under Section 114 of the Customs Act for sailing off without Let Export Order (LEO) and liability of shipping line, reduction of penalty quantum.

Analysis:
1. The appeals were filed against penalties of Rs. 5 lakhs each imposed under Section 114 of the Customs Act for sailing off without waiting for LEO in relation to the export of goods. The shipping line argued that they acted in good faith based on assurances from the exporter's Customs House Agent (CHA) that all export requirements were complete. However, the Shipping line, exporter, and CHA were found to have committed a serious breach of Customs Act provisions. The Shipping line sought to vacate the penalties, but failed to provide sufficient grounds for relief. The Commissioner held the goods liable to confiscation under Section 113(g) of the Act due to the breach of waiting for LEO as required by Section 40 of the Customs Act.

2. The judge found that the vessels sailing off without waiting for LEO constituted a serious breach of the Customs Act provisions. The master of the vessel is required to carry an authenticated copy of the shipping bill with LEO endorsed as per Section 40 and Section 51 of the Act. The act of sailing off without LEO amounted to abetting the offence committed by the exporter and CHA, attracting penalty under Section 114 of the Act. The penalties imposed on the shipping line were deemed justifiable, as there was no valid counter to the respondent's argument regarding the requirement to wait for LEO before loading goods onto vessels.

3. Despite upholding the penalties, the judge considered the quantum of penalty imposed by the Commissioner as harsh. Referring to a similar case where the High Court reduced a penalty from Rs. 5 lakhs to Rs. 2 lakhs, the judge decided to reduce the penalty quantum in the present case as well. Taking into account the facts and circumstances, the penalty was reduced to Rs. 2 lakhs in each case. The orders of the Commissioner were sustained with this modification, and the appeals were disposed of accordingly.