2009 (10) TMI 802 - AT - Customs

Penalty u/s 114(i) of the Customs Act - Smuggling - export of Red Sanders in the guise of Rice - finding of the Commissioner against appellant is that they arranged and sent the container to Irugur, ICD, moved the container laden into port area and acted as per instructions of D. Padmanabhan - Held that - M/s. Sethu Samudhra Shipping Services did not take care to verify genuineness of export/exporters and therefore they have aided in smuggling of red sanders. The other two appellants have been held to have failed in discharging duties and realizing responsibilities as required under the Customs House Agents Licensing Regulations by filing export documents supplied by Padmanabhan and not by the actual exporter and therefore they did not take sufficient care in the export and thereby assisted in the smuggling of red sanders. Failure to discharge duties as required under the Customs House Agents Licensing Regulations may lead to action under those Regulations but certainly cannot lead to a conclusion that they aided and abetted Padmanabhan in the attempt to export red sanders. There is no evidence of any action (commission) or inaction (omission) on their part so as to render any goods liable to confiscation, in order to attract the provisions of Section 114 against them. Penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalties under Section 114(i) of the Customs Act on Custom House Agents for involvement in smuggling activities.

Analysis:
The judgment revolves around the imposition of penalties on Custom House Agents for their alleged involvement in an attempt to smuggle red sanders disguised as rice. The appellants were penalized under Section 114(i) of the Customs Act for aiding smuggling activities orchestrated by an individual named D. Padmanabhan. The case involved the discovery of red sanders loaded in a container meant for exporting rice at ICD Irugur, where the rivet of the keel was tampered with. The Commissioner found that the appellants, including M/s. Sethu Samudhra Shipping Services, provided logistics support without verifying the genuineness of the export documents, thus aiding and abetting the smuggling activities.

The testimonies presented during the proceedings revealed the intricate details of the smuggling operation. Padmanabhan's involvement in the scheme, including his connections with various individuals and entities, was thoroughly examined. Statements from individuals such as Shri M. Arasu and Shri Loganathan of M/s. Sethu Samudhra Shipping Services shed light on their interactions with Padmanabhan and the lack of direct contact with the exporter. Additionally, the testimony of Shri Ramaraj from Shree Venkatesh Shipping Services highlighted the role of Ravikumar in handling the customs formalities for the export consignments.

However, upon careful consideration of the evidence and statements provided, the tribunal found no conclusive proof of the appellants' direct involvement in the smuggling attempt. While M/s. Sethu Samudhra Shipping Services was criticized for not verifying the genuineness of export documents, the other appellants were deemed to have failed in discharging their duties as required under the Customs House Agents Licensing Regulations. Nevertheless, the tribunal concluded that the actions of the appellants did not amount to aiding and abetting Padmanabhan in the smuggling operation. The failure to discharge duties as per regulations could lead to regulatory action but did not establish complicity in the smuggling activity. As a result, the penalties imposed under Section 114(i) were set aside, and the appeals of the appellants were allowed.

In summary, the judgment delves into the complexities of the smuggling operation involving red sanders and the role of Custom House Agents in facilitating the illicit activity. Through detailed testimonies and analysis, the tribunal determined the extent of the appellants' involvement and ultimately overturned the penalties imposed, emphasizing the distinction between regulatory failures and active participation in smuggling activities.