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2012 (11) TMI 305 - AT - CustomsPenalty u/s 114 Following the decision of court in case of Nichrome India Ltd. vs CCE 2009 (7) TMI 648 - CESTAT, MUMBAI Held that - There is no mens rea required for imposition of penalty under Section 114. Any action or omission on the part of any person which makes the goods liable to confiscation attracts penalty. Therefore, imposition of penalty on the exporter and the CHA for the omission on their part in exporting the goods before grant of LEO was in accordance with law. Value of goods under export is only about Rs. 8 lakhs, penalty reduced from Rs.1.00 lakh to Rs.40,000/- each on the exporter, M/s Electrotherm India Ltd. and on the CHA, M/s Sahil Freight Express Pvt. Ltd - order of the lower authority is upheld.
Issues:
1. Breach of provisions of the Customs Act, 1962 regarding export formalities and Let Export Order (LEO). 2. Liability for penalty under Sections 113(g) and 114(iii) of the Customs Act. 3. Responsibility of exporter and Customs House Agent (CHA) in ensuring compliance with export formalities. 4. Consideration of penalty amount imposed on the exporter and CHA. Analysis: Issue 1: Breach of provisions of the Customs Act, 1962 regarding export formalities and Let Export Order (LEO) The case involved the export of goods without obtaining the Let Export Order (LEO) from the customs authority before the vessel carrying the goods sailed. The Customs Act, 1962 mandates completion of export formalities, including the issuance of LEO, before goods are exported. The appellants were issued a notice for breach of these provisions, leading to the confiscation of the export goods valued at Rs.8,00,096/- (FOB) and imposition of penalties under Sections 113(g) and 114(iii) of the Act. Issue 2: Liability for penalty under Sections 113(g) and 114(iii) of the Customs Act The Revenue argued that the exporter and CHA were responsible for ensuring compliance with export formalities, and the failure to obtain LEO before the vessel sailed constituted a breach of Sections 50 and 51 of the Customs Act. As per Section 113(g), goods loaded without permission are liable for confiscation, and Section 114(iii) imposes penalties on individuals whose actions or omissions render goods liable for confiscation. The penalties imposed on the exporter and CHA were deemed appropriate given the value of the goods determined. Issue 3: Responsibility of exporter and Customs House Agent (CHA) in ensuring compliance with export formalities The exporter's counsel argued that the CHA should bear responsibility for any lapses in customs formalities, contending that the shipping agent and customs authorities also contributed to the situation. However, the Tribunal held that both the exporter and the CHA have a duty to ensure compliance with export formalities, including obtaining LEO before goods are exported. The Tribunal cited precedents to support the imposition of penalties for actions or omissions leading to non-compliance with Customs Act provisions. Issue 4: Consideration of penalty amount imposed on the exporter and CHA After considering the circumstances and the value of the goods exported, the Tribunal reduced the penalties imposed on the exporter and CHA from Rs.1.00 lakh to Rs.40,000/- each. The Tribunal upheld the lower authority's decision regarding the penalties but modified the penalty amount due to the value of the goods involved. The Tribunal emphasized that penalties are imposed irrespective of mens rea, focusing on actions or omissions leading to non-compliance with Customs Act provisions. In conclusion, the Tribunal upheld the penalties imposed on the exporter and CHA for breaching provisions of the Customs Act related to export formalities and LEO. The penalty amount was reduced considering the value of the goods, emphasizing the strict adherence to customs regulations and responsibilities of exporters and CHAs in ensuring compliance with export formalities.
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