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2013 (12) TMI 92 - AT - CustomsConfiscation of goods u/s 113(g) - Penalty under Section 114(iii) - Imposition of redemption fine - Held that - redemption fine cannot be imposed if the goods are not available for confiscation unless the goods were allowed to be cleared subject to furnishing undertaking/bond etc. - imposition of redemption fine in the impugned order is not sustainable in law - Following decision of Shiva Kripa Ispat Pvt. Ltd. case 2009 (1) TMI 124 - CESTAT MUMBAI and Raja Impex (P) Ltd. 2008 (4) TMI 320 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH - Decided in favour of assessee. There is nothing in the language of the provisions of Section 114 of the Customs Act, 1962, to suggest that mens rea is essential for imposition of penalty. Mere act or omission to act would suffice for imposition of penalty if such act or omission violates statutory provisions. Proceedings under Section 114 of the Customs Act are not criminal proceedings but quasi-judicial proceedings and hence mens rea is not required to impose penalty under the said section - The short time interval between the arrival of the goods in the port area and the sailing of the vessel could have led to the omission/default on the part of the CHA which could be a mitigating factor - Penalty reduced - Decided partly in favour of assessee.
Issues Involved:
1. Confiscation of goods not available for confiscation. 2. Imposition of penalty on the Customs House Agent (CHA). Issue-wise Detailed Analysis: 1. Confiscation of Goods Not Available for Confiscation: The appellants, M/s. Inox India Ltd. (exporter) and M/s. The Universal Traffic Co. (CHA), challenged the confiscation of a cryogenic tank for liquefied gases and the imposition of a redemption fine of Rs. 15 lakhs. The goods were loaded on the vessel "Vira Bhum" on 23-7-2008, but the 'let export order' was obtained only on 24-7-2008. The Customs authorities issued a show cause notice for confiscation under Section 113(g) of the Customs Act, 1962, and imposed penalties under Section 114(iii). The Tribunal referenced the Larger Bench decision in Shiv Kripa Pvt. Ltd. and the Punjab & Haryana High Court ruling in Raja Impex (P) Ltd., which held that redemption fine cannot be imposed if the goods are not available for confiscation. Since the goods had already sailed, the Tribunal set aside the redemption fine of Rs. 15 lakhs as unsustainable in law. 2. Imposition of Penalty on the CHA: The CHA argued that they had no control over the goods once entered for exportation and had informed the freight broker not to load the container without customs clearance. However, the Tribunal emphasized that the CHA's responsibilities include ensuring the assessment of the shipping bill, examination of cargo, obtaining the 'Let Export Order' (LEO), and supervising the loading of goods. The CHA's failure to ensure compliance with these statutory provisions made the goods liable to confiscation under Section 113(g), thereby attracting penalty under Section 114(iii). The Tribunal cited various precedents, including Nichrome India Ltd. and LCL Logistics (India) Pvt. Ltd., to support the imposition of penalty on the CHA for omissions leading to the loading of goods without LEO. The Tribunal also noted that mens rea is not required for imposing penalties under Section 114, as per the Supreme Court rulings in Gujarat Travancore Agency v. CIT and SEBI v. Shriram Mutual Fund. The Tribunal acknowledged that the short time interval between the arrival of the goods in the port area and the sailing of the vessel could be a mitigating factor. Consequently, the penalty on the CHA was reduced from Rs. 3 lakhs to Rs. 50,000. Conclusion: The Tribunal set aside the fine of Rs. 15 lakhs imposed on the goods and reduced the penalty on the CHA from Rs. 3 lakhs to Rs. 50,000. The appeals were disposed of accordingly.
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