2013 (12) TMI 175 - AT - Customs

Confiscation u/s 113(g) and Penalty u/s 114(iii) - Held that - vessel has sailed on 25-12-2009 whereas the LEO was given only on 26-12-2009. As per the provisions of Section 113(g) any goods loaded or attempted to be loaded on any conveyance or water-borne or attempted to be water-borne for being loaded on any vessel the eventual destination of which is a place outside India without the permission of the proper officer of the Customs is liable to confiscation. In the case before me the goods have been loaded and the vessel has sailed before the LEO was given by the Customs officer and therefore the goods are liable to confiscation. Once the goods are held to be liable to confiscation as per Section 113(g) any person who in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation under Section 113 or abets or aids such acts shall be liable to penalty not exceeding the value of the goods declared by the exporter or the value as determined by the Customs Act whichever is greater. If the exporter chooses to export goods without obtaining LEO from the proper officer of Customs he is liable for the consequences - both the exporter and the CHA failed in the responsibility to comply with the requirement of Section 51 of the Customs Act 1961 and therefore they are liable to penalty under Section 114(iii) of the Customs Act. Thus the appellant has not made out a case for complete waiver of the pre-deposit of the penalties adjudged against them - Stay granted partly.

Summary

Issues:
1. Alleged violation of Section 40 and Section 51 of the Customs Act, 1962.
2. Liability to confiscation of goods under Section 113(g) and penalty under Section 114(iii) of the Customs Act.
3. Responsibility of exporter and CHA in ensuring compliance with Customs regulations.
4. Appeal for waiver of pre-deposit of penalties imposed.

Analysis:

Issue 1: Alleged Violation of Customs Act Sections
The case involved allegations of violation of Section 40 and Section 51 of the Customs Act, 1962. The appellant, an exporter and a Customs House Agent (CHA), faced penalties due to discrepancies in the shipping process. The vessel sailed before the "Let Export Order" (LEO) was issued, leading to a show cause notice citing non-compliance with Customs regulations.

Issue 2: Liability to Confiscation and Penalties
The liability to confiscation of goods under Section 113(g) and imposition of penalties under Section 114(iii) of the Customs Act were central to the case. The appellant argued that the shipping line's mistake led to the premature sailing of the vessel without the necessary clearance. However, the Revenue contended that penalties were justified as the goods were liable to confiscation due to non-compliance with Customs procedures.

Issue 3: Responsibility of Exporter and CHA
The responsibility of the exporter and the CHA in ensuring compliance with Customs regulations, specifically Section 51 of the Customs Act, was emphasized. The Customs Act mandates that goods must be made available for examination before export and loaded in the presence of a Customs officer. Failure to adhere to these requirements can render the goods liable to confiscation and attract penalties.

Issue 4: Appeal for Waiver of Pre-deposit
The appellant sought a waiver of the pre-deposit of penalties, arguing that they were not directly responsible for the shipping line's actions. However, the Tribunal held that both the exporter and the CHA failed in their responsibilities under the Customs Act. The Tribunal directed the appellant to make a partial pre-deposit of the penalties adjudged, with the balance amount waived upon compliance within a specified timeframe.

In conclusion, the judgment highlighted the importance of strict adherence to Customs regulations by exporters and CHAs to avoid liabilities and penalties. The decision underscored the significance of obtaining proper clearance before exporting goods and the consequences of non-compliance with statutory provisions.