2014 (3) TMI 883 - AT - Customs

Penalty for involvement in export of a consignment of red sanders wood, an item prohibited for export out of India - Revokation of CHA licence - Held that - The argument that section 113 will apply to only goods attempted to be exported and will not apply to this case because the attempt was successful is a very illogical argument. A successful export takes place only after attempt to export and if the goods were liable to confiscation for attempt to export it can be confiscated even after successful attempt so long as the goods could be brought back which has happened in this case. At any rate the attempt was not fully successful because the goods were brought back. Acting as a proxy for non-traceable persons and allowing the laws of the country to be flouted is not a matter to be encouraged. An argument that IE codes are assigned so that the code can be rented out for consideration is not an acceptable argument at all. By his own statement two consignments were exported in the past also. Such persons trying to enrich themselves by taking benefit of prohibitions on export, needs to be dealt with severely - Penalty imposed is low considering the value of goods. - penalty increased from ₹ 3,00,000/- to ₹ 5,00,000/- Penalty on CHA and revocation of his licence - Held that - Since he was not taking even the minimum care to avoid this type of incident from happening there is an omission on his part which is punishable under section 114 (i) of the Customs Act, 1962. Such an approach needs to be dealt with severely and the penalty as reduced by the Commissioner (Appeal) is not commensurate with his omissions of duties cast on him by CHALR, 2004. - If the omissions of duties cast on him have rendered any goods liable to confiscation penalty under section 114 (i) is justified. - penalty increased from ₹ 3,00,000/- to ₹ 5,00,000/- Penalty on G. Ravi, Proprietor of M/s. Deepak Logistics, Tuticorin. Shri Ravi had obtained an H card (Identity cum Authorization card) issued under Regulation 19(6) of CHLAR 2004 - Held that - Shri Ravi is a person who signed Annexure-A form for export of goods by Shri. George using blank signed forms given by Shri Rama Theena Thayalan. - he was aware of the manipulation of the contents in the container. - . In the case of economic offences, non-compliance with statutory obligations resulting in loss to the Government itself is punishable. - penalty increased from ₹ 2,00,000/- to ₹ 5,00,000/- Decided against all the applicants and partly in favor of revenue.

Summary

Issues Involved:
1. Legality of penalties imposed on individuals involved in the export of prohibited red sanders wood.
2. Applicability of Section 113 and 114 of the Customs Act, 1962.
3. Role and culpability of each appellant in the illegal export.
4. Justification for increasing or reducing the penalties imposed by the Commissioner (Appeals).

Detailed Analysis:

1. Legality of Penalties Imposed:
The adjudicating authority imposed penalties on individuals involved in the export of red sanders wood, a prohibited item. The Commissioner (Appeals) reduced these penalties, which were challenged by the individuals and the Revenue. The Tribunal considered all appeals together due to the commonality of facts.

2. Applicability of Section 113 and 114 of the Customs Act, 1962:
The argument that Section 113 applies only to goods attempted to be exported and not to successfully exported goods was rejected. The Tribunal clarified that successful export involves an attempt and goods can be confiscated if brought back, as in this case.

3. Role and Culpability of Each Appellant:

Shri S. Chandrasekaran:
Shri S. Chandrasekaran, proprietor of M/s. Kumari Coir Products, allowed his firm's name and Import Export Code (IEC) to be used by Shri George without verifying his credentials. He admitted to receiving Rs. 30,000 for this arrangement. The Tribunal found his role culpable as he facilitated the illegal export by acting as a proxy, thus violating the law. The penalty was increased to Rs. 5,00,000.

Shri Rama Theena Thayalan:
As the proprietor of M/s. Vector Freight Forwarders, a Customs House Agent (CHA), Shri Rama Theena Thayalan provided blank signed Annexure-A forms to Shri G. Ravi for export purposes. He failed to exercise due diligence as required under the Customs House Agents Licensing Regulations, 2004. The Tribunal found his actions non-bonafide and increased his penalty to Rs. 5,00,000.

Shri G. Ravi:
Shri G. Ravi, proprietor of M/s. Deepak Logistics, misused his H-card by filing shipping bills without proper authorization and verification. He was aware of the unusual delay in cargo arrival and failed to exercise caution. The Tribunal inferred his awareness of the manipulation and increased his penalty to Rs. 5,00,000.

4. Justification for Increasing or Reducing Penalties:
The Tribunal found the penalties reduced by the Commissioner (Appeals) insufficient given the severity of the offenses. The penalties were increased to Rs. 5,00,000 for each appellant to reflect the gravity of their actions and the value of the prohibited goods involved.

Conclusion:
The appeals filed by the individuals were rejected, and the appeals filed by the Revenue were partially allowed. The penalties on Shri S. Chandrasekaran, Shri Rama Theena Thayalan, and Shri G. Ravi were increased to Rs. 5,00,000 each, emphasizing the need for strict adherence to legal and regulatory obligations to prevent the export of prohibited items.