2015 (1) TMI 119 - HC - Customs

Penalty on CHA - Goods being loaded on foreign going vessel without having obtained the necessary LEO from the Customs - Held that - Tribunal has considered all relevant facts and in particular, relied upon its own decisions in identical matters where CHA such as the Appellant have been imposed penalty for the goods being loaded on foreign going vessel without having obtained the necessary LEO from the Customs. The Tribunal also relied upon the Customs Manual which specifically casts an obligation on the exporter or his agent to have the goods examined by the Customs. In this case, the CHA was obliged to present the goods to the shed appraiser (export) in docks for examination and it is only after examination of the goods that an LEO is passed. In this case, the impugned order records the fact that the Appellant was at all times aware that the vessel was to sale out of India on 9th October, 2009 and, therefore, ought to have ensured that the goods are examined before they are loaded on to the foreign going vessel. The alternate submission in respect of absence mens rea was also considered by the Tribunal and on interpretation of Section 114 of the Act recorded a prima facie finding that there is no requirement of mens rea under Section 114 of the Act. The reliance upon the admission of an appeal by this Court from an order of the Tribunal at the final hearing for purposes of dispensing with predeposit is inappropriate. In fact, the Tribunal had held against the Appellant on a similar facts and, therefore, this itself would warrant a deposit. - deposit of 25% of the penalty of ₹ 7 lakhs imposed upon the Appellant is reasonable in the present facts. Thus, no substantial question of law arises for consideration - Decided against the appellant.

Summary

Issues:
1. Challenge to order directing predeposit of penalty by Customs Tribunal.
2. Questions of law raised regarding the imposition of penalty on the Custom House Agent (CHA).
3. Appellant's contention of absence of mens rea and undue hardship in predeposit requirement.
4. Interpretation of Section 114 of the Customs Act, 1962 regarding mens rea.
5. Consideration of Tribunal's previous decisions and Customs Manual in imposing penalty.
6. Applicability of proviso to Section 129E of the Act in dispensing with predeposit.
7. Justification of 25% penalty deposit in the present case.

Analysis:

1. The appeal challenged the Customs Tribunal's order directing the appellant to predeposit 25% of the penalty imposed by the Commissioner of Customs for entertaining the appeal on merits under Section 130 of the Customs Act, 1962. The appellant raised questions regarding the appropriateness of the predeposit requirement, especially concerning the loading of goods without Let Export Order (LEO) and the liability of the Custom House Agent (CHA) in such situations.

2. The issues raised included whether the Tribunal correctly imposed a penalty on the CHA under Section 114(iii) of the Act and whether the CHA could be held responsible for the actions of others leading to a violation. The appellant contested the imposition of the penalty, citing lack of knowledge and mens rea, and argued for a complete waiver of the penalty predeposit.

3. The appellant argued that the absence of mens rea and the inability to control the goods once they entered the docks should exempt them from the predeposit requirement. The Tribunal considered the appellant's submissions but upheld the predeposit order based on previous decisions and the Customs Manual's obligations on the CHA regarding examination of goods before loading.

4. The Tribunal interpreted Section 114 of the Act, stating that mens rea is not a requirement for imposing penalties, and relied on its findings from similar cases involving CHAs and LEO violations. The Tribunal emphasized the CHA's duty to ensure proper examination of goods before loading on foreign vessels, irrespective of mens rea, and justified the 25% penalty deposit as reasonable in the circumstances.

5. The Tribunal's decision was based on a thorough consideration of facts, previous judgments, and legal provisions, leading to the dismissal of the appeal. The Tribunal's observations were specific to the appeal and should not hinder further examination of merits during the final hearing. The appellant was granted an extension to make the penalty deposit, ensuring the appeal's disposal on its merits in due course.