2015 (1) TMI 405 - AT - Customs

Export of red sanders - goods were not covered by the valid CITES permit as per the format - shipping bill invoice showed M/s. Ocean Trading Company, Hong Kong as the buyers name and not to M/s. Koyei as mentioned in the Public Notice. The Bill of Lading shows the destination as Hong Kong, who is an intermediary - Confiscation of goods - Imposition of redemption fine and penalty - Held that - The Director General of Foreign Trade issued licences in respect of export of Red sanders wood in log form. In this context, we find that the licences would indicate that M/s. Andhra Pradesh Forest Development Corporation Ltd., is authorized to export Red sanders to M/s. M/s.Kyoei Trading Company, Japan and M/s. Radeep Services, Singapore and the destination of export as all permissible destinations. The licences were issued subject to fulfillment of all the conditions specified in Public Notice and subject to necessary clearance under CITES. Public Notice categorically imposed the condition that the export shall be made only to M/s.Kyoei Trading Company, Japan and M/s.Radeep Services, Singapore. It is also stated that no resale of the goods permitted to nobody in any circumstances. Public Notice categorically mentioned that there must not be any intermediary and middle man. On plain reading of the Public Notice, it is clearly apparent that goods will be exported directly to both the companies and no intermediary or middle men would be allowed to enter into the transaction. We have noticed that there is no mention of name of M/s. Ocean Trading Company in the purchase order and the agreement between the parties. The word intermediary means an agent. The licences allowed to export to permissible destinations. So, the licences were issued to export Red sanders to both the companies in their permissible destination. There is restriction that the goods cannot be exported to the agent. In view of that, we do not find any force in the submission of the Ld. Advocate. It is seen that the name of M/s. Ocean Trading Company was mentioned at the time of the export of the goods in the invoices and shipping bills. This practice was followed by the APFDC in the past exports and such irregularity cannot be accepted lightly. They have not placed any material to substantiate their contention. It is clearly established that the appellants exported the goods in violation of the condition of the Public Notice as well as licences and therefore, confiscation of goods under Section 113(d) & (l) of the Customs Act, 1962. The DIU officers detected the violation of the Public Notice and the licences. The Hon ble High Court had directed to process adjudication proceedings and the Hon ble Court also directed to furnish bank guarantee in respect of redemption fine and penalty - We agree with the findings of the adjudicating authority that the Vice Chairman and the Managing Director of the appellants are responsible for such irregularity and the CITES inspection report was given by the CITES authority only after 31.07.2007, which was not provided along with the Shipping Bill, which is also a clear violation against the Public Notice and the condition of licences. They cannot absolve their responsibility and liability for violation of conditions of Public Notice and Licences. Therefore, penalty on the Chairman and the Managing Director of APFDC and Shri P.V Shashidhar, Managing Director, M/s. Andhra Fogaku Pvt. Ltd. are warranted. - Decided against the assesse.

Summary

Issues Involved:
1. Export prohibition under Foreign Trade Policy.
2. Validity and compliance with CITES certificates.
3. Involvement of intermediaries in export transactions.
4. Amendment of shipping bills and revalidation of CITES certificates.
5. Confiscation and imposition of fines and penalties.
6. Appeals against adjudication orders.

Detailed Analysis:

1. Export Prohibition under Foreign Trade Policy:
The export of Red sanders is prohibited under the Foreign Trade Policy Schedule 2, 2004-2009, as the goods are covered under the Convention on International Trade in Endangered Species (CITES) in Appendix II. The Ministry of Commerce and Industry, Govt. of India, permitted the export of Red Sanders in log form by M/s. Andhra Pradesh Forest Development Corporation (APFDC) to specific companies (M/s. Kyoei Trading Company, Japan, and M/s. Radeep Services, Singapore) under Public Notices No. 94/2006 and 07/2007.

2. Validity and Compliance with CITES Certificates:
The consignments were detained by the Customs authorities due to issues with the CITES permits. The CITES certificates were not valid at the time of export, leading to their revalidation by the order of the Hon'ble High Court. The High Court permitted the amendment of shipping bills and revalidation of the CITES certificates, allowing the export of goods upon executing a bond and bank guarantee.

3. Involvement of Intermediaries in Export Transactions:
The adjudicating authority observed violations of the Public Notices, which mandated that there must not be any intermediary or middle man in the transactions. The goods were exported to M/s. Ocean Trading Company, Hong Kong, an intermediary, instead of directly to the specified consignees. This was a clear violation of the conditions stipulated in the Public Notices and the export licenses.

4. Amendment of Shipping Bills and Revalidation of CITES Certificates:
The Hon'ble Madras High Court directed the amendment of the shipping bills and revalidation of the CITES certificates. The Court observed that there was a typographical error in the Shipping Bills, where the name of the consignee was incorrectly mentioned. The Court allowed the export of goods upon furnishing a bank guarantee.

5. Confiscation and Imposition of Fines and Penalties:
The Commissioner of Customs (Export-Seaport), Chennai, confiscated the goods under Section 113(d) and (l) of the Customs Act, 1962, and imposed redemption fines and penalties on the involved parties. The penalties were imposed on the Vice Chairman and Managing Director of APFDC, and other individuals associated with the export transactions. The Tribunal found that the appellants exported the goods in violation of the conditions of the Public Notices and licenses, justifying the confiscation and penalties.

6. Appeals Against Adjudication Orders:
The Tribunal modified the adjudication orders, reducing the redemption fines and penalties imposed on the appellants. The appeal filed by M/s. Kyoei Trading Co. Ltd., Japan, was dismissed as non-maintainable. The penalties on certain individuals were set aside, considering their roles and involvement in the transactions.

Conclusion:
The Tribunal upheld the confiscation of goods and imposition of fines and penalties for violations of the Public Notices and export licenses. The penalties were reduced for some appellants, and the appeal by M/s. Kyoei Trading Co. Ltd. was dismissed. The Tribunal emphasized the importance of adhering to the conditions stipulated in the Public Notices and licenses to prevent illegal trade and ensure compliance with international regulations.