2015 (1) TMI 1032 - HC - Customs

Attempt to smuggle Red Sander Wooden Logs - Misdeclaration of goods - penalty under Section 114(i) - Held that - Tribunal has rendered a categoric finding that there is no finding of a positive role of the first respondent in the attempt to smuggle out red sander wooden logs. Even in the order of the Original Authority, it is held that the custom house agent has not discharged his duty in the normal course of his service. As rightly observed by the Tribunal, for failure to discharge functions as a Custom House Agent, penalties are provided in the Customs House Agents Licensing Regulations. Therefore, imposition of penalty under Section 114(i) of the Customs Act is unwarranted. We, therefore, find no reason to differ with the finding of the Tribunal - Decided against Revenue.

Summary

Issues:
- Appeal against Final Order of Central Excise and Service Tax Appellate Tribunal
- Alleged smuggling of Red Sanders Wooden logs
- Role of Customs House Agent in facilitating smuggling
- Imposition of penalty under Section 114(i) of the Customs Act

Analysis:

1. Appeal against Final Order of Central Excise and Service Tax Appellate Tribunal:
The appeal was filed by the department against the Final Order passed by the Tribunal, challenging the imposition of penalty under Section 114(i) of the Customs Act on the first respondent. The Tribunal had set aside the penalty, citing lack of evidence showing the first respondent's positive role in the attempted smuggling of Red Sanders Wooden logs.

2. Alleged smuggling of Red Sanders Wooden logs:
The case involved the interception of a container declared to carry Potassium Feldspar Lamps but found to contain Red Sanders Wooden logs. The Original Authority held two individuals directly responsible for the smuggling attempt and imposed penalties. However, the Tribunal found no concrete evidence implicating the first respondent in the smuggling operation, leading to the appeal by the department.

3. Role of Customs House Agent in facilitating smuggling:
The main contention was that the first respondent, acting as a Customs House Agent, failed to verify the authenticity of documents, enabling unauthorized access to customs clearing formalities and aiding in the smuggling of prohibited goods. The Tribunal emphasized that penalties for such failures are covered under Customs House Agents' Licensing Regulations, not under Section 114(i) of the Customs Act.

4. Imposition of penalty under Section 114(i) of the Customs Act:
The Tribunal's decision to set aside the penalty was based on the absence of evidence showing the first respondent's direct involvement in the smuggling attempt. The Tribunal highlighted that penalties for failing to discharge duties as a Customs House Agent are governed by specific regulations, and without clear proof of abetment in the smuggling operation, the imposition of penalty under Section 114(i) was deemed unjustified.

In conclusion, the High Court dismissed the appeal, upholding the Tribunal's decision to set aside the penalty on the first respondent due to the lack of evidence demonstrating his active participation in the attempted smuggling of Red Sanders Wooden logs. The Court concurred with the Tribunal's interpretation that penalties for Customs House Agents' failures are regulated separately, and the imposition of penalty under Section 114(i) of the Customs Act was deemed inappropriate in this case.