2015 (2) TMI 690 - AT - Customs

Imposition of penalty on shipping agency - Mens rea - Non compliance of circular No.56/2004 cus dated 18/10/2004 - appellant submits that there is no mistake on their part as appellants have declared the correct description in IGM on the basis of import documents. - Held that - Appellant have not verified the correctness of the inspection report which was supposed to be issued by M/s Moody International Certification (India), which is specified agency as provided under the Handbook of Procedure, 2009. However, inspection report issued by the M/s Moody International Certification Tehran, which is not specified agency for carrying out pre-inspection of consignment of Heavy Melting scrap. On going through circular of 56/2004, it can be seen that the whole procedure and precautions was specified particularly in respect of melting scrap which has specific objective to avoid the casualties due to explosion of the explosive contained in the heavy melting scrap. The circular was issued after serious accident took place, wherein due to explosion 10 persons were died. So it is very obvious that precautions prescribed with the sole objective of saving of human lives. Therefore, heavy responsibility have been casted on the agency involved in importation and clearance of consignments of heavy melting scrap. In the present case the submission of the appellant that merely because of similar name of the pre-inspection agency, mistake has occurred on their part cannot accepted. Shipping line is duty bound to ensure that every consignment of metal scrap in shredded, compressed to loose form is accompanied by such a pre-shipment inspection certificate before it is loaded on the ship and failure of the such compliance, panel action was proposed. - mens rea is not required, in failure of such compliance. I am of the view that irrespective of any reason, if directions provided in the circular is not complied with, whether intentional or unintentional, shipping line is bound to face the consequences. As regard penalty on Shri Joy Francis, since he is directly involved in documentation as authorized by the shipping line, he is also equally responsible for the lapses made by his employer i.e. M/s. Cosco (I) Pvt. Ltd. In view of the above discussion, I am of the considered view that the penalties were correctly and legally imposed upon both the appellants - Decided against assessees.

Summary

Issues:
- Imposition of penalties under Section 112(a) of the Customs Act, 1962 on M/s. Cosco (India) Shipping Pvt. Ltd and Shri Joy Francis.
- Allegations of shipping dangerous goods without following instructions and violating Circular No. 56/2004.
- Appeal against penalties upheld by the Commissioner of Customs (Appeals) Mumbai Zone-I.
- Verification of correctness of inspection report by the appellant.
- Responsibility of the shipping agent to provide correct information of import consignments.

Analysis:

The judgment revolves around two appeals challenging the imposition of penalties under Section 112(a) of the Customs Act, 1962 on M/s. Cosco (India) Shipping Pvt. Ltd and Shri Joy Francis for their involvement in the import of 'Heavy Melting Scrap.' The Commissioner of Customs (Appeals) Mumbai Zone-I upheld the penalties imposed by the adjudication order, leading to the appeals before the Appellate Tribunal CESTAT Mumbai.

The primary issue raised was the failure of the appellants to comply with the instructions laid down in Circular No. 56/2004, which mandated precautions for the import of Heavy Melting Scrap to prevent casualties due to explosions. The circular emphasized the responsibility of the shipping line to ensure pre-shipment inspection certificates for such consignments. The judgment highlighted that the circular aimed at safeguarding human lives following a fatal accident. The Tribunal emphasized that the shipping line's duty to adhere to these precautions is crucial, irrespective of intent, and non-compliance would result in penal action.

The appellant contended that a mistake occurred due to confusion between two similarly named inspection agencies. However, the Tribunal ruled that such confusion did not absolve the shipping line from its obligations under the circular. It was emphasized that the shipping agent must verify the correctness of inspection reports from specified agencies as per the Handbook of Procedure, 2009. The judgment underscored that the penalties were rightfully imposed on both appellants for failing to comply with the circular's directives.

Moreover, the judgment addressed the role of Shri Joy Francis, holding him equally responsible for the lapses made by M/s. Cosco (India) Shipping Pvt. Ltd. as he was directly involved in the documentation process. The Tribunal concluded that the penalties imposed were justified and legally sound, leading to the dismissal of both appeals. The analysis highlighted the strict liability imposed on shipping agents in ensuring compliance with safety regulations, emphasizing the paramount importance of following prescribed procedures in hazardous cargo handling.

In conclusion, the judgment underscored the significance of adherence to regulatory directives in the importation and clearance of goods, particularly in cases involving potentially dangerous materials. The detailed analysis provided a comprehensive overview of the legal reasoning behind upholding the penalties imposed on the appellants, emphasizing the stringent responsibilities placed on shipping agents in ensuring compliance with safety protocols to safeguard against potential risks and hazards.