2015 (2) TMI 694 - AT - Customs

Penalty u/s 114(iii) - Confiscation of goods - Held that - It is the shipping agency who is supposed to perform the job of loading of export consignments to the vessel who in the present case is M/s. Zim Integrated Shipping Services India (P) Ltd. The said shipping line was appointed by the foreign consignee M/s. Hanesbrands Inc. USA and payment for the same was also made by the said consignee. It is observed that as regards the shipping line is concerned they are not the authorised agent of exporter. Moreover, nothing was brought on record either in the show-cause notice or in the impugned order that the exporter is involved in the mistake of sailing of the vessel carried out by shipping line. It is also fact that whatsoever mistake has occurred there is no gain flowing to the exporter. It is only a procedural lapse which even does not involve any Revenue. In the same impugned order, the penalty was also imposed on the shipping line and the CHA who were directly involved in the job of loading of vessel and sailing thereof in the port area. Similar issue earlier came up before this Bench of this Tribunal in the case of Emirates Shipping Agencies (I) Pvt. Ltd. 2009 (3) TMI 395 - CESTAT, MUMBAI and Mohini Organics Pvt. Ltd. cited 2009 (2) TMI 184 - CESTAT, MUMBAI . - Following the case laws of Bombay High Court in Kusters Calico Machinery Ltd. (2010 (3) TMI 474 - BOMBAY HIGH COURT), I am of the view that the penalty on the exporter is not warranted - Decided in favour of assessee.

Summary

Issues:
1. Imposition of penalty under Section 114 (iii) of the Customs Act, 1962 for violation of Section 40 (a) due to loading and sailing of export consignment before the Let Export Order (LEO) was issued.

Analysis:

Issue 1: Imposition of Penalty under Section 114 (iii) for Violation of Section 40 (a)
The appeal challenged the penalty imposed on M/s. Pratibha Syntex Ltd. under Section 114 (iii) of the Customs Act, 1962 for loading and sailing an export consignment before the issuance of the Let Export Order (LEO). The appellant argued that the mistake was on the part of the shipping line, not them, as they followed statutory provisions and procedures correctly. They contended that there was no evidence of their involvement in the violation. The Revenue, however, argued that as the exporter's authorized agent, the Customs House Agent's (CHA) mistake could be attributed to the exporter. The Tribunal noted that the exporter was not directly involved in the loading and sailing mistake, which was primarily the responsibility of the shipping line. The Tribunal cited previous cases where penalties were imposed on shipping lines for similar violations. The Tribunal also referred to judgments where penalties on exporters were upheld due to lack of genuine attempts to prevent loading before LEO issuance. However, the Tribunal ultimately ruled in favor of the appellant, following the precedent set by the Bombay High Court, stating that the penalty on the exporter was unwarranted in this case.

This detailed analysis covers the key issues involved in the legal judgment, providing a comprehensive overview of the arguments presented by both parties and the Tribunal's reasoning for its decision.