2015 (12) TMI 648 - AT - Customs

Violation of Section 40 and Section 51 of the Customs Act, 1962 - confiscation of the goods under Section 113 (g) and to impose penalty under Section 114(iii) - Held that - exporter and CHA have no control over the goods, once the goods enter into the port of export. I also find that the matter is squarely covered by the decision of the Hon ble Bombay High Court in the case of Kusters Calico Machinery Ltd. (2010 (3) TMI 474 - BOMBAY HIGH COURT), relied upon by the appellant. Accordingly, following the ratio of Kusters Calico Machinery Ltd. (supra), I set aside the impugned order - Decided in favour of assessee.

Summary

Issues:
1. Alleged violation of Sections 40 and 51 of the Customs Act, 1962.
2. Liability to confiscation of goods under Section 113(g) and penalty under Section 114(iii) of the Customs Act.
3. Control and responsibility of exporter and Customs House Agent (CHA) over goods during export.
4. Interpretation of legal provisions regarding the liability for penalty in case of goods liable to confiscation.
5. Applicability of precedent set by the Hon'ble Bombay High Court in similar cases.

Analysis:

1. The appeals arose from an Order-in-Appeal passed by the Commissioner of Customs (Appeals), Mumbai-II, concerning the alleged violation of Sections 40 and 51 of the Customs Act, 1962. The appellants, an exporter and a CHA, faced penalties for a shipping bill processed after the vessel had sailed, leading to a show cause notice citing violations and liability to confiscation of goods under Section 113(g) and penalties under Section 114(iii) of the Customs Act.

2. The appellant argued that the mistake leading to the sailing of the container without the Let Export Order (LEO) was solely the shipping line's fault, and they should not be held responsible. Citing a precedent from the Hon'ble Bombay High Court, the appellant contended that similar circumstances had been ruled in favor of the exporter previously. The Revenue, however, maintained that once goods are liable to confiscation, penalties are inevitable, emphasizing the responsibilities of exporters and CHAs under Sections 50 and 51 of the Customs Act.

3. The Tribunal, after considering both parties' arguments and the case records, found that exporters and CHAs do not retain control over goods post-entry into the port of export. Relying on the precedent set by the Hon'ble Bombay High Court in a similar case, the Tribunal concluded that the appellants could not be held accountable for the shipping line's error. Consequently, the impugned order was set aside, and the appeals by the appellants were allowed with consequential benefits.

This judgment clarifies the division of responsibilities between exporters, CHAs, and shipping lines in ensuring compliance with Customs regulations during the export process. It also underscores the significance of legal precedents in determining liability and penalties in customs-related cases, providing guidance for future similar disputes.