2014 (9) TMI 1213 - AT - Customs

Reduction in quantum of penalty u/s 117 of CA - Allegation of guilty of violating the Facility Notice - HELD THAT - Perusing of copy of the Facility Notice No. 69/2011, it is found that it nowhere refers to the Section 141(2) of the Customs Act. Further, in the facts and circumstances, it is found that the show-cause notice is vague, as the gist of allegation and period is not found mentioned. The whole proceedings are vitiated for lack of proper show-cause notice. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Imposition of penalty under Section 117 of the Customs Act, 1962 on the shipping agent for contravention of Facility Notice.
2. Validity of the show-cause notice issued to the shipping agent.
3. Interpretation of the Facility Notice No. 69/2011 under Section 141(2) of the Customs Act.

Analysis:

Issue 1: Imposition of Penalty
The appellant, a shipping agent, filed an appeal against the penalty imposed under Section 117 of the Customs Act, 1962. The penalty was reduced from Rs. 1 lakh to Rs. 50,000 by the Commissioner of Customs (Appeals). The appellant contended that the penalty was unjust as there was no contravention of the Customs Act. The appellant highlighted the obligation to return containers to the shipping line within six months and the additional costs incurred for monitoring containers moved to different Container Freight Stations (CFS). The appellant argued that the penalty was not justified and cited a Tribunal's decision in a similar case. The Tribunal found merit in the appellant's arguments and set aside the penalty, ruling in favor of the appellant.

Issue 2: Validity of Show-Cause Notice
The show-cause notice issued to the shipping agent was challenged on grounds of vagueness and lack of specifics regarding the complaint. The appellant requested a copy of the complaint letter to effectively respond to the notice, but it was not provided. The Tribunal noted that the notice lacked essential details, rendering the proceedings flawed. The Tribunal held that the vague notice vitiated the entire process, leading to the setting aside of the penalty and the impugned order.

Issue 3: Interpretation of Facility Notice
The Facility Notice No. 69/2011, issued under Section 141(2) of the Customs Act, outlined procedures for container movement to CFS. However, upon review, the Tribunal observed that the notice did not reference Section 141(2) of the Customs Act. The Tribunal found discrepancies in the notice and concluded that it did not provide clear allegations or timelines. Consequently, the Tribunal invalidated the notice and overturned the penalty imposed on the shipping agent, granting relief in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the shipping agent, setting aside the penalty and the impugned order due to the vague show-cause notice and discrepancies in the Facility Notice. The judgment emphasized the importance of clear and specific notices in customs proceedings to ensure fairness and procedural compliance.