2016 (7) TMI 644 - AT - Customs

Diversion of goods meant for export to DTA - export of High Carbon Ferro Chrome (HCFC) - the exporter or CHA failed to inform the department till the matter came to light through news papers - The adjudicating authority refrained from confiscating the missing cargo as it was not physically available for confiscation. It was observed further that though M/S GMR Industries acted in a negligent manner in not insisting on weighing the cargo when it reached the port premises, however, as they applied for DEPB credit only for actual quantity exported the same established their bonafide that they did not intend to benefit in any unjust manner. The adjudicating authority did not impose penalty on M/S GMR Industries on such finding. Held that - There is absolutely no evidence to show that M/S GMR Industries had any direct involvement in short shipment or that they had tried to make any illegal gain. In fact as soon as they came to know of the less quantity, they have initiated internal enquiry by seeking explanation from CHA, surveyor, transporters etc. They also filed police complaint. The delay in informing the department in our opinion is only an inadvertent lapse as found by the Commissioner. The goods were rightly not confiscated as they were not physically available. We find no merit in the appeal. - Decided against the revenue.

Summary

Issues Involved:
- Confiscation of goods due to shortage in weight for export
- Imposition of penalties on involved parties
- Negligence of exporters in handling the cargo
- Applicability of DEPB scheme and its impact on the case

Confiscation of Goods:
The case revolved around the shortage in weight of exported goods, leading to a discrepancy between the declared and actual quantity. The department contended that the unexported quantity was liable for confiscation under the Customs Act. However, the Commissioner refrained from confiscating the goods due to their unavailability for physical confiscation and the absence of revenue implications. The decision was based on the lack of evidence to support direct involvement or intent to benefit illegally by the exporting party.

Imposition of Penalties:
Penalties were imposed on certain entities involved in the export process. The Commissioner imposed penalties on SGS India Limited and an individual in accordance with specific sections of the Customs Act. However, no penalty was imposed on GMR Industries, the exporting party, based on the finding that they had applied for DEPB credit only for the actual quantity exported, demonstrating a lack of malicious intent.

Negligence of Exporters:
The judgment highlighted the negligence of the exporting party in handling the cargo, particularly in not ensuring the weighing of the cargo upon reaching the port premises. Despite this negligence, the Commissioner found that the exporters' actions did not indicate a deliberate attempt to benefit unjustly. The delay in informing the Customs Department about the shortage was considered an inadvertent lapse rather than intentional misconduct.

Applicability of DEPB Scheme:
The exporters' application for DEPB for the actual quantity exported played a significant role in the case. It was noted that the exporters did not apply for DEPB for the full quantity, indicating a lack of fraudulent intent. This aspect, coupled with the exporters' proactive steps upon discovering the shortage, contributed to the decision not to impose penalties on GMR Industries.

In conclusion, the appellate tribunal upheld the Commissioner's order, dismissing the appeal. The decision was based on the lack of evidence implicating GMR Industries in any illegal activities related to the shortage in exported goods. The judgment emphasized the inadvertent nature of the exporters' lapses and the absence of malicious intent in their actions.