2017 (3) TMI 407 - AT - Customs

Imposition of penalty u/s 114 (i) and 114AA of the CA, 1962 - Smuggling - red sanders - The Custom House Agent and Freight Forwarders had also hand in glove with the smuggling racket who were also conscious of the smuggling activity in respect of the offending goods - Held that - The appellant did not inform the investigating authority about the modus operandi of the racket. Appellant was quite aware that a 20 feet container could conveniently carry logs of large size. Still he kept quite when the declared goods of yarn does not require such a huge and long container. That rules out transport of yarn. Appellant also did not disclose identity of Rajesh Gupta nor cooperated with the investigation to unearth the smuggling racket. Daniel Raj, the appellant was Managing Partner of CHA M/s. Jay Yess Agency. He in his statement dated 2.12.2011 admitted that the document given by T. Mariappan in respect of the attempted export was submitted by him to customs. When he was CHA, he was expected to be aware about the existence of Excise Range IVE. He did not inform the Customs or Excise authorities about forgery and fabrication of documents accompanying the offending goods. He also did not inform about use of false seal used to seal the container. This proved his ulterior motive for personal gain perpetuating the offence of attempt to export red sander - A person acting on the advice of another runs in risk if he does not ascertain veracity of the advice. Doctrine of Caveat Emptor makes the appellant liable under law. Customs law expects a CHA to be trustful to Customs. Non-disclosure of material facts and conspiracy against Customs brings him to the fold of law in view of both oral and documentary evidence came up against appellant. Appellant s conscious knowledge and intimacy to the smuggling surfaced with echoed evidence. Conduct of the appellant showed his hand in glove with the smuggling racket to act to the detriment of Customs. Accordingly, appellant s plea of innocence fails. He deceived Customs. His deception caused peril to the interest of Revenue. Penalty upheld - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Imposition of penalty under Section 114(i) and Section 114AA of the Customs Act, 1962.
2. Alleged involvement in the illegal export of red sanders.
3. Misuse of IEC code and fabrication of documents.
4. Appellant's defense against the charges.
5. Revenue's evidence and arguments.

Issue-Wise Detailed Analysis:

1. Imposition of Penalty under Section 114(i) and Section 114AA of the Customs Act, 1962:
The appellant challenged the penalty of ?5,00,000 imposed under Section 114(i) and Section 114AA of the Customs Act, 1962. The adjudicating authority found the appellant to be a conduit in the attempted illegal export of red sanders, justifying the penalty.

2. Alleged Involvement in the Illegal Export of Red Sanders:
The adjudication order revealed that a group, including Rajesh Gupta and the appellant, attempted to illegally export 9.89 MTs of red sanders using fabricated documents and a false seal of a non-existent Excise Range. The appellant was found to be directly, consciously, and intimately involved in the smuggling racket.

3. Misuse of IEC Code and Fabrication of Documents:
The investigation found that the IEC code of M/s. Shiva Tex Yarn, Coimbatore, was misused to export red sanders falsely declared as "Cotton Grey Sheeting." The documents and seals used were fabricated, and the truck used for transportation had a false registration number. The appellant, as a CHA, was expected to verify the authenticity of the documents but failed to do so.

4. Appellant's Defense Against the Charges:
The appellant argued that he acted in good faith based on the documents provided by the forwarder, Mariappan, and had no knowledge of the illegal contents. He claimed innocence, stating he did not contravene any provisions of the Customs Act, 1962, and had no prior knowledge or intention to export red sanders. He also argued that no evidence was presented to prove his involvement or any pecuniary advantage gained from the attempted export.

5. Revenue's Evidence and Arguments:
Revenue presented a detailed chain of evidence, including statements and documents, proving the appellant's conscious involvement in the smuggling attempt. The investigation revealed that the appellant failed to verify the authenticity of the documents and the existence of the Excise Range. The appellant's silence and non-cooperation with the investigation were seen as evidence of his involvement. Revenue argued that the appellant facilitated the smuggling and deceived Customs, justifying the penalty imposed.

Conclusion:
The tribunal dismissed the appeal, stating that the appellant's plea of innocence did not sustain against the evidence presented. The appellant's involvement in the smuggling racket and failure to verify the documents and inform the authorities were seen as deliberate actions for personal gain. The penalty of ?5,00,000 imposed under Section 114(i) and Section 114AA of the Customs Act, 1962, was upheld.