2017 (7) TMI 830 - AT - Customs

Smuggling - attempted export of red sanders - Held that - Incidence of seizure of the red sanders by the investigation brought role of the smuggling racket of which they were members. Plea of the appellants that they were innocent could have received consideration had they brought out the illegal act of Himadri to the knowledge of Customs. But they did not. Rather all of them had concerted effort to deceive Customs. The so called exporter disowned the offending consignment attempted to be exported. Penalties - Held that - Appellants acted in connivance with the racket till the offending container was seized by the investigation resulting in discovery of smuggled goods. They could not lead any evidence to prove their detachment to the attempted export of the offending goods. They all caused prejudice to Customs and submitted to the jaws of law for appropriate penalties. Their role was contributory to the confiscation of smuggled goods. Accordingly, imposition of penalties on all of them does not appear to be unreasonable when their role in abetting and aiding smuggling was proved by investigation successfully and their connivance came to record. The appellants in this case were intimately connected with the smuggling racket without ascertaining the identity of exporter and owner of IEC. No authorization was obtained by them to file shipping bill. Evidence came to light proving their predetermined mind to cause loss to the exchequer - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Attempted export smuggling of prohibited goods (red sanders).
2. Tampering and substitution of declared cargo.
3. Misuse of Importer Exporter Code (IEC).
4. Role of Customs House Agents (CHA) and their involvement.
5. Penalties imposed on the appellants.

Detailed Analysis:

1. Attempted Export Smuggling of Prohibited Goods:
The investigation revealed that there was an attempt to export red sanders, which are prohibited goods. The container No. HDMU 2388598, loaded on a trailer, was intercepted while in transit to Chennai Port. Upon examination, 281 logs of red sanders weighing 5.560 MT and valued at ?2,50,20,000 were found concealed under the declared cargo of magnesium sulphate. These goods were seized and confiscated under Sections 113(d), 113(h), and 113(k) of the Customs Act, 1962.

2. Tampering and Substitution of Declared Cargo:
The investigation found that the container was tampered with without disturbing the liner and customs seal. The red sanders were substituted for part of the declared goods inside the cargo. The tampering was confirmed by the Container Surveyor's report. The container used for smuggling was also seized and confiscated.

3. Misuse of Importer Exporter Code (IEC):
The investigation into the filing of Shipping Bill No. 2657917 dated 12/05/2014 revealed that the IEC of M/s. A.S.P. Senna Traders was misused. The actual allottee of the IEC had neither filed the shipping bills nor authorized anyone to do so on their behalf. Further investigation found that another consignment under Shipping Bill No. 2701019 dated 13/05/2014 and Shipping Bill No. 2025726 dated 05/04/2014 also misused the IEC of M/s. A.S.P. Senna Traders.

4. Role of Customs House Agents (CHA) and Their Involvement:
The investigation revealed that M/s. T. Shanmuga Sundaram, CHA, and M/s. G. Masilamani, CHA, were involved in aiding and abetting the smuggling attempt. They allowed their firm names and CHA licenses to be used by the smuggling racket. The appellants argued that they were not involved and had no mens rea or malafide intent. However, the evidence showed their active role in the smuggling attempt.

5. Penalties Imposed on the Appellants:
The adjudicating authority imposed penalties on the appellants under Section 114(i) of the Customs Act, 1962. The penalties were as follows:
- G. Masilamani, CHA: ?10,00,000
- V. Sundaramoorthy: ?5,00,000
- P. Ashok Kumar: ?2,00,000
- T. Shanmuga Sundaram: ?10,00,000

The appellants' arguments were dismissed as the evidence showed their active involvement in the smuggling attempt. The penalties were upheld as reasonable given their role in aiding and abetting the smuggling.

Conclusion:
The judgment concluded that the appellants were intimately connected with the smuggling racket and had a predetermined intent to cause loss to the exchequer. The evidence gathered by the investigation could not be discarded, and the appellants failed to prove their innocence. The adjudication and penalties imposed were upheld, and the appeals were dismissed.