2017 (9) TMI 540 - AT - Customs

Penalty u/s 112A of the Customs Act, 1962 - smuggling - cigarettes - cigarettes of foreign origin in huge quantities were being smuggled into the country by concealing them in container by mis-declaring them as containing car seat cushions - the sole ground for imposition of penalty on M/s Eminence is that they have given wrong description of the goods in the Bill of Lading - Held that - Bill of Lading has not been issued by the appellant and they were pure agent of M/s Alpine Shipping who has issued the Bill of Lading - As no role has been explained by the authorities below alleging the appellant for the act of omission and commission which resulted leading to mis-declaration, therefore, the penalty on the appellant is not imposable. As Revenue has failed to produce any evidence on record that the appellant was in collusion for mis-declaration and description of the goods in question, therefore penalty on the appellant is not imposable. Reliance placed in the case of Commissioner of Custom (Import & General) , New Delhi Versus Buhariwal Logistics & Another 2015 (12) TMI 1149 - DELHI HIGH COURT , where it was held that the appellant has taken due diligence while issuing delivery order, therefore, no penalty can be imposed on the appellant - Admittedly, in this case, it was not in the knowledge of the appellant that they were having knowledge of illegal import made by the importer. In that circumstances, relying on the case of Buhariwala Logistics, the penalty on the appellant are not imposable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Penalty imposed under Section 112A of the Customs Act, 1962 on appellants for smuggling cigarettes of foreign origin into the country by mis-declaring them as car seat cushions.

Analysis:
1. The case involved the smuggling of cigarettes of foreign origin into the country by mis-declaring them as car seat cushions in a container. The Directorate of Revenue Intelligence (DRI) obtained information about the smuggling, leading to the examination of the container and recovery of 33,92,000 cigarettes. Despite no legal importation documents being produced, penalties were imposed under Section 112A of the Customs Act, 1962 on the appellants.

2. The first appellant, M/s Eminence Container Lines, was penalized for allegedly facilitating mis-declaration by issuing a delivery order to the consignee. However, it was argued that they were a pure agent of M/s Alpine Shipping and had no role in preparing the false Bill of Lading. As they did not issue the Bill of Lading, the penalty was deemed not imposable due to lack of evidence linking them to mis-declaration.

3. The second appellant, Sh. Anoop Mithas, was penalized for not obtaining the photo ID of the person receiving the delivery order. The appellant contended that all relevant KYC documents were submitted, and due diligence was exercised while issuing the delivery order. Citing a Delhi High Court decision, it was argued that the penalty was unjustified.

4. The Revenue argued that penalties were warranted as the appellants were involved in mis-declaration. They claimed that M/s Eminence Container Lines issued the incorrect Bill of Lading and Sh. Anoop Mithas failed to obtain proper identification of the recipient, allowing the actual importer to evade customs.

5. The Tribunal found that penalties were unjustified as there was no evidence implicating the appellants in the mis-declaration. M/s Eminence Container Lines acted as a pure agent, and Sh. Anoop Mithas demonstrated due diligence. Citing the case of Buhariwal Logistics, it was concluded that penalties were not warranted as the appellants were unaware of the illegal activities of the importers.

6. Ultimately, the Tribunal set aside the impugned orders imposing penalties on the appellants, allowing the appeals with consequential relief. The judgment highlighted the importance of tangible evidence linking the appellants to the illegal activities for penalties to be imposed.