2018 (3) TMI 654 - AT - Customs

Smuggling - illegal export of red Sanders wood - penalty - Held that - In the present case the acts of the CHA could at best be charged for violation of the CHALR,2004 but in absence of evidence of their complicity in the act of attempt to illegal export of Red Sanders wood, penalty u/s 114(i) cannot be sustained. Penalty imposed on M/s Raghuvir Singh & Sons - Held that - merely authorizing M/s Chirag Enterprises to undertake the transportation from CWC-CFS-Gandhidham to the Port area, it was within the knowledge of the Appellant that the Roofing Tiles would be replaced with Red Sander Woods by the Proprietor of M/s Chirag Enterprises, Sh. Dev Kumar Kapta at Jamadar Wadi - penalty on M/s Raghuvir Singh & Sons u/s 114(i) of Customs Act, 1962 also not sustainable. Penalty u/s 114(i) of Customs Act, 1962 on the CHA M/s Act Forwarders and M/s Raghuvir Singh & Sons - Held that - the Sh. Dev Kumar Kapta has not been charged as a repeated Offender, to meet the ends of justice, penalty imposed on him is reduced to ₹ 5.00 lakhs - Appeals filed by M/s Act Forwarders and M/s Raghuvir Singh & Sons are allowed. Appeal allowed in part.

Issues Involved:
1. Legality of the penalties imposed under Section 114(i) of the Customs Act, 1962.
2. Authorization and role of Sh. Dev Kumar Kapta in the export process.
3. Involvement and liability of M/s Act Forwarders.
4. Involvement and liability of M/s Raghuvir Singh & Sons.

Detailed Analysis:

1. Legality of the Penalties Imposed Under Section 114(i) of the Customs Act, 1962:
The core issue revolves around the imposition of penalties under Section 114(i) of the Customs Act, 1962, for the attempted illegal export of Red Sanders Wood. The adjudicating authority had imposed personal penalties on Sh. Dev Kumar Kapta, M/s Act Forwarders, and M/s Raghuvir Singh & Sons for their alleged roles in aiding and abetting the illegal export.

2. Authorization and Role of Sh. Dev Kumar Kapta in the Export Process:
Sh. Dev Kumar Kapta filed a shipping bill for exporting Roofing Tiles, which were later replaced with Red Sanders Wood. The defense argued that Sh. Dev Kumar Kapta was authorized by the CHA, M/s Act Forwarders, to sign documents and handle work in the dock area. However, evidence indicated that Sh. Dev Kumar Kapta was involved in the logistics and transportation of the goods and had knowledge of the illicit activity. The Commissioner noted that Sh. Dev Kumar Kapta instructed his staff not to inquire about the whereabouts of Sh. Pradeep, the mastermind behind the smuggling attempt, indicating his complicity. The tribunal upheld the penalty on Sh. Dev Kumar Kapta but reduced it to ?5.00 lakhs, considering he was not a repeated offender.

3. Involvement and Liability of M/s Act Forwarders:
The CHA, M/s Act Forwarders, was penalized on the grounds that they had authorized Sh. Dev Kumar Kapta to operate on their behalf. However, the tribunal found that the CHA did not authorize Sh. Dev Kumar Kapta to file the shipping bill for the export of roofing tiles. The tribunal referred to several judgments, including Commissioner of Cus.(Exports), Chennai Vs. I. Sahaya Edin Prabhu (2015) and Swaroop Shipping Services Vs. C.C.(Exports) Chennai (2008), which held that penalties under Section 114(i) could not be imposed for mere negligence. The tribunal concluded that the acts of the CHA could only be charged under the CHALR, 2004, and not under Section 114(i) of the Customs Act, 1962. Thus, the penalty on M/s Act Forwarders was set aside.

4. Involvement and Liability of M/s Raghuvir Singh & Sons:
M/s Raghuvir Singh & Sons was penalized for allowing M/s Chirag Enterprises to undertake transportation, a task they were authorized to perform. The Commissioner observed that M/s Raghuvir Singh & Sons had a history of authorizing M/s Chirag Enterprises for transportation. However, there was no evidence to suggest that M/s Raghuvir Singh & Sons knew about the replacement of roofing tiles with Red Sanders Wood. The tribunal found no justification for penalizing M/s Raghuvir Singh & Sons under Section 114(i) of the Customs Act, 1962, and set aside the penalty.

Conclusion:
The tribunal modified the impugned order, setting aside the penalties on M/s Act Forwarders and M/s Raghuvir Singh & Sons. The penalty on Sh. Dev Kumar Kapta was sustained but reduced to ?5.00 lakhs, considering the overall circumstances and the absence of repeated offenses. The appeals filed by M/s Act Forwarders and M/s Raghuvir Singh & Sons were allowed, and the appeal filed by Sh. Dev Kumar Kapta was partly allowed.

(Pronounced in the open court on 12.03.2018)

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