2020 (2) TMI 1261 - AT - Customs

Imposition of penalty u/s 114(i) and 114AA of the Customs Act, 1962 - export of prohibited items - case of appellant is that appellant was virtually ignorant of the said activities of the Marketing Manager and the appellant had not given any instruction to the marketing staff to export the prohibited items - HELD THAT - In this case prohibited items are being exported but the same was intercepted. The only defense of the appellant was that export was done by the Marketing Manager without his knowledge and consent and he had not given any instruction to his Marketing staff to export the prohibited items. This defense does not inspire confidence. It is not convincing that the Marketing Manager has exported the prohibited goods without the knowledge of the appellant under whom the Marketing Manager is working. The penalty imposed is also not very exorbitant - Appeal dismissed - decided against appellant.

Summary

Issues:
Penalty imposition under Sections 114(i) and 114AA of the Customs Act, 1962 for exporting prohibited items without the knowledge and consent of the appellant.

Analysis:
The appeal challenged an order imposing a penalty of ?1,50,000 under Sections 114(i) and 114AA of the Customs Act, 1962 on the appellant for exporting rice and wheat products without their knowledge. The Commissioner of Customs had confiscated the products with the option to redeem them on payment of fines. The appellant argued that the Marketing Manager exported the items without their consent due to pressure from overseas clients, claiming no mens rea on their part. The appellant relied on the case of Anchor Logistics v. CC - 2013 (290) E.L.T. 334 (Guj.) to support their defense. However, the Commissioner upheld the penalty, noting that the export of prohibited items was admitted, and the appellant's defense of lack of knowledge was not convincing.

Upon hearing both parties and examining the evidence, the Tribunal found that the prohibited items were indeed being exported, albeit intercepted. The appellant's defense that the Marketing Manager acted without their knowledge was deemed unconvincing. The Tribunal reasoned that the Marketing Manager's actions were within the scope of his employment, and the appellant should bear responsibility. The Tribunal also noted that the penalty imposed was not excessive. Consequently, the Tribunal upheld the impugned order, dismissing the appellant's appeal against the penalty.

In conclusion, the Tribunal affirmed the penalty imposed under Sections 114(i) and 114AA of the Customs Act, 1962 on the appellant for the unauthorized export of prohibited items. The Tribunal found the appellant's defense of lack of knowledge regarding the Marketing Manager's actions insufficient, holding the appellant accountable for the export activities conducted on their behalf. The decision highlighted the importance of supervision and control over employees engaged in export activities to avoid penalties for unauthorized exports.