2021 (12) TMI 745 - AT - Customs

Illegal removal of goods under the custody of CFS - Levy of penalty under Regulations 12 (8) of HCCAR 2009, apart from directing the appellants to compensate the Government for the losses caused due to the negligence on the part of the custodian - Detention of imported goods - Sewing machines - allegation of smuggling, mis-declaration etc. - serious contravention of Section 45 (2) (b) of the Customs Act, 1962 - CFS has failed to follow the mandatory regulations, especially 5 (1) (i) (n), 6 (1) (f) of the Handling of Cargo in Customs Area Regulations, 2009 - HELD THAT - The Revenue s case is that on specific intelligence it was found that the goods pertaining to the Bill of Entry No. 3325365 dated 21.09.2017, filed by M/s. Rashi Trader, imported vide container No. ZCSU 8954812 was detained by SIIB Officers for misdeclaration. It was found on examination to contain needles for Sewing Machines on which anti-dumping duty of ₹ 2.51 Crores was applicable. The sewing machine needles were found to have been declared in the Bill of Entry with the intention to evade customs duty which was thereafter seized and handed over to the appellant-custodian. Subsequently, i.e, on 25.10.2017 it appears that SIIB had noticed that the above goods were removed by the CFS on 23.10.2017 at 22.45 hrs. and it was found later that the goods were removed out of CFS by one Shri U. Magesh and R. Prabhakaran on the instructions of Mr. Hariprabhu and Mr. Thirumalai Thyagarajan of Raj Brothers Shipping Pvt. Ltd. The appellant has seriously made allegations against the Revenue and has tried to justify its action on the grounds of having obtained certain documents from the CHA, but it is not at the instructions of the person who authorized detention in the custody of the appellant. There was also allegations that the appellant was not made known the reasons of seizure or the progress in the investigation, but suffice it to say that a CFS need not know the reasons for seizure and detention since such actions are initiated for prevention of evasion of duties by means of smuggling, mis-declaration etc., in the national interest. The CFS has failed in discharging the assigned duty diligently. On the contrary, strangely and in utter disregard, it has chosen to act solely on some documents filed by the CHA, which documents later on turned out to be fake/forged, to release the seized goods. This, rather raises serious suspicion as to the due diligence exercised by the appellant. The release in the first place itself was against the statute as well as the instructions of the Government Authority, then the release was made at the odd hours of the night by accepting useless documents that too without proper verification as to the urgency, and lastly, no verification of identity appears to have been made by not cross-checking with the PAN or GST Registration No. etc. of the CHA. There has been serious violations to the Government Regulations as alleged by the Revenue, in as much as the goods were released without there being specific instructions to do so from the Revenue. The only natural consequence, therefore, that has to follow is as prescribed under sub-section (3) to Section 45 of the Customs Act, 1962, since the appellant has not made out any case for not invoking the said provision. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Legality of the penalty imposed on the appellant.
2. Alleged violation of Section 45 (3) of the Customs Act, 1962, and provisions of Handling of Cargo in Customs Area Regulations, 2009 (HCCAR, 2009).
3. Procedural fairness and adherence to principles of natural justice.
4. Responsibilities and due diligence of the Customs Cargo Service provider (CFS).

Detailed Analysis:

1. Legality of the Penalty Imposed on the Appellant:
The appellant contested the penalty imposed by the adjudicating authority, arguing that it was unjustified and erroneous. The appellant maintained that there was no violation of Section 45 (3) of the Customs Act or the HCCAR, 2009. However, the adjudicating authority found that the appellant had accepted cash payments without generating invoices and released the seized goods without proper authorization, leading to the imposition of a ?50,000 penalty under Regulation 12 (8) of HCCAR, 2009.

2. Alleged Violation of Section 45 (3) of the Customs Act, 1962, and Provisions of HCCAR, 2009:
The Revenue's case was based on the appellant's failure to comply with Section 45 (2) (b) of the Customs Act, which restricts the removal of imported goods without proper authorization. The appellant released the goods at night without written permission from the Superintendent of Customs or Appraiser, violating Regulation 6 (f) of HCCAR, 2009. The adjudicating authority emphasized that the appellant's actions were against statutory provisions and regulations, leading to the conclusion that the appellant was liable under Section 45 (3) for any pilferage.

3. Procedural Fairness and Adherence to Principles of Natural Justice:
The appellant argued that the respondent failed to adhere to principles of natural justice by predetermining the issue and passing stereotyped orders without proper consideration of the facts. The appellant also claimed that the respondent did not provide necessary documents or explain the reasons for invoking Section 45 (3). However, the adjudicating authority found that the appellant's contentions were irrelevant since the primary issue was the unauthorized release of goods, and the appellant's cooperation post-incident did not mitigate the initial violation.

4. Responsibilities and Due Diligence of the Customs Cargo Service Provider (CFS):
The adjudicating authority highlighted the appellant's failure to exercise due diligence and follow mandatory regulations. The appellant released the goods based on forged documents without proper verification, at odd hours, and without written instructions from the detaining authority. The appellant's actions raised serious suspicions about their diligence and compliance with statutory requirements. The authority concluded that the appellant's conduct violated the responsibilities prescribed under HCCAR, 2009, and justified the penalties and suspension of custodianship.

Conclusion:
The appeal was dismissed, upholding the adjudicating authority's findings and penalties. The appellant's failure to comply with statutory provisions and regulations, unauthorized release of goods, and lack of due diligence were critical factors in the decision. The judgment emphasized the importance of strict adherence to customs regulations and the responsibilities of custodians in handling imported goods.