2022 (2) TMI 803 - AT - Customs

Levy of penalty under Regulation 12(8) of Handling of Cargo in Customs Area Regulation, 2009 - smuggling of red sanders - callous approach of the custodian towards their responsibilities in following HCCAR, 2009 - HELD THAT - It is seen that though the appellant has filed a reply to the Show Cause Notice, they have not filed any objections / counter representations after receiving the copy of the inquiry report. Regulation 12 of HCCAR, 2009 provides for the procedure for suspension or revocation of approval and imposition of penalty. As per Regulation 12(6), the appellant is to file a representation on the inquiry report within 30 days from the receipt of the inquiry report. Though various contentions have been raised in regard to the inquiry report, the appellant has not filed any representation against the inquiry report. It is also seen that the appellant can ask for examination of witnesses, cross-examination of witnesses relied by the inquiry officer - After considering the submissions made and the fact that the custodian is Airports Authority of India, which is a legal body, the appellant has to be given a further chance to establish their case. The appeal is allowed by way of remand to the Commissioner and he is directed to give a chance to the appellant to file objections / counter representations on the inquiry report under Regulation 12(6) of HCCAR, 2009.

Issues Involved:
1. Imposition of penalty under Regulation 12(8) of Handling of Cargo in Customs Area Regulation, 2009 (HCCAR, 2009).
2. Alleged contravention of Regulations 5(n), 6(1)(b), and 6(1)(f) of HCCAR, 2009.
3. Adequacy and procedural fairness of the inquiry report and the appellant's opportunity to respond.

Detailed Analysis:

1. Imposition of Penalty under Regulation 12(8) of HCCAR, 2009:
The appellant challenged the penalty of ?40,000/- imposed under Regulation 12(8) of HCCAR, 2009. The penalty was levied following an inquiry that found the appellant in contravention of specific regulations under HCCAR, 2009. The appellant argued that the penalty was imposed without sufficient evidence and without giving them a fair opportunity to respond to the inquiry report.

2. Alleged Contravention of Regulations 5(n), 6(1)(b), and 6(1)(f) of HCCAR, 2009:
The inquiry report highlighted several lapses by the appellant, such as improper segregation of cargo, lax security measures, and failure to verify the LEO status electronically. Specifically:
- Regulation 5(n) pertains to the security and access control to prohibit unauthorized access into the premises. The report noted that security personnel were not properly verifying ID cards, and there were instances of forged "Yellow ID Cards."
- Regulation 6(1)(b) requires keeping a record of each activity related to the movement or handling of goods. The report indicated a failure in maintaining proper records.
- Regulation 6(1)(f) mandates that goods should not be removed from the customs area without written permission. The report found that the bond was closed without checking the LEO status electronically, reflecting a negligent approach.

The appellant contended that these findings were based on unsubstantiated observations and lacked concrete evidence such as witness testimonies or electronic records.

3. Adequacy and Procedural Fairness of the Inquiry Report and the Appellant's Opportunity to Respond:
The appellant argued that they were not given a fair chance to respond to the inquiry report. Although they filed a reply to the Show Cause Notice, they did not file objections to the inquiry report due to the lack of evidence supporting the allegations. They requested an opportunity to file objections to the inquiry report to present their defense adequately.

The Tribunal noted that under Regulation 12(6) of HCCAR, 2009, the appellant should have been given at least 30 days to file any representations against the findings of the inquiry report. The Tribunal found merit in the appellant's request for an additional opportunity to file objections and establish their case.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal by way of remand. The Commissioner was directed to give the appellant a further chance to file objections or counter representations on the inquiry report under Regulation 12(6) of HCCAR, 2009. The adjudicating authority was instructed to conduct a de novo adjudication after considering the appellant's representations.

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