2022 (3) TMI 238 - AT - Customs

Cancellation of Let Export Order - denial of duty drawback - confiscation of red sanders - prohibited goods - sufficient evidences present or not - penalty on corporation as well as on partner of corporation - HELD THAT - There are no whisper that the Appellants have performed an act of omission or commission in the respect of the prohibited red sander wood which was substituted in the container which was stuffed by them at ICD Janori in the presence and supervision of proper officer of Customs. Appellants admittedly were dealing in the export of Vegetable and Fruits. Undisputedly and admittedly the container at ICD Janori was stuffed with 27000 Kgs of the onions, for which the proper shipping bill was filed by them. After stuffing the container was sealed with the Central Excise Bottle Seal and was handed over to the ICD Janori for transportation to the gate way port. In similar facts and circumstances in case of Maheshwari Rocks (I) Pvt Ltd 2009 (10) TMI 803 - CESTAT CHENNAI where it was held that there is no evidence against the appellants regarding their involvement in the substitution of the cargo or tampering of the seal. In the circumstances, we confirm our prima facie view, set aside the confiscation of the container and the penalty imposed on M/s. Caravel Shipping Services Pvt. Ltd. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Cancellation of Let Export Permitted under Shipping Bill.
2. Denial of duty drawback.
3. Confiscation of Red Sanders logs.
4. Confiscation of onions used as cover cargo.
5. Confiscation of offloaded onions.
6. Imposition of penalties on the appellant firm and its partner.

Issue-wise Detailed Analysis:

1. Cancellation of Let Export Permitted under Shipping Bill:
The Joint Commissioner canceled the Let Export Permitted under Shipping Bill No. 6196190 dated 01.03.2016, citing that the goods were not exported as per the provisions of Rule 2(c) read with Rule 3 of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995.

2. Denial of Duty Drawback:
The duty drawback of ?5,527 claimed by the appellant was denied on the grounds that the goods were not exported under the said Shipping Bill as per the relevant rules.

3. Confiscation of Red Sanders Logs:
The Joint Commissioner ordered the absolute confiscation of 11.750 MTs of Red Sanders logs valued at ?4.70 Crores, which were attempted to be exported concealed under onions. The confiscation was under Section 113(d), 113(1), 113(i), and 113(ia) of the Customs Act, 1962, read with Rule 11 of the Foreign Trade (Regulation) Rules, 1993, provisions of the Indian Forest Act, 1927, and CITES Convention, 1973.

4. Confiscation of Onions Used as Cover Cargo:
The total quantity of 15190 kgs of onions in 311 jute bags, declared with an FOB value of ?3,10,948, was also confiscated. These onions were used to conceal the Red Sanders logs and were seized under Section 110 of the Customs Act, 1962, and were liable for confiscation under Section 119 read with Section 113(ia) of the Customs Act, 1962.

5. Confiscation of Offloaded Onions:
Additionally, 11.810 MTs of onions, with an FOB value of ?2,41,757, were confiscated as they were offloaded without the permission of the proper officer and not exported, violating Section 113(ia) and 113(k) of the Customs Act, 1962.

6. Imposition of Penalties:
Penalties of ?24,00,000 each were imposed on the appellant firm and its partner under Section 114(i) of the Customs Act, 1962, for aiding and abetting the smuggling of prohibited Red Sanders logs.

Judgment Analysis:

Findings of the Joint Commissioner:
The Joint Commissioner found that the appellants aided and abetted the main conspirator, Sanjay Pawar, in smuggling Red Sanders by exhibiting gross negligence. The appellants failed to verify the credentials of Sanjay Pawar and allowed the container to be transported by a truck trailer arranged by him, leading to the substitution of declared goods with prohibited Red Sanders.

Appellate Tribunal's Observations:
The Tribunal noted that the appellants were dealing in the export of vegetables and fruits, and the container was initially stuffed with onions at ICD Janori under the supervision of customs officials. The substitution of goods occurred during transportation to the gateway port, for which the custodian (ICD) was responsible as per the Board Circular 57/98-Cus dated 04.08.1998.

Responsibility of Custodian:
The Tribunal emphasized that the responsibility for the safe transportation of goods from ICD to the gateway port lies with the custodian, not the exporter. The appellants' actions, even if negligent, did not relate to the prohibited Red Sanders but to onions, which are not prohibited for export.

Case Law References:
The Tribunal distinguished the present case from the Chennai Bench's decision in Farooq Basha and Mohamed Naseer, where the facts were different, and the penalty was imposed without specifying the relevant clause of Section 114. The Tribunal also referred to the Maheshwari Rocks (I) Pvt Ltd case, where similar circumstances led to the setting aside of penalties on the exporter.

Conclusion:
The Tribunal found no merits in the impugned order and set aside the penalties imposed on the appellants. The appeals were allowed, and the order was pronounced in the open court.