2022 (10) TMI 258 - HC - Customs

Maintainability of petition - availability of alternate and efficacious remedy of filing an appeal before the CESTAT - pre-condition of filing an appeal - requirement to deposit 7.5% of the penalty that was imposed upon Petitioner - containers allegedly contained goods materially different from the goods disclosed in the Bills of Entry - HELD THAT - Admittedly, the goods came in sealed containers. Mr. Balani has placed on record seven Bills of Lading by which seven containers arrived at Nhava Sheva Port. The seven containers are 40 ft. containers and were Full Container Load (FCL) containers. The Bills of Lading also provided for disclaimer by carrier. The description of goods in Bills of Lading also states; Shipper s Load and count xxx cartons , and particulars were furnished by Merchant - it is nobody s case that Petitioner knew what was contained in those containers and even if there is any allegation, which we could not find in the impugned order, there is no finding as to how Petitioner would have known what was there inside the sealed containers. The Custom House Agent, which the Petitioner was, only files the Bills of Entry on behalf of the importer relying on the documents provided to him by the importer, and if there is mis-match between what is mentioned in the documents given to the Customs House Agent to file Bills of Entry and what is found in the FCL container, prima-facie, the Custom House Agent cannot be made liable; Added to that in the case at hand the 7x40 ft. containers were FCL containers - To impose total penalty of Rs.5.77 Crores on such Custom House Agent and without any satisfactory findings that he knew what was inside the 7x40 ft. containers or he knowingly or intentionally made any declaration would certainly cause undue hardship and more so to a person who has to file an appeal and deposit Rs.43,27,500/- being 7.5% of Rs.27 Lakhs plus Rs.5.5 Crores as pre-condition to filing an appeal. Petition is admitted.

Summary

Issues:
1. Availability of alternate remedy before Customs Excise and Service Tax Appellate Tribunal (CESTAT) for filing an appeal.
2. Imposition of penalties under Sections 112A and 114AA of the Customs Act, 1962.
3. Role and liability of the Custom House Agent in the case.
4. Allegations of abetment against the Petitioner.
5. Examination of the contents of the sealed containers and the Custom House Agent's knowledge.
6. Consideration of undue hardship caused by the penalty amount.
7. Applicability of Section 114AA in cases of import consignments.

Analysis:

1. The judgment deliberates on the availability of an alternate remedy for the Petitioner to file an appeal before CESTAT. The Respondent argued that a 7.5% penalty deposit is a pre-condition for the appeal. The Petitioner was penalized under Sections 112A and 114AA of the Customs Act, 1962, with amounts totaling Rs. 5.77 Crores. The court acknowledged the penalty but emphasized the need to consider the Petition.

2. The Petitioner, a Custom House Agent, was implicated in a case involving misdeclaration and concealment of goods in containers. The investigation highlighted the role of another individual as the main conspirator. The court examined the Bills of Lading and the sealed containers, emphasizing that the Petitioner's role was limited to filing Bills of Entry based on provided documents.

3. The judgment scrutinized the Petitioner's liability as a Custom House Agent. It was noted that the Petitioner's knowledge of the container contents was limited, especially in the case of Full Container Load (FCL) containers. The court highlighted that the Petitioner's role was to file Bills of Entry based on the importer's documents, and discrepancies do not necessarily imply liability.

4. Allegations of abetment against the Petitioner were considered in light of the investigation findings. The court emphasized the need for concrete evidence linking the Petitioner to the misdeclaration and concealment of goods. The judgment focused on the lack of findings indicating how the Petitioner could have known the container contents.

5. The judgment addressed the undue hardship caused by the substantial penalty imposed on the Petitioner. It was emphasized that penalizing the Custom House Agent without clear evidence of knowledge or intentional wrongdoing would be unjust, especially considering the financial burden of appealing and depositing a portion of the penalty amount.

6. The applicability of Section 114AA in cases of import consignments was raised for future consideration based on the Petitioner's argument and the Standing Committee's discussion. The court admitted the Petition and granted interim relief, allowing further submissions from the Respondents. The case was scheduled for a hearing to address the issues raised comprehensively.