2023 (9) TMI 91 - AT - Customs

Levy of penalty on the appellants (CHA firm) under Section 114(1) of the Customs Act 1962 - Smuggling - Red Sanders - facilitating the entry of the offending goods (red sander wood logs) into the port area, for purpose of export to a third country - HELD THAT - The port authorities post verification of all statutory documents and being satisfied for it being in order issued the DDM permission/permit. Unless proper verification of the statutory documents pertaining to the vehicle, the driver and other details thereof are made, the port authorities do not issue the DDM permit, nor allow the driver or the vehicle driven by him to enter into the dock. Further, it is not only the appellant, but it has also been admitted by their key personnel like Uttam Roy (Supervisor of National Agency), that he did not know of any responsible person of the exporting firm and that their CHA firm was never engaged by the said exporter earlier. However, they did not take any steps to verify the genuineness of the exporting firm by visiting the office premises or even talking to any responsible person - appellant cannot however escape of their responsibility and the special burden cast on them as a CHA, besides being certainly guilty of carelessness, negligence and omissions and commissions that have facilitated the entry of the offending goods (red sander wood logs) into the port area, for purpose of export to a third country. The appellant has rendered himself liable to penal consequences. As the Show Cause Notice fails to bring to fore any express and active collusion in the attempted exports of Red Sander Wood logs on the part of the appellants, noting the various acts of omissions and commissions on the part of the appellants, imposition of a penalty of Rs. 50,000/- under Section 114(i) of the Customs Act, 1962 would meet the ends of justice. Appeal disposed off.

Summary

Issues involved:
The judgment involves the imposition of a penalty under Section 114(1) of the Customs Act, 1962 on the appellant for the attempted export of Red Sanders Wood misdeclared as Royal Chimney.

Details of the Judgment:

Issue 1: Misdeclaration of Goods
The containers detained by the DRI were found to contain Red Sanders Wood instead of Royal Chimney as declared. The entire export process was orchestrated through a middleman, Sanjay Singh, without direct contact between the exporting firm and the overseas buyer. The appellant, a Customs House Agent (CHA), claimed ignorance of Sanjay Singh's background and involvement in the export process.

Issue 2: CHA's Role and Responsibilities
The CHA, in this case, facilitated the export process based on instructions from the exporter and the freight forwarder. They prepared shipping bills based on changing instructions from the exporter, without thorough verification of details such as the cargo, truck driver, and container sealing. The appellant failed to independently verify the legitimacy of the exporting firm, neglecting their prime responsibility as a CHA.

Issue 3: Liability and Penalty
The Tribunal found the appellant liable for carelessness, negligence, and facilitating the entry of prohibited goods into the port area. While no direct collusion was proven, the appellant's omissions and commissions warranted a penalty of Rs. 50,000 under Section 114(1) of the Customs Act, 1962 to serve the ends of justice.

Conclusion:
The appeal was disposed of with the decision to impose the penalty on the appellant for their role in the attempted export of Red Sanders Wood misdeclared as Royal Chimney.