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2024 (8) TMI 858 - AT - CustomsRejection of request of renewal of custodianship granted under Section 45 of the Act read with Regulation 30 of HCCAR, 2009 - revocation of custodianship/approval as CCSP under Section 45 read with HCCAR, 2009 under Regulation 11 read with Regulation 12 of HCCAR, 2009 - imposition of penalties. HELD THAT - The appellant, Container Corporation of India was given custodianship under HCCAR, 2009 as a Customs Cargo Service Provider (CCSP). The approval of CCSP is under Regulation 10 of the HCCR 2009, which is given by the jurisdictional Commissioner of Customs on fulfillment of conditions under Regulation 5, ibid. Further the responsibilities of the CCSP are mentioned at Regulation 6, ibid. It is found that the custodianship would have been issued to CCSP i.e. after the satisfaction of all the conditions prescribed in Regulation 5. The CCSP has applied for renewal of the custodianship - the issues raised by the Customs on audit of the appellant-custodian pertained to the conditions mentioned in Regulation 5 and the discrepancies were found at the time of renewal could be because of certain new requirements, which should have arisen between the period of issue of custodianship and the application for renewal. It is found that the custodian has operated from the area, which is not notified under Section 8, of the Customs Act, 1962. As regards Section 45, the appellant contends there is no allegation or incident, where there is any unauthorized clearance of goods from the approved premises of the CCSP nor there was any pilferage of goods alleged. Hence, imposition of penalty under Section 117 is not tenable - Learned Commissioner has observed that the custodian is operating from an area beyond the notified area without approval from the proper officer as per the inquiry report. In these circumstances, operating from an area which is not notified tantamount to violation of Section 45 read with Section 7 and 8 of the Customs Act, 1962, since storing and clearing of the cargo from such unnotified area would be a violation of provisions of Section 45 of the Customs Act, 1962. Therefore, the imposition of penalty under Section 117 is tenable. The discrepancies/non-adherence noticed on audit of the appellant-custodian (CCSP) are found to be non-fulfillment of conditions under Regulation 5(1)(i) (c) (f) (g) (n) and clause (iii) of Regulation 5 of HCCAR, 2009, hence the penalty imposed under Regulation 12(8) of HCCAR, 2009 is tenable. The penalty of Rs. 50,000/- imposed on the Custodian (CCSP) reduced to Rs. 10,000/- under Regulation 12(8) of HCCAR, 2009 - Further, the penalty imposed under Section 117 of the Customs Act, 1962 is reduced from Rs. 4,00,000/- to Rs. 25,000/-. Appeal disposed off.
Issues Involved:
1. Renewal of custodianship under Section 45 of the Customs Act, 1962. 2. Compliance with Handling of Cargo in Customs Area Regulations, 2009 (HCCAR). 3. Imposition of penalties under Regulation 12(8) of HCCAR and Section 117 of the Customs Act, 1962. Issue-wise Detailed Analysis: 1. Renewal of Custodianship under Section 45 of the Customs Act, 1962: The appellant, M/s. Container Corporation of India Ltd., was appointed as custodian of the Inland Container Depot (ICD) at Whitefield, Bangalore, under Section 45 of the Customs Act, 1962, in conjunction with HCCAR, 2009. The custodianship was due for renewal on 31.03.2020, but due to the Covid-19 pandemic, the due date was deferred to 31.12.2020. An inspection conducted in December 2020 revealed several deficiencies. Consequently, a show-cause notice was issued questioning why the renewal of custodianship should not be rejected and why the custodianship should not be revoked under Regulation 11 read with Regulation 12 of HCCAR, 2009. 2. Compliance with Handling of Cargo in Customs Area Regulations, 2009 (HCCAR): The audit report identified several deficiencies in the appellant's operations, including lack of security boundaries, inadequate monitoring of entry and exit, incomplete insurance documentation, improper layout of the notified area, insufficient infrastructure, unregulated parking, tardy disposal of Section 48 Cargo, and pending clearance of seized goods. The Commissioner of Customs adjudicated that the appellant had not adhered to certain provisions of HCCAR, 2009, but instead of revoking custodianship, extended it for six months and imposed penalties. 3. Imposition of Penalties under Regulation 12(8) of HCCAR and Section 117 of the Customs Act, 1962: The Commissioner imposed a penalty of Rs. 50,000/- under Regulation 12(8) of HCCAR, 2009, and Rs. 4,00,000/- under Section 117 of the Customs Act, 1962. The appellant contended that the breaches were not serious and remedial actions were taken. They argued that the penalties were imposed without considering their submissions and that the violations were venial in nature, not warranting such penalties. They also referenced previous Tribunal decisions where penalties under Section 117 were reduced or deemed not imposable. The Authorized Representative for Revenue argued that the violations were grave and detrimental to Revenue's interest, citing relevant case laws to support the imposition of penalties. Judgment Analysis: The Tribunal found that the appellant, as a Customs Cargo Service Provider (CCSP), had discrepancies in fulfilling conditions under Regulation 5 of HCCAR, 2009. The Tribunal acknowledged the appellant's argument that the discrepancies were due to the Covid-19 pandemic and that some issues were attended to, while others would be addressed in due course. However, it was noted that operating from an unnotified area violated Sections 7, 8, and 45 of the Customs Act, 1962, justifying the penalty under Section 117. The Tribunal concluded that while the penalties were tenable, the quantum was disproportionate to the discrepancies. Therefore, the penalty under Regulation 12(8) of HCCAR, 2009, was reduced from Rs. 50,000/- to Rs. 10,000/-, and the penalty under Section 117 of the Customs Act, 1962, was reduced from Rs. 4,00,000/- to Rs. 25,000/-. Conclusion: The appeal was disposed of with a reduction in penalties, acknowledging the appellant's partial compliance and the impact of the Covid-19 pandemic on their operations. The Tribunal maintained the penalties' legitimacy but adjusted their amounts to better reflect the nature of the violations.
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