2025 (1) TMI 1460 - AT - Customs

Penalties u/s 114(i) of the Customs Act 1962 - alleged involvement in the mis-declaration and attempted export of prohibited goods (beef) as Frozen Boneless Buffalo Meat - HELD THAT - The appellant no. 1 was mainly engaged for the purpose of loading and unloading of export cargo of M/s. Global Foods International and he got a remuneration of Rs.22, 000/- per month. We find that although the business under the name of M/s. A.M. Enterprise was registered in the name of appellant no. 1 the entire activities of the said Firm has been controlled and managed by Mr. Ankit Kapoor of M/s. Global Foods International. From the documents available on record it is observed that Mr. Ankit Kapoor used to make contact and finalize the dealings with all the persons concerned who used to supply cattle meat to the said firm; those meat products purchased for export from NS Dock Kolkata were exported in the name of M/s. A.M. Enterprise and not in the name of M/s. Global Foods International. The goods were being shown as sold by M/s. A.M. Enterprise in favour of M/s. Global Foods International and accordingly online fund transactions were made by M/s. Global Foods International in favour of M/s. A.M. Enterprise and the money was being paid to all such suppliers in the name of M/s. A.M. Enterprise. The money transactions done through M/s. A.M. Enterprises has been mainly used by Mr. Ankit Kapoor for the purpose of renovation of the cold storage. Penalty under Section 114 - HELD THAT - Penalty under Section 114 is imposable only when the person abets an offence which leads to confiscation of the goods. It must be established that he has abetted the offence knowingly. In this case the appellant no. 1 had to carry out the packing loading and unloading of the goods as directed by his employer. Thus the appellant no. 1 has not contravened any of the provisions under the Customs Act 1962 warranting imposition of penalty under Section 114(i) of the Customs Act 1962. Thus the penalty under Section 114(i) is not imposable on the appellant no. 1 in this case. Accordingly the penalty imposed on appellant no.1 in the impugned order is set aside. Penalty imposed on appellant no. 2 - HELD THAT - The rent agreement specifically mentioned that the cold storage is meant only for the purpose of storage of the goods i.e. meat as agreed upon in the agreement. Thus appellant no. 2 is in no way concerned with the alleged export of beef and hence the penalty imposed on him for abetting the offence under Section 114(i) of the Customs Act 1962 is not sustainable and accordingly the penalty imposed on him set aside. Appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

• Whether the penalties imposed on the appellants under Section 114(i) of the Customs Act, 1962, for alleged involvement in the mis-declaration and attempted export of prohibited goods (beef) as "Frozen Boneless Buffalo Meat" are justified.
• Whether appellant no. 1, Mr. Musarraf Hossain, was actively involved in the export activities that led to the mis-declaration of goods.
• Whether appellant no. 2, Mr. Mizanur Mondal, by renting out his cold storage facility, abetted the export of the prohibited goods.

ISSUE-WISE DETAILED ANALYSIS

1. Penalty on Mr. Musarraf Hossain (Appellant No. 1)

• Relevant Legal Framework and Precedents: Section 114(i) of the Customs Act, 1962, imposes penalties on individuals who attempt to export goods improperly or abet such activities.
• Court's Interpretation and Reasoning: The Tribunal examined whether Mr. Hossain had knowingly abetted the export of beef. It was found that Mr. Hossain was an employee of M/s. Global Foods International, earning a monthly salary, and was involved in loading and unloading activities as directed by his employer.
• Key Evidence and Findings: The firm M/s. A.M. Enterprise, registered in Mr. Hossain's name, was controlled by Mr. Ankit Kapoor. Transactions and export activities were managed by Mr. Kapoor, not Mr. Hossain.
• Application of Law to Facts: The Tribunal noted that Mr. Hossain's role was limited to executing tasks assigned by his employer. The mis-declaration of goods was attributed to Mr. Kapoor, not Mr. Hossain.
• Treatment of Competing Arguments: The Revenue argued that Mr. Hossain was involved in procurement and export activities. However, the Tribunal found no evidence of Mr. Hossain's knowing involvement in the mis-declaration.
• Conclusions: The Tribunal concluded that Mr. Hossain did not abet the export of prohibited goods knowingly, and thus, the penalty under Section 114(i) was not sustainable.

2. Penalty on Mr. Mizanur Mondal (Appellant No. 2)

• Relevant Legal Framework and Precedents: Section 114(i) of the Customs Act, 1962, was also applicable to Mr. Mondal for allegedly abetting the export of prohibited goods by renting his cold storage facility.
• Court's Interpretation and Reasoning: The Tribunal assessed whether Mr. Mondal had knowledge of the illegal activities conducted by his tenants. It was found that he had rented out his facility without knowledge of the mis-declaration.
• Key Evidence and Findings: Mr. Mondal had a rent agreement specifying the use of the cold storage for meat storage. He was unaware of the substitution of buffalo meat with beef until the Show Cause Notice was issued.
• Application of Law to Facts: The Tribunal determined that mere rental of the facility did not constitute abetment of the illegal export, as Mr. Mondal had no role in the tenant's business operations.
• Treatment of Competing Arguments: The Revenue contended that renting the facility amounted to abetment. The Tribunal disagreed, citing lack of evidence of Mr. Mondal's knowledge or involvement.
• Conclusions: The Tribunal held that Mr. Mondal did not abet the export of prohibited goods, and the penalty under Section 114(i) was not justified.

SIGNIFICANT HOLDINGS

• Verbatim Quotes of Crucial Legal Reasoning: The Tribunal emphasized that penalties under Section 114(i) require evidence of knowing abetment of an offense leading to confiscation of goods.
• Core Principles Established: The judgment reinforced that penalties for abetment require clear evidence of knowledge and involvement in the prohibited activity.
• Final Determinations on Each Issue: The penalties imposed on both appellants were set aside, as the Tribunal found no evidence of their knowing involvement in the mis-declaration and export of prohibited goods.

In conclusion, the Tribunal allowed the appeals filed by Mr. Musarraf Hossain and Mr. Mizanur Mondal, setting aside the penalties imposed under Section 114(i) of the Customs Act, 1962, and granting consequential reliefs as per law.