2015 (11) TMI 1022 - AT - Customs

Violation of the provisions of Section 51 of the Customs Act, 1962 read with Section 147 proposing to impose penalties - whether the CHA is liable to penalty - Held that - From the statutory provisions and the supplemental instructions issued, it can be easily seen that the responsibility of the CHA does not end with filing of the shipping bill. He has to ensure the assessment of the shipping bill, examination of cargo and obtain the Let Export Order after which he has to contact the customs staff for loading of the goods. Thus unless and until the loading of the export goods on to the vessel is completed, the duty and responsibility cast on the CHA does not come to an end. In case the CHA fails to comply with these statutory provisions, he would be liable for penal consequences. - any act or omission to do any act, which renders the goods liable to confiscation attracts penalty. The said provision does not speak of the requirement of any mens rea on the part of the person committing the act or omission. Mere act or omission would suffice to attract the penalty. Thus applying these provisions to the facts at hand, the CHA failed to ensure that the goods were loaded on to the vessel only after let export order was obtained, thereby making the goods liable to confiscation under section 113(g). For the omission on the part of CHA, he is liable to penalty under section 114(iii). - There is nothing in the language of the provisions of section 114 of the Customs Act, 1962, to suggest that mens rea is essential for imposition of penalty . Mere act or omission to act would suffice for imposition of penalty if such act or omission violates statutory provisions. Proceedings under section 114 of the Customs Act are not criminal proceedings but quasi -judicial proceedings and hence mens rea is not required to impose penalty under the said section - identical matter was considered by a Division Bench and the imposition of penalty on the CHA was upheld. The said decision of the Division Bench would prevail over the decisions of Single Member Bench. In view of the above, I am of the considered view that the appellant is liable to penalty under Section 114 of the Customs Act. - However, penalty is reduced - Decided partly in favour of appellant.

Summary

Issues Involved:
1. Liability of the Customs House Agent (CHA) for penalties under Section 114(iii) of the Customs Act, 1962.
2. Compliance with Sections 50 and 51 of the Customs Act, 1962.
3. Applicability of mens rea for imposing penalties under Section 114 of the Customs Act, 1962.
4. Relevance of precedent cases and judicial decisions in determining the liability of the CHA.

Issue-wise Detailed Analysis:

1. Liability of the Customs House Agent (CHA) for penalties under Section 114(iii) of the Customs Act, 1962:
The core issue is whether the CHA is liable for penalties when the goods were loaded onto the vessel without obtaining the "Let Export Order" (LEO) from the Customs authorities. The CHA contended that the responsibility for the container's safety, storage, and loading onto the vessel lies with the shipping line, not with the CHA. However, the Tribunal held that the responsibility of the CHA does not end with the filing of the shipping bill. The CHA must ensure the assessment of the shipping bill, examination of cargo, and obtaining the LEO before contacting customs staff for loading the goods. Failure to comply with these statutory provisions makes the CHA liable for penalties under Section 114(iii).

2. Compliance with Sections 50 and 51 of the Customs Act, 1962:
Sections 50 and 51 prescribe the procedure for the export of goods. Section 50 requires the exporter to make an entry by presenting a shipping bill electronically, and Section 51 mandates that the proper officer must be satisfied that the goods are not prohibited and that duties and charges are paid before permitting clearance and loading for exportation. The Tribunal emphasized that the CHA must comply with these provisions, and failure to do so results in the goods being liable for confiscation under Section 113(g) and penalties under Section 114(iii).

3. Applicability of mens rea for imposing penalties under Section 114 of the Customs Act, 1962:
The Tribunal clarified that the provisions of Section 114 do not require the establishment of mens rea (criminal intent) for imposing penalties. Mere act or omission that renders the goods liable to confiscation suffices for penalty imposition. This principle was supported by precedents from the Hon'ble Supreme Court, which held that unless the statute explicitly requires mens rea, proving default in complying with the statute is sufficient for penalties.

4. Relevance of precedent cases and judicial decisions in determining the liability of the CHA:
The appellant relied on several cases where penalties on the CHA were contested, arguing that the CHA was not liable if unaware of the vessel's premature departure. However, the Tribunal distinguished the facts of the present case, noting that the CHA had adequate time to complete formalities before the vessel's scheduled departure. The Tribunal referred to decisions like Nichrome India Ltd. and LCL Logistics (India) Pvt. Ltd., which upheld penalties on CHAs for similar omissions. The Tribunal also noted that Division Bench decisions, such as in Inox India Ltd., take precedence over Single Member Bench decisions, reinforcing the CHA's liability for penalties.

Conclusion:
The Tribunal concluded that the CHA is liable for penalties under Section 114(iii) due to the failure to obtain the LEO before the vessel's departure. The Tribunal reduced the penalty from Rs. 7.00 lakhs to Rs. 2.5 lakhs, considering the circumstances, but upheld the imposition of the penalty on the CHA. The operative part of the order was pronounced in court.