2016 (10) TMI 292 - AT - Customs

Imposition of penalties u/s 114(i) of the Customs Act, 1962 - export of glass chimneys after verification and inspection - seal of container found broken - illegal export of Red Sanders were sought to be done under the cover of the appellant s documents of export - Held that - Penalties u/s 114 are imposable upon the person who in relation to any goods does omits to do any act which would render such goods liable to be confiscated under Section 113 or abetted doing or omission of such act. There is also nothing in the Customs Act, 1962, that the exporter is required to monitor the movement of the container till it is exported. It is not coming out of the case records as to what the appellants omitted to do which lead to this abetment to the offence. That there is no evidence on record to indicate that the appellants had knowledge of the contraband being sent in the container. Some negligence in not monitoring the export consignment can only be attributed on the part of the appellants. But the same will not make the appellant a party to attempt to export of contraband goods. The decision in the case of Air India-vs.- Commr.of Customs, Mumbai 2000 (5) TMI 858 - CEGAT, MUMBAI relied upon where it was held that negligence alone is not enough for imposition of penalty. Imposition of penalties not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalties under Section 114 of the Customs Act, 1962 on the appellants for alleged involvement in the illegal export of Red Sanders Woods.

Analysis:
The case involved the appellant, a manufacturer of glass products, who received an order for glass chimneys from a purported entity. The consignment was prepared and sealed by the appellants, but upon interception, Red Sanders logs were found instead of the glass products. The issue revolved around whether penalties under Section 114 of the Customs Act were rightfully imposed on the appellants for the incident.

The appellant's argument centered on the lack of legal obligation for exporters to monitor container movements post-stuffing, attributing such responsibility to multimodal transportation operators under the Multimodal Transportation of Goods Act, 1993. The appellant contended that they were unaware of the contraband substitution and hence should not be penalized. The defense cited relevant case laws to support their position.

The Revenue, however, alleged the appellant's director as the main culprit behind the smuggling attempt, emphasizing that no actual person named in the order existed. The Revenue strongly defended the adjudication order, asserting the appellant's complicity in the illegal export.

Upon examination, the Tribunal found that the responsibility for monitoring container movements did not lie with the exporter under the Customs Act. The Tribunal noted that the findings against the appellants were based on presumptions and lacked concrete evidence of their knowledge or involvement in the illicit act. Citing legal precedents, the Tribunal highlighted that negligence alone was insufficient for penalty imposition under the Customs Act.

Relying on previous judgments, the Tribunal concluded that the penalties imposed on the appellants were unjustified. The Tribunal set aside the adjudication order and allowed the appeals filed by the appellants, emphasizing the lack of legal basis for penalty imposition in the given circumstances.

In summary, the Tribunal ruled in favor of the appellants, overturning the penalties imposed under Section 114 of the Customs Act, 1962, due to insufficient evidence linking them to the smuggling attempt and emphasizing the absence of a legal obligation for exporters to monitor post-stuffing container movements.