2018 (3) TMI 1144 - AT - Customs

Penalties - smuggling - illegal export of Red Sanders, instead of the declared goods as Polished Marble Slabs - Held that - the allegations against the appellants are mainly concerned with failure to discharge their duties and responsibilities mandated under various Regulations for dealing with goods in legalized manner. Apparently, there is no material evidence available in records to prove that the appellants were either involved in smuggling of the goods, or encouraged and supported the wrong doer in doing the wrongful act in attempting to export the goods - penal provisions cannot be invoked for imposition of penalties under Section 114 and 114AA of the Act. Penalties set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalties for illegal export of Red Sanders instead of declared goods as Polished Marble Slabs.

Analysis:
The judgment pertains to multiple appeals arising from a common impugned order regarding penalties imposed for the illegal export of Red Sanders disguised as Polished Marble Slabs. The case involved the exporter M/s. Ritu Corporation, who exported containers filled with Red Sanders instead of the declared goods. The authorities found the containers tampered with and stuffed with the prohibited item. Show cause notices were issued, leading to penalties imposed under Sections 114 and 114AA of the Customs Act, 1962. The appellants challenged the penalties before the Tribunal.

Upon hearing both sides and examining the case records, the Tribunal analyzed the roles of each party involved in the illegal exportation. The custodian, transporters, shipping agents, and customs house agents were found to have neglected their duties, facilitating the smuggling of Red Sanders. The adjudicating authority observed various failures in discharging statutory obligations, leading to penalties under the Customs Act.

The Tribunal emphasized that penalties under Section 114 of the Customs Act are to be imposed when acts or omissions render goods liable for confiscation. It noted that the charges against the appellants were related to neglecting duties under specific regulations rather than direct involvement in smuggling activities. The Tribunal highlighted the need for evidence proving intentional wrongdoing or malafide intent for penalties under Sections 114 and 114AA to be justified.

Citing relevant case laws such as Sanco Trans Ltd., Sarosh Nagarwala & Others, and Skyline Shipping & Logistics, the Tribunal concluded that the penalties imposed on the appellants lacked substance. It emphasized the requirement of prior knowledge or deliberate intent for penalties under the Customs Act. Consequently, the Tribunal set aside the penalties and allowed the appeals in favor of the appellants.

In the final order pronounced on 21.03.2018, the Tribunal found no merit in the impugned order supporting the penalties on the appellants, leading to the appeals being allowed in favor of the appellants.