2018 (7) TMI 626 - AT - Customs

Smuggling - Cigarettes of foreign origin - Cigarettes concealed in the declared cargo of mattresses - Confiscation - penalty u/s 112 (a) (b) of CA on CHA as well as on employees of the firm - Held that - So far as Shekhar (employee) is concerned, he was fully aware that everything was not legal and proper and up to the mark so far as the present consignment of M/s Digital Exports was concerned as he has been informed about the sensitivity of the matter by Shri Navin Kumar. Shri Sushil Sharma being responsible person of the CHA firm was also informed by Shri Shekhar about sensitive nature of consignment of M/s Digital Exports, however, both of them has willingly accepted the clearing work of M/s Digital Exports and did what was required for attempted clearance of the smuggled cargo. All the three employees though they have been handling the work of clearance of imported consignments it appears that they are salaried employees of the CHA firm and thus people of limited financial capability and means. CHA firms are the most important link between the importer/exporter and the custom department. It is expected of CHA firm that the credentials of importer/exporter are properly verified by them before undertaking the work of clearances in the various custom house - Both the appellants have failed in ensuring the clean credentials of the importer M/s Digital Exports and, therefore, the penalty under Section 112 (a) & (b) of the Customs Act, 1962 has rightly been imposed on both of them - however, the quantum of penalty reduced from ₹ 50 lakhs to ₹ 10 lakhs on each. Appeal allowed in part.

Summary

Issues:
Mis-declaration of imported cargo as mattresses, attempted smuggling of foreign-made cigarettes, imposition of penalties under Section 112 (a) & (b) of the Customs Act, 1962, involvement and responsibilities of Custom House Agents, connivance of employees in smuggling activities, waiver and reduction of penalties based on individual roles and financial conditions.

Analysis:

1. The case involved the mis-declaration of imported cargo as mattresses, which was actually foreign-made cigarettes concealed within the declared cargo. This led to detailed investigations and the issuance of a show cause notice for confiscation of the mis-declared cargo and penalties under Section 112 (a) & (b) of the Customs Act, 1962 on various individuals.

2. The appellants contested the penalties imposed on them, claiming they had not violated any provisions and had not connived with the main accused in the attempted smuggling. They argued that the penalties of ?50 lakhs each were excessive and disproportionate to their mistakes.

3. The tribunal examined the roles of the Custom House Agents (CHAs) and their employees involved in the attempted smuggling. It was found that one employee, Shri Shakti Nath Jha, had no direct involvement or knowledge of the smuggling activities. His penalty was waived due to lack of evidence linking him to the illegal actions.

4. Another employee, Shri Shekhar, was found to be aware of the illegal activities and had connived with others in the clearance of contraband goods. He, along with another employee, Shri Sushil Sharma, failed to verify the importer's credentials properly and ensure the legality of the consignments being cleared under the CHA firm's name.

5. The tribunal emphasized the crucial role of CHA firms in verifying the credentials of importers/exporters and ensuring the legality of the goods being cleared. It held Shri Shekhar and Shri Sushil Sharma accountable for their failure to uphold these responsibilities and reduced their penalties from ?50 lakhs to ?10 lakhs each, considering their financial limitations as salaried employees.

6. Ultimately, the tribunal modified the impugned order-in-original, waiving the penalty for Shri Shakti Nath Jha and reducing the penalties for Shri Shekhar and Shri Sushil Sharma, while highlighting the importance of CHA firms in customs clearance processes and the need for employees to fulfill their responsibilities diligently.