2018 (9) TMI 399 - HC - Customs

Penalty u/s 114 of CA - Smuggling - Red Sanders - allegation pertains to smuggling of red sanders under the cover of magnesium sulphate in HDPE bags - whether there is any evidence either before the Original Authority or before the Tribunal to link the appellants with the smuggling of red sanders? Held that - The Commissioner of Customs noted that the said Mr.V. Sundaramoorthy and the said Mr.Hemadri entered into a conspiracy and arranged a genuine export consignment to smuggle red sander logs out of India through the said consignment, for which, the said Mr.Hemadri approached the said Mr.V.Sundaramoorthy of the said M/s.G.Masilamani, CHA for carrying out the work of clearance in Chennai and had given them all the documents, which were in the name of the said M/s.A.S.P.Senna Traders namely the IEC holder. It was further noted from the surveyor's report that the container was tampered without disturbing the liner and the customs seal and a part of the declared cargo was de-stuffed and replaced with red sanders. Further, from the statement, it emerged that the said Mr.P.Ashok Kumar was working for one M/s.Dravidian Logistics, CHA and he is a close friend of the said Mr.Hemadri and that the appellants or the others, who had given their statements, did not plead any ignorance of the transaction nor ignorance of the persons, whose names have been mentioned there. Thus, the complexity and the connivance among persons, which include the appellants, had been clearly brought out in the order passed by the Commissioner of Customs. Thus, there was abundant evidence available, which was considered by the Original Authority and a finding has been rendered as to the complexity and the modus operandi adopted by the appellants for the purpose of illegal export of red sanders. Penalty upheld - appeal dismissed - decided against Appellant.

Summary

Issues involved:
1. Scope of imposing penalty under Section 114 of the Customs Act, 1962 in the absence of knowledge and specific role of the appellants in the alleged offense.
2. Whether the Tribunal was correct in holding the appellants as abettors without evidence of their knowledge or active participation in the offense.
3. Upholding penalty on both the proprietor and the proprietary firm under Section 114 of the Customs Act, 1962 on the same grounds.

Detailed Analysis:
Issue 1:
The appellants challenged the imposition of penalties under Section 114 of the Customs Act without evidence linking them to the smuggling of red sanders. The Commissioner of Customs found that the appellants were involved in a conspiracy to smuggle red sanders out of India. The Tribunal upheld this finding, stating that the appellants were intimately connected with the offense and could not benefit from ignorance. The appellants argued that there was no evidence to establish their role in the smuggling activity. However, the Commissioner of Customs and the Tribunal found ample evidence of their involvement in the smuggling racket.

Issue 2:
The appellants contended that they had no knowledge or active participation in the attempted export of red sanders logs. They argued that the Tribunal erred in holding them as abettors without concrete evidence. The Commissioner of Customs noted the complexity and connivance among the persons involved, including the appellants. The Tribunal found that the appellants had clear roles in perpetuating smuggling by misusing licenses and engaging in fraudulent practices. The Tribunal concluded that the appellants acted in connivance with the smuggling racket, leading to the seizure of offending goods.

Issue 3:
In one of the appeals, the question arose regarding upholding penalties on both the proprietor and the proprietary firm under Section 114 of the Customs Act based on the same grounds. The appellants' counsel argued that penalties could not be imposed without evidence of their active involvement. However, the Commissioner of Customs and the Tribunal found that the appellants deliberately used licenses and engaged in fraudulent practices to deceive customs authorities for illegal gains. The Tribunal concluded that the appellants were members of the smuggling racket and could not prove their detachment from the attempted export of offending goods.

In conclusion, the Court dismissed the appeals, upholding the penalties imposed on the appellants under Section 114 of the Customs Act. The Court found that there was abundant evidence linking the appellants to the smuggling activity, as established by the Commissioner of Customs and upheld by the Tribunal. The Court rejected the appellants' arguments based on previous legal judgments, emphasizing the specific facts and findings in the present case.