2021 (7) TMI 673 - AT - Customs

Levy of penalty - Proceedings against the Custodian / Cargo Service provider - Smuggling - Smart Tortoises - Red Sanders - it is alleged that appellants had allowed the cargo to move into the sterile area without checking the status of Customs clearance i.e., without checking whether LEO was given or not - violation of Regulation 5(n) of HCCAR,2009 - Allowing unauthorised persons to enter into the area - Penalty. HELD THAT - It is seen that allegations made against the appellants that shortcomings as a custodian lead to smuggling of Star Tortoises on 07.11.2018 is without any basis. There is no evidence to show that the appellants have in any connection to such seizure of Star Tortoises . The allegations in show-cause notice now narrows down to the Shipping Bill No.5981482, dated 01.08.2019, wherein the LEO was given by Customs at 17 27 hrs. It is the case of the department that the appellants allowed the cargo for scanning at 16 45 hrs much before sanction of LEO. On perusal of the X-Ray Register, it is seen that though the cargo had reached for scanning at 16 45 hrs, the same was detained without conducting the X-Ray scan. It was again scanned only at 17 27 hrs, after the sanction of LEO. The department does not allege that the appellant has done the same with any wrongful intention. There is no allegation with regard to the goods exported under the shipping bill. Allowing unauthorised persons to enter into the area - violation of Regulation 5(n) of HCCAR,2009 - HELD THAT - Though, it is stated in the show-cause notice that the appellants have allowed unauthorised persons to access the premises, there is no evidence to support the same. The details of such unauthorized persons seen in the premises are not furnished by department. The allegation without support of any evidence cannot sustain. Penalty - HELD THAT - The penalty imposed upon the appellants cannot sustain and is not warranted. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Compliance with Customs Act and Regulations by custodian M/s. Air India Ltd.
2. Alleged violations of Rules 5 and 6 of Handling of Cargo in Customs Area Regulations, 2009.
3. Allegation of allowing unauthorised access into Customs area.
4. Imposition of penalty under Regulations 12(8) of HCCAR, 2009.

Compliance with Customs Act and Regulations by custodian M/s. Air India Ltd.:
The case involved M/s. Air India Ltd., granted custodianship permission for cargo export, obligated to adhere to Customs Act, 1962 and Handling of Cargo in Customs Area Regulations, 2009 [HCCAR, 2009]. The department conducted a surprise check revealing instances where cargo was allowed for scanning before Customs clearance, and security lapses were noted. Previous cases of smuggling involving the custodian were also highlighted.

Alleged violations of Rules 5 and 6 of Handling of Cargo in Customs Area Regulations, 2009:
The department alleged violations of Rules 5 and 6 of HCCAR, 2009, concerning allowing cargo movement before Customs clearance and unauthorized access into the premises. A penalty of ?50,000 was imposed under Regulation 12(8) of HCCAR, 2009, without revoking the custodian appointment, leading to the appeal before the Tribunal.

Allegation of allowing unauthorised access into Customs area:
The department accused the custodian of allowing unauthorised access by failing to properly verify ID cards and not furnishing lists of authorized and revoked ID cards. Instances of forged ID cards being misused were highlighted, along with security lapses. The penalty was justified based on these alleged violations.

Imposition of penalty under Regulations 12(8) of HCCAR, 2009:
The Tribunal analyzed the allegations and submissions from both sides. It found no evidence linking the custodian to previous smuggling cases and observed that the cargo movement before Customs clearance was a minor lapse without wrongful intent. The accusation of allowing unauthorized access lacked supporting evidence. Consequently, the penalty imposed was deemed unwarranted, and the appeal was allowed, setting aside the penalty.

This comprehensive analysis of the legal judgment highlights the key issues, arguments presented, and the Tribunal's decision, ensuring a detailed understanding of the case.