2021 (9) TMI 1130 - AT - Customs

Levy of penalty u/s 117 of CA - Statutory obligation and liability of Custodian - Legality of removal of goods from Customs Area - statutory obligation of M/s. DIAL to be responsible for handling cargo in the Customs area - Outsourcing and Custodianship of goods - HELD THAT - Bare perusal of the Act makes it clear that the person who approved by competent officer of Customs to be the Custodian of goods lying in customs area is duty bound for handling of cargo in the Customs area as mentioned in the sub clause (2)(b) of section 45 till the goods are removed from the Customs area. As per section 45(2)(b), the custodian is duty bound to not to permit such goods to be removed from the customs area except after proper permission. From the admitted facts, it is clear that approval of Principal of Commissioner of Customs was given in favour of M/s. DIAL and not in favour of M/s. CELEBI - it was the statutory mandate for the person so approved to furnish the custodian bond. The HCCR regulations define Customs Cargo Service provider to mean any person responsible in receipt, award, delivery, discharge or otherwise handling of imported goods and exported goods and includes the custodian as referred to in Section 45 of the Act and the persons as referred to in sub-section (2) of Section 141 of the said Act. The use of words while includes the custodian again corroborates the finding of the Adjudicating Authority Below - M/s. DIAL after taking notice of the impugned incidence of removal of package without filing of Bill of Entry have taken measures to avoid any such incidence in future. All the conditions which are required to be complied with under Rule 5 of HCCR, 2009, are admitted to have been complied with by M/s. DIAL post the impugned incidence. Rule 6(2) of HCCR restricts such contracting or outsourcing of Cargo handling functions. Even if the permission for outsourcing was given to M/s. DIAL vide the letter of Commissioner of Customs (IMG) dated 07.07.2012, the said permission was agreed to be coterminus with custodianship of M/s. DIAL and was held subject to fulfilment of provisions of Customs Act, 1962 and the Rules and Regulations made thereunder. - Admittedly the custodian bond was still of M/s. DIAL. M/s. CELEBI never substituted the same. The provisions of Customs Act and that of HCCR do not absolve the custodian of the responsibilities as mentioned in these Regulations to be observed by the Custodians itself, that there are no infirmity with the order under challenge where simultaneously penalty has been imposed upon M/s. DIAL as well. Appeal dismissed.

Summary

Issues:
1. Liability of M/s. DIAL and M/s. CELEBI for the removal of a consignment without filing a Bill of Entry.
2. Interpretation of statutory provisions under Customs Act, 1962 regarding custodianship and handling of imported goods in the Customs area.

Issue 1: Liability of M/s. DIAL and M/s. CELEBI

The case involved a consignment of machine parts weighing 691 kg that was removed from the Import shed of Air Cargo complex without filing a Bill of Entry. M/s. CELEBI, appointed by M/s. DIAL to handle cargo operations, was held directly responsible for the lapse. However, the Department proposed penalties on both M/s. DIAL and M/s. CELEBI. M/s. DIAL argued that as they outsourced duties to M/s. CELEBI, the latter should be solely responsible. The Department contended that M/s. DIAL, as the approved custodian, was statutorily obligated to ensure proper handling of goods in the Customs area.

Issue 2: Interpretation of Statutory Provisions

The Tribunal analyzed relevant sections of the Customs Act, 1962, including Section 45 on custody of imported goods and Section 141 on control of goods in a Customs area. It noted that M/s. DIAL was approved as the custodian of imported goods and had entered into a concessional agreement with M/s. CELEBI. Despite outsourcing, M/s. DIAL remained responsible for ensuring compliance with Customs regulations. The Tribunal emphasized that the custodian, as per the Act, must not permit goods to be removed without proper authorization.

The Tribunal highlighted that M/s. DIAL had fulfilled its custodian bond obligations and had taken corrective actions post the incident. It found no fault in the lower authority's decision to penalize M/s. DIAL, as custodian responsibilities could not be absolved. The Tribunal upheld the penalty on M/s. DIAL, emphasizing that the outsourcing agreement did not negate M/s. DIAL's primary obligations under the Customs Act and related regulations.

In conclusion, the Tribunal affirmed the penalty imposed on M/s. DIAL for the unauthorized removal of the consignment, emphasizing that custodian responsibilities under the Customs Act could not be shifted entirely to an outsourced entity. The judgment clarified the statutory obligations of custodians in handling imported goods in the Customs area, underscoring the importance of compliance and oversight in such operations.