2022 (10) TMI 1020 - HC - Customs

Levy of penalty on vessel operators - Penalty u/s 117 of Customs Act, for contravention of the provisions of Section 41 of the Customs Act, 1962 - petitioners had not filed Export General Manifest (EGM) in respect of certain specified shipping bills - error rectified only post the issuance of show cause notices - specific averment by the petitioners to the effect that penal action has been taken only in the present cases, and in no other charge in the country, has not been denied by the respondents - HELD THAT - A consistent methodology must be followed by customs authorities pan India. The Circulars and Instructions that have been placed before the Court also indicate categorically that the overriding spirit in terms of which the procedure must be understood and implemented, is one of facilitation, rather than adversarial. The shipping industry comprises of several stakeholders, exporters, vessels/carriers, officials of the Customs department, Port authorities and facilitators, such as customs agents, freight forwarders, transporters, consolidators, CFS and many more. It is important for the authorities to arrive at a proper methodology for capturing information from each of the stake holders. This is the attempt of the Electronic Data Interface (EDI) and the ICEGATE system. Clearly, the system requires fine tuning and the quicker the authorities respond and resolve issues that stakeholders face, as and when they arise, the smoother the functioning of the system will be - the request of the petitioner for access to the ICEGATE system is rejected for the reason as stated by the customs authorities. The system is a conglomeration of materials from various sources and is meant for effective functioning of the Department and smooth management of the transactions. No one operator can be provided with access to the entirety of the system. The petitioners are given liberty to make a representation before the appropriate authority setting out the circumstances in which they seek access to the electronic system and raising any/all submissions as necessary in support of the request, including but not limited to the practice followed by other Ports and Commissionerates in other States in the Country as well as Circulars and Instructions of the Board, as appropriate - the request of the petitioners for access to the ICEGATE system is rejected - Petition disposed off.

Summary

Issues Involved:
1. Non-filing of Export General Manifest (EGM).
2. Imposition of penalty under Section 117 for contravention of Section 41 of the Customs Act, 1962.
3. Delay in issuance of show cause notices and orders.
4. Responsibility and liability of carriers and consolidators.
5. Access to the ICEGATE system for verification purposes.

Issue-wise Detailed Analysis:

1. Non-filing of Export General Manifest (EGM):

All petitioners, who are vessel operators, were penalized for not filing the Export General Manifest (EGM) for certain shipping bills. The error was rectified post-issuance of show cause notices, resulting in penalties under Section 117 of the Customs Act for violating Section 41. The non-filing of EGM delayed export incentive claims for exporters, cited as an additional reason for penalties.

2. Imposition of penalty under Section 117 for contravention of Section 41 of the Customs Act, 1962:

The petitioners argued that the show cause notices were issued belatedly, close to or more than two years from the date of the lapse. They contended that the stuffing was done under customs supervision at a Container Freight Station (CFS) or Inland Container Terminal (ICD). The petitioners claimed that the responsibility for ensuring the integrity of the container should not rest entirely on them and requested access to the ICEGATE system for cross-verification.

3. Delay in issuance of show cause notices and orders:

The court noted that the impugned orders were significantly delayed, with orders from 2019 relating to shipping bills from 2017. It was incumbent upon the authorities to raise the issue timely. The delay in issuing show cause notices and orders was deemed unacceptable, and this delay was considered fatal to the respondents' case. The court provided a tabulation of dates showing delays in all cases.

4. Responsibility and liability of carriers and consolidators:

The court emphasized that the burden of ensuring the accuracy of the EGM falls entirely on the person-in-charge of the conveyance carrying export goods, i.e., the Liners/petitioners. The role of the consolidator is to assist the carrier in stuffing containers, but the primary responsibility for a correct and complete EGM cannot be shifted to customs officials. The petitioners must liaise with the consolidator to ensure proper communication and prevent errors or omissions in the EGM.

5. Access to the ICEGATE system for verification purposes:

The petitioners requested access to the ICEGATE system to verify the shipping bills and prevent errors. The customs authorities opposed this request, stating that the system is designed to receive inputs from all stakeholders and cannot be accessed by any single operator. The court rejected the petitioners' request for access to the ICEGATE system but suggested that the authorities might consider granting selective access to the portion of the system containing stuffing reports and shipping bill details, if possible, in a read-only format to prevent tampering.

Conclusion:

The court set aside the impugned orders due to significant delays in issuing show cause notices and orders. The court emphasized the need for a consistent methodology by customs authorities across India and highlighted the importance of facilitation rather than adversarial procedures. The petitioners were given liberty to make representations to the appropriate authority for selective access to the ICEGATE system. All writ petitions were disposed of in these terms, and connected miscellaneous petitions were closed.