2023 (7) TMI 1132 - AT - Customs

Revocation of order to operate as ship chandler - levy of penalty u/s 117 of CA - prohibited goods or not - allowing the goods for export - HELD THAT - It is an admitted fact that 2,00,000 of 3 ply non-woven masks which were loaded on to the Philippines Navy vessel BRP DAVAO Delsur was meant for Philippines Government. The Trade Facility Notice No.17/2019 dated 23.5.2019 clearly laid down the procedures for ship stores which was followed by the appellant by filing a Manual Shipping Bill and clearly mentioning that supply of non-woven 3-fold mask (3 ply) 59 Boxes were being shipped on to the vessel. The appellant has placed all the necessary permissions and records filed and signed by the respective authorities at different stages - it appears that the appellant (Ship Chandler) had not deviated nor violated any of the provisions of the Customs Act, 1962 and there is no allegation in the impugned order of violation of any of the provisions of the Customs Act, 1962. The provisions of Section 89 of CA, clearly state that the Proper Officer i.e., the customs authorities have to determine taking into consideration the size of the vessel or aircraft the number of passengers and crew and the length of the voyage on which the vessel or aircraft, have to determine the quantity that need to be supplied as stores on to the vessel. Hence, it was the duty of the concerned authorities to verify these facts before allowing 2,00,000 of 3 ply non-woven masks having been permitted and loaded on to the Vessel, they cannot now turn around and make the appellant having grossly failed in his duty to intimate the authorities. The Appellant in fact has followed all the procedures and with necessary permissions has loaded the said goods on to the vessel - the impugned order is set aside and the appeal is allowed.

Summary

Issues involved:
The issues involved in this case are the export of prohibited goods, violation of Customs Act provisions, revocation of permission to operate as a Ship Chandler, and imposition of penalty under Section 117 of the Customs Act, 1962.

Export of Prohibited Goods:
The appellant, a Ship Chandler, was granted permission to carry out Ship Chandler's work at Cochin port. However, it was found that 2,00,000 pieces of 3 ply non-woven masks, loaded onto a foreign vessel, were prohibited for export as per DGFT Notifications. This led to a notice for revocation of permission and imposition of penalty under Section 117.

Violation of Customs Act Provisions:
The Commissioner held that the appellant violated Section 89 of the Customs Act, 1962 by supplying an excessive quantity of masks to the foreign vessel. Despite the declared number of passengers and crew, the quantity supplied was deemed excessive, leading to revocation of permission and imposition of a penalty of Rs.4,00,000 under Section 117.

Revocation of Permission and Penalty Imposition:
The Commissioner revoked the appellant's permission to operate as a Ship Chandler and imposed a penalty of Rs.4,00,000 under Section 117 of the Customs Act, 1962. This action was based on the alleged violation of provisions regarding the quantity of goods supplied to a foreign-going vessel.

Appellant's Defense and Legal Compliance:
The appellant argued that they followed the Trade Facility Notice for supplying ship stores by filing a Manual Shipping Bill and obtaining necessary permissions. Documents, including letters from the Embassy of the Republic of the Philippines, supported the purpose of supplying masks for COVID-19 relief efforts. The appellant contended that they did not violate any Customs Act provisions.

Decision and Ruling:
The Tribunal found that the appellant complied with all procedures and permissions required for exporting the masks to the Philippines Government. Since the goods were considered ship stores, the DGFT Notification was deemed irrelevant. The Tribunal set aside the impugned order, ruling in favor of the appellant and allowing the appeal.