2024 (3) TMI 294 - AT - Customs

Customs Cargo Service Provider (CCSP) - Suspension of their CCSP approval and imposing a penalty - Demand of value of pilfered goods - custodian of Speedy CFS - Cigarette sticks were found stolen / Pilfered from the safe custody - violation of HCCAR and the Customs Act, 1962, by issue of SCN No.282/2021-22 CCSP/CAC/ JNCH - penalty - Suspending the operation of appellants CFS as CCSP - HELD THAT - We are of the view that the action in the impugned order demanding the value of the seized goods that were pilfered from the custody of CCSP in terms of the action to safeguard interest of Revenue in respect of the seized goods, and thus recovery of the above amount under HCCAR and under the general powers vested with the Central Government u/s 142 ibid, is valid in law. The facts of the case and the customs, as well as police investigation brings out clearly the conclusion that the appellants facilities at Speedy CFS, particularly the trailer truck, entry/exit gates were used for pilferage of customs seized goods contained in container No.GESU-4913126. We find that it is clearly proved by the above factual reports arising out of the investigation conducted by Customs that the appellants CFS had violated the obligations cast upon them under Regulations 5(1)(i)(n), 6(1)(f) and 6(1)(i) of HCCAR, and hence we do not have any hesitation in arriving at the conclusion that the appellants did not fulfil the conditions of Regulation 5(1)(i)(n), 6(1)(f) and 6(1)(i), by their failure to restrict unauthorized access into the premises and allowing the pilferage of goods and by their failure to provide safe and secure storage facility of customs seized goods kept in the containers within Speedy CFS premises and allowed certain unauthorized persons to remove the customs seized goods. Hence, we are of the considered view that imposition of penalty on the appellants under Regulation 12(8) of HCCAR and Section 117 of the Customs Act, 1962, is sustainable. The HCCAR apply to the custodian under the provisions of Section 141(2) of the Customs Act, 1962 which interalia prescribe the manner in which the goods shall be handled in a customs area and the responsibilities have been framed accordingly. Besides this, the responsibility of the custodian u/s 45(2) is to keep the imported goods in safe custody, maintaining of records and not to permit its removal without any authorization from Customs. The absence of proper system of security, control and maintenance of records in the present case of seized imported goods mutatis mutandis apply to the imported goods which are seized. Hence the appellant cannot escape from the responsibilities and obligations cast upon them as CFS operator under HCCAR for proper handling of import/export goods. In view of this, we find that the appellants have failed to fulfil the responsibilities entrusted on them under Regulation 6(1)(a) and 6(1)(b) of HCCAR. The serious violations on security of the CFS and the goods stored inside the CFS, established through inquiry report under HCCAR and Police investigation, have led to the action to safeguard government interest on the seized goods, and thus recovery of the above amount. Hence, we find that there is no illegality in the impugned order in seeking recovery of the value of the goods which were pilfered from the custody of the appellants as CCSP, due to aforesaid act of negligence and improper handling of cargo in customs area. Hence, we find that there is no illegality in the action taken by Customs department. As the period for which the suspension of 15 days was ordered was in terms of specific dates, i.e., from 16.04.2023 to 30.04.2023, which had expired during the process of this appeal, and stay of the order given by the Hon ble High Court of Bombay vide judgement dated 19.06.2023 in Writ Petition No. 5415 of 2023, no precipitative action was taken by the Customs pending this appeal, and the impugned order to this extent has become infructuous. Thus, even the illusory adversity of closure of the appellants CONCOR-DRT CFS has not happened in reality and hence there is no ground for entertaining the appeal on this ground. The detailed discussions, clearly prove that the appellants not only failed to fulfil the conditions and to abide by the responsibilities reposed on them as CCSP, but also failed to rectify the situation as one another attempt was made again for illegal removal of seized red sanders, which was identified by Customs and on which the Commissioner of Customs had passed an order on 18.11.2020. Hence, there are clear violations of the HCCAR and Section 141(2) of the Customs Act, 1962 by the appellant and thus we do not find any infirmity in the impugned order imposing penalty u/s 117 ibid on the appellants. Thus, the appeal filed by the appellants is dismissed - The miscellaneous application stands disposed of.

Summary

Issues Involved:
1. Validity of suspension of approval for operation as CCSP.
2. Confirmation of demand of Rs.2,22,67,440/- as the value of pilfered goods.
3. Violation of obligations under HCCAR and imposition of penalties.

Summary:

1. Validity of Suspension of Approval for Operation as CCSP:
The Tribunal examined the case in detail, noting that the Commissioner of Customs (General) ordered the suspension of the appellant's approval for operating as a Customs Cargo Service Provider (CCSP) for 15 days. The suspension was based on violations of Handling of Cargo in Customs Areas Regulations (HCCAR), 2019, and the Customs Act, 1962. The Tribunal upheld the suspension, finding it legally valid under HCCAR. However, since the suspension period had already expired, the order was deemed non-implementable.

2. Confirmation of Demand of Rs.2,22,67,440/- as the Value of Pilfered Goods:
The Tribunal found that the appellants were responsible for the pilferage of 23,32,800 cigarette sticks from a seized container kept in their custody. The seized goods were considered "imported goods" under the Customs Act, 1962, and the appellants were liable to indemnify the government for the loss. The demand for Rs.2,22,67,440/- was confirmed as valid under Regulation 5(6) of HCCAR and Section 142 of the Customs Act, 1962.

3. Violation of Obligations under HCCAR and Imposition of Penalties:
The Tribunal determined that the appellants violated several obligations under HCCAR, including failing to provide adequate security and allowing unauthorized access, which led to the pilferage of seized goods. The Tribunal upheld the imposition of penalties under Regulation 12(8) of HCCAR and Section 117 of the Customs Act, 1962. The penalties were deemed appropriate given the appellants' failure to fulfill their responsibilities as a custodian and CCSP.

Conclusion:
The appeal filed by the appellants was dismissed, and the miscellaneous application was disposed of. The Tribunal found no infirmity in the impugned order, confirming the suspension, demand for the value of pilfered goods, and imposition of penalties.