2024 (7) TMI 329 - AT - Customs

Levy of penalty u/s 114 (i) of the Customs Act, 1962 - complicity in the export of red sanders - prohibited goods - Role of appellant (Commission Agent) in Export of prohibited goods - HELD THAT - The appellant had a close business relationship with the kingpin/mastermind of the case, that his testimony regarding working as a commission agent is not borne out of records, that the appellant had himself admitted before the authorities that he was an employee of Bose Enterprises CHA firm in the case. It is admitted by the appellant that he had worked for Sujan Sharma in the past as well, facilitated seeking of an office for him, had visited his residence at least on two occasions in the past, had known his other business contacts like Vinod Gupta etc.. All this is reflective of the close business nexus between the appellant and the prime accused - there is direct corroboration between the assertions of Shrikant Adhikari vis- -vis that of some of the other co-accused and investigations undertaken by the department. It is thus borne out from records that the appellant was in direct touch with the key conspirator Sujan Sharma and had knowingly associated with him in the facilitation and smooth clearance of the subject attempted export. The plea of the appellant that he was mainly acting as a commission agent actually does not hold any substance and is not borne out with evidence. In any case it is a recorded fact and an admitted position by the appellant that he had procured the consignment and handed over the consignment documents to the Customs Broker for onward clearance. It is an admitted fact that the appellant was not only in constant touch with the mastermind who remained unreachable for the authorities but also known common associates like Vinod Gupta working at Indo-Nepal border. The complicity and nexus of the appellant is undisputed. It is obvious that the appellant for certain monetary considerations has played the role of a middleman between the actual operators and perpetrators of the crime and the exporters. The role of the proprietor of M/s. Arihant Logistic Sushant Sharma has been well documented in the show cause notice and thoroughly analysed by the adjudicating authority in the order. The appellant has been rightly subjected to penal proceedings under the Customs Act. However, it is noted that the penalties imposed on the appellant are not commensurate and in proportion to the role and involvement of the appellant in the attempted export of red sanders wood logs - under the facts and circumstances of the case and our findings above, a penalty of Rs.1,00,000 would meet the ends of justice. Appeal allowed in part.

Summary

Issues Involved:
1. Legitimacy of the appellant's role as a commission agent.
2. Appellant's complicity in the attempted export of prohibited goods.
3. Proportionality of the penalty imposed under Section 114(i) of the Customs Act, 1962.

Detailed Analysis:

1. Legitimacy of the Appellant's Role as a Commission Agent:
The appellant claimed to work as a Commission Agent for Customs House Agents (CHA)/Customs Brokers (CB), procuring import-export business for these firms. The appellant argued that his involvement was limited to procuring the order on a commission basis, without any role in the actual export process. However, the adjudication order and subsequent investigation revealed that the appellant had a close business relationship with the mastermind of the smuggling operation, Sujan Sharma. The appellant's testimony indicated that he had facilitated the clearance of the contraband goods by using his credentials and had been in direct contact with Sujan Sharma and other associates. This evidence contradicted the appellant's claim of merely being a commission agent.

2. Appellant's Complicity in the Attempted Export of Prohibited Goods:
The investigation revealed that the appellant was involved in the attempted export of 6560 kgs of red sander wood logs, an endangered species prohibited for export. The appellant had procured the consignment documents and handed them over to the Customs Broker for clearance. The show cause notice highlighted the appellant's role in facilitating the smooth clearance of the contraband goods, his direct contact with Sujan Sharma, and his involvement in processing documents for customs clearance. The adjudicating authority found that the appellant had knowingly associated with the key conspirator and played a significant role in the smuggling activities for monetary consideration. The appellant's admissions and corroborative evidence, such as call data records, established his complicity in the attempted export.

3. Proportionality of the Penalty Imposed Under Section 114(i) of the Customs Act, 1962:
Section 114(i) of the Customs Act, 1962, imposes a penalty on any person who attempts to export goods improperly. The adjudicating authority initially imposed a penalty of Rs.50,00,000 on the appellant. However, the Appellate Tribunal found that while the appellant was rightly subjected to penal proceedings, the penalty imposed was disproportionate to his role and involvement. The Tribunal noted that the appellant's actions, although significant, did not warrant such a high penalty. Consequently, the penalty was reduced to Rs.1,00,000 to meet the ends of justice.

Conclusion:
The Appellate Tribunal upheld the penalty imposed on the appellant under Section 114(i) of the Customs Act, 1962, but reduced the quantum to Rs.1,00,000. The Tribunal found substantial evidence of the appellant's complicity in the attempted export of prohibited goods and rejected the appellant's claim of merely being a commission agent. The judgment emphasizes the importance of proportionality in imposing penalties for customs violations.