2025 (1) TMI 1328 - AT - Customs

Appellant s liability for customs duty and penalty - pilferage of goods while in the custody - whether the appellant can be held liable for payment of customs duty and penalty under the provisions of Section 45 of the Act read with Regulation 6 of Handling of Cargo in Customs Areas Regulations 2009 - time limitation - HELD THAT - For considering the said issue reference is invited to a recent decision of the Delhi High Court in CONTAINER CORPORATION OF INDIA VERSUS THE COMMISSIONER OF CUSTOMS 2024 (9) TMI 1503 - DELHI HIGH COURT where the learned Division Bench upheld the order of the Tribunal in CONTAINER CORPORATION OF INDIA LTD. VERSUS COMMISSIONER OF CUSTOMS (EXPORTS) NEW DELHI 2023 (10) TMI 758 - CESTAT NEW DELHI holding that the goods got pilfered and container seal found tampered when the goods were not still cleared. It was held that as per Section 45 the custodian is burdened with the responsibility of safe custody of imported goods unless and until the goods are cleared either for home consumption or for being warehoused. After the first check was ordered by the appraising officer the shed officer had raised the objection in respect of the goods contained in the container in question that import of Refrigerant Gas in cylinders requires NOC/Approval from the Chief Controller of Explosives which is evident of the fact that the impugned goods arrived in the said container and were pilfered while in the custody of the appellant - The appellant has been held to be the custodian of the imported goods and therefore in terms of Section 45 of the Act read with Regulation 6 they are liable to pay the customs duty and penalty as ordered by the Adjudicating Authority. Time limitation - HELD THAT - On the issue of time limit as prescribed under Section 28 of the Act it is seen that the appellant vide their letter dated 27.06.2013 had informed the Department that the container was found empty during the joint survey for which FIR has been lodged. Taking the date of the said letter the show cause notice issued on 18.12.2013 is well within the time. Penalty - HELD THAT - No interference is called for in imposition of penalty under Section 117 of the Act as it was the responsibility of the appellant to keep the goods in safe and secure condition so long as they remain in their custody. Here the goods have been pilfered while they were in the custody of the appellant. There are no reason to interfere with the impugned order which is hereby affirmed - appeal dismissed.

Summary

The judgment revolves around the appeal filed by M/s Container Corporation of India Ltd. challenging the order confirming the duty demand along with interest and penalty under Section 45 of the Customs Act, 1962, read with the Handling of Cargo in Customs Areas Regulations, 2009. The core issues considered include the appellant's liability for customs duty and penalty due to alleged pilferage of goods while in their custody and the applicability of the legal framework governing custodianship of imported goods.

The Tribunal addressed the primary issue of whether the appellant, as a custodian, could be held liable for customs duty and penalties under Section 45 of the Customs Act and related regulations. The legal framework involves Section 45 of the Customs Act, which imposes a duty on custodians to ensure the safe custody of imported goods until they are cleared for home consumption or warehousing. Regulation 6 of the Handling of Cargo in Customs Areas Regulations further specifies the responsibilities of Customs Cargo Service Providers, including securing the goods and not permitting their removal without proper authorization.

The Court's interpretation emphasized that the custodian is responsible for the safety of the goods and is liable for any pilferage occurring while the goods are in their custody. The Tribunal relied on a recent decision by the Delhi High Court, which upheld the Tribunal's previous order, affirming that the custodian bears the burden of ensuring the safe custody of goods and is liable for customs duty if the goods are pilfered while in their custody.

The key evidence included statements from individuals involved in the import process, revealing that the goods required an import license and that there was an attempt to misdeclare the goods. The appellant argued that the container was found empty during a joint survey and that there was no evidence of tampering with the container seal. However, the Tribunal found that no evidence was provided to support the claim that the container was received without a seal or with a broken seal.

The Tribunal applied the law to the facts by examining the responsibilities of the appellant as a custodian and the evidence of pilferage. The Court concluded that the appellant failed to provide sufficient evidence to rebut the presumption of liability under Section 45 of the Act and Regulation 6 of the Regulations. The Tribunal also rejected the appellant's attempt to shift responsibility to the CISF, emphasizing that the legal burden of safe custody rested with the appellant.

In addressing competing arguments, the Tribunal considered the appellant's claims regarding the joint survey and the deployment of CISF but found them unsubstantiated. The Tribunal upheld the findings of the lower authorities, emphasizing the custodian's duty to ensure the security of the goods and the appellant's failure to fulfill this obligation.

The Tribunal's significant holdings include affirming the custodian's liability for customs duty and penalties under Section 45 of the Customs Act and Regulation 6 of the Handling of Cargo in Customs Areas Regulations. The Tribunal quoted the Delhi High Court's interpretation that the custodian is duty-bound to prevent unauthorized removal of goods and is liable for any pilferage while the goods are in their custody.

The core principles established by the Tribunal reiterate the custodian's responsibility for the safe custody of imported goods and the liability for customs duty and penalties in case of pilferage. The Tribunal concluded that the appellant failed to demonstrate that the goods were not pilfered while in their custody and upheld the order imposing customs duty and penalties.

The Tribunal dismissed the appeal, affirming the lower authority's order and holding the appellant liable for the customs duty and penalties as prescribed under the relevant legal provisions. The decision underscores the stringent obligations placed on custodians of imported goods and the legal consequences of failing to secure the goods adequately.