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TMI Blog2015 (6) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of the main conditions of appointing the appellant as custodian CFS which is evident as per the bond executed by the appellant before Customs. It is established beyond doubt that the sealed containers were tampered in transit and the goods were replaced with Red Sanders before the container reached the gateway port. Their contention that they are not responsible for change of cargo after exit from CFS is not justified and not acceptable. As per the terms and conditions of Custom House Public Notice No.5/2002 dt. 8.1.2002, it is clearly stipulated that the custodian (CFS) is responsible for any loss/damage/pilferage of cargo/container so moved. Therefore, they cannot plead ignorance. The CFS being custodian of cargo, he is responsible till delivery of the containers to the port. It is pertinent to state that the Govt. has entrusted the work of handling of cargo to a CFS only with a faith that Custodian will perform his duties diligently and in a dedicated manner. Prior to the concept of CFS entire operations of cargo clearance were done only at the port itself which is handled by Port Trust Authority appointed under Port Trust Act. - The role of CFS as custodian of cargo can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their behalf. On completion of the investigation, the Additional Director-General, DRI issued show cause notice dt. 9.1.2008 to both exporters and to other co-noticees including the appellants for imposition of penalty. The Commissioner of Customs, Chennai by the impugned order ordered for absolute confiscation of red sander logs and imposed penalty on R.Chitty Raja, K. Shanmugam, R. Bhaskaran. He also imposed penalty of ₹ 5 lakhs on T.V. Shanmugam, (1st appellant herein), proprietor of M/s.TVS Shanmugam, the CHA and ₹ 5 lakhs on M/s.Sanco Trans Ltd. (2nd appellant) under Section 114 of Customs Act. Aggrieved by the order, only these two appellants have filed appeals. There is no record of any appeals filed by other notices. 4. Heard both sides. 5. Ld. Advocate appeared for both the appellants. In respect of first appellant T.V.Shanmugam, the CHA he referred para-34 and para 34.1 of the order, where the contravention of provisions of the Customs Act was alleged against the appellant. He submits that there is no dispute on the fact mentioned at para-34 of the order for the conduct of CHA signing the shipping documents for third party and not physically verified th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut establishing mens rea no penalty can be imposed on the appellant under Section 114. He relied on the above Hon'ble Madras High Court order dt. 8.1.2015 and pleaded to set aside the order. In respect of waiver of penalty on both appellants, he relied on the following judgements : 1) CC (EP) Vs P.D.Manjrekar - 2009 (244) ELT 51 (Bom.) 2) Neptune's Cargo Movers Pvt. Ltd. Vs CC (Export), Chennai 2007 (219) ELT 673 (Tri.-Chennai) 3) D.H.Patkar Co. Vs CC (Import) Mumbai 2008 (229) ELT 612 (Tri.-Mumbai.) 4) CC (Export) Mumbai Vs Rajasthan Spinning Weaving Mills Ltd. - 2008 (229) ELT 614 (Tri.-Mum) 5) Swaroop Shipping Services Vs CC (Seaport-Exports), Chennai- 2008 (227) ELT 555 (Tri.-Chennai). 7. On the other hand, LD. A.R on behalf of Revenue reiterated the findings of the Commissioner. She refers to para-(5) of the OIO where entire modus operandi has been unearthed in the smuggling of Red Sanders by using exporter's name. The shipping bill was filed fraudulently by using the name of M/s.Win Exports the CHA had authenticated all the documents. The entire operation of filing shipping bills, booking space at CFS, processing the documents, transportatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicating authority ordered absolute confiscation of red sanders and imposed penalties on various co-noticees including the appellants. 11. RECORD OF FINDINGS CONCLUSION :- Appeal No.C/12/2009 filed by Shri T.V. Shanmugam In respect of this appellant, the adjudicating authority held that appellant being a CHA he has signed the shipping documents for third party without verifying the genuineness who was not authorized by the exporter to handle the documents. He has not seen the exporter. Instead he has signed shipping documents produced by P.Bhaskaran, a clearing clerk of M/s.Sankari Seasky Cargo. The appellant s main contention is that he has not played any key role in the smuggling of red sanders which has taken place after sealing of the customs cargo by the customs officer and during transit from CFS to port. It was further contended that as per the shipping documents the export goods were duly presented for examination and the goods were examined by Customs and loaded in the container and the cargo was sealed by Customs. Therefore, he has not committed any omission or commission in so far as the declared cargo i.e. Natural Slate Stones is concerned. The adjudicatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge his functions as a CHA, in the entire order, there is no finding of a positive role of the appellant in the attempt to smuggle out red sanderwood logs or the manner in which he abetted the attempt. For failure to discharge functions as a CHA, penalties are provided in the Custom House Agents' Licensing Regulations. In the absence of any finding showing that the appellant had abetted the failed effort to smuggle out prohibited red sanderwood logs, I find that penalty imposed on the appellant under Section 114(i) is not sustainable. Accordingly, the appeal filed by Shri I.Sahaya Edin Prabhu is allowed. 7. The Tribunal has rendered a categoric finding that there is no finding of a positive role of the first respondent in the attempt to smuggle out red sander wooden logs. Even in the order of the Original Authority, it is held that the custom house agent has not discharged his duty in the normal course of his service. As rightly observed by the Tribunal, for failure to discharge functions as a Custom House Agent, penalties are provided in the Customs House Agents Licensing Regulations. Therefore, imposition of penalty under Section 114(i) of the Customs Act is unwarranted. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Port of Chennai, by road. 4. If the custodian furnished documentary evidence to the satisfaction of the Commissioner of Customs. Chennai within one day from the date of dispatch of the settled containers containing export goods from Sanco CFS, Chennai to Port Chennai or within such extended time as the Commissioner of Customs, Chennai may allow that the export goods to be exported through sealed containers have reached the gateway port in full. ...... 8. The liability of this bond shall also cover safety and security of the cargo being transshipped by Sanco CFS from Chennai Port to their CFS and vice versa in their capacity as carrier and custodian. Then the above written bond shall be void and of no effect, otherwise the same shall remain in full force and virtue. Therefore, the finding is that in terms of CBEC Circular(s) and Chennai Custom House Public Notice(s) and the Bond furnished by them M/s, Sanco Trans Limited has undertaken the responsibility of safe transport of export containers from its premises to the Port. Hence, the defense put forward by Mk. Sanco Trans Limited that it is not responsible for the safe transport of the 'export good's merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court decision which is related to CHA. The role of CFS as custodian of cargo cannot be equated with the role of Custom House Agent and the CFS obligations and roles are entirely different from the role of CHA. Therefore, the decision relied by the appellant are not relevant to the facts of the appellant's case and the facts are distinguishable. In this regard, I rely on Hon ble Madras High Court s order in CC Vs Bansal Industries (supra) relied upon by Revenue wherein the Hon ble High Court allowed the Revenue s appeal by relying on Hon ble Supreme Court s decision in the case of Chairman, SEBI Vs Sri Ram Mutual Fund [2006 (5) SCC 361 held that for physical loss, no mens rea is required. The relevant paras 6 to 8 of the Hon'ble High Court's judgement are produced below :- 6. We have gone through the order of the Tribunal. It is true that the Tribunal has recorded a finding of fact that it is inclined to accept the reasons given by the assessee that it was the supplier who by mistake loaded tin sheets waste which were not ordered by the assessee and that the Revenue has not shown that there was any flow back of funds for the purpose of tin sheets waste. However, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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