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TMI Blog2018 (1) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... t aside - penalty imposed on M/s. Sea Port Lines (India) Pvt. Ltd. is also set aside. Appeal allowed - decided in favor of appellant. - Appeal Nos.C/40030/2017, C/40107/2017 & C/41708/2017 - Final Order Nos.40001-40003/2018 - Dated:- 2-1-2018 - Ms. Sulekha Beevi C.S., Member ( Judicial ) For the Appellants : S/Shri M. Kumar, J. Janakiraman G. Derrick Sam, Advocates For the Department : Shri K. Veerabhadra Reddy, JC (AR) Shri R. Subramaniyan, AC (AR) ORDER The issue for consideration in these appeals being the same, they were heard together and are disposed by this common order. 2. Brief facts are that on 2.3.2015, on information received to the effect that red sander logs, a prohibited item for export out of India had been stuffed inside the container for smuggling out of India, the officers of SIIB, Custom House, Tuticorin, on surveillance identified one container loaded in lorry bearing Regn. No. TN 20 BU 4975 and intercepted the same. On examination, it was found that the original cargo that is cotton tufted floor mats which was declared in the shipping bill dated 28.2.2015 and stuffed inside the container at M/s. Chola Container Freight Station (CF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. Kumar submitted that the appellant is only a CFS agent. The export cargo was examined by customs officers in their CFS area and thereafter the export goods namely cotton tufted floor mat were stuffed into the container and let export order was given by the proper officer of customs posted in CFS. The container was then loaded on the lorry and the container with customs seal was moved out of the CFS. They have no role or connection with the attempted illegal export of red sanders or substitution of the declared cargo. The investigation or facts of the case do not reveal that the appellant was in any way connected with the act of illegal export of red sander logs. The allegation is that the appellant omitted to take reasonable precaution that the container was not tampered in any manner after it left CFS. He submitted that while leaving the CFS, the container was loaded with the declared cargo and the illegal act has been done without the knowledge of the appellant and outside the CFS area. As per discussion in para 61 of the Order in Original, it is stated that the appellant has violated the provisions of clause 6(1)(k) of Handling of Cargo in Customs Area Regulation, 2009 and P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court of Calcutta in the case of IMSA Shipping Agency Pvt. Ltd. vs. Commissioner of Customs 2002 (145) ELT 55 (Cal.). The following decisions were also relied by the appellant to support the contention that when there is no evidence to establish deliberate commission of an act abetting smuggling of red sanders, the imposition of penalty alleging not following KYC norms is not sustainable:- a. Scope Amra Logistics Pvt. Ltd. Vs. Commissioner of Central Excise - 2015 (324) ELT 724 b. Freight Connection India Pvt. Ltd. Vs. Commissioner of Customs - 2016 (333) ELT 375 c. Maheshwari Rocks Pvt. Ltd. Vs. Commissioner of Customs, Chennai - 2010 (262) ELT 574 d. Skyline Shipping Logistics Vs. Commissioner of Customs, Chennai - 2010 (262) ELT 985 4. On behalf of M/s. Sea Port Lines (India) Pvt. Ltd, ld. counsel Shri G. Derrick Sam appeared and argued the matter. He submitted that the allegation against the appellant is that they did not obtain KYC from the client. There is no allegation that appellant had any involvement in the smuggling of red sanders or had committed any positive role in the alleged smuggling of red sanders. The appellant had booke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d requested for permission for outsourcing the services of transporting the goods. Pending such application, the offence had occurred. That since the appellant had sought permission for outsourcing the transportation with effect from 8/2015 and as they had already taken necessary steps to comply with the provisions of the Regulations, there is no violation of the Regulations. In para 61 of the Order in Original, the adjudicating authority finds that they have violated provisions of 6(1)(k) of Handling of Cargo in Customs Area Regulation, 2009 and Public Notice No. 1/2014. Since there is a subsequent order passed by the Commissioner holding that there is no violation of the provisions of above said Regulation, I have to conclude that the imposition of penalty on M/s. Chola Logistiks Pvt. Ltd. cannot sustain and requires to be set aside which I hereby do. 8. The grounds put forward by M/s. Bhavani Shipping Services India Pvt. Ltd. as well as M/s. Sea Port Lines (India) Pvt. Ltd. are almost similar. The allegations raised against both these appellants are that they did not obtain the KYC details of the exporter. The Regulations require to obtain KYC of the client. M/s. Bhavani Ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted in the present case, when the penalty is imposed on the companies, penalties on the employees are not warranted. As regard penalties on the appellant companies, I find that in view of the role of the companies, the lapse is only confined to the non-compliance of KYC and not involvement in the smuggling of Red Sanders. In view of this facts, I am of the view that the quantum of penalty on the appellant companies are very higher side and the appellant companies deserve reduction in the penalty imposed under Section 114(i). As regard the judgments relied upon by the ld. Counsel, I find that both the said judgments have not dealt with the Public Notice No. 17/2012, therefore, the ratio of the same are not applicable, hence distinguished. 8. In the case of Freight Connection India Pvt. Ltd. (supra), the Tribunal has observed as follows:- 5. Having heard the rival contentions and considering the facts on record, I find that the present appellant have issued the container in question for past export through another freight forwarder. I further find that the whole case of the Revenue is based on assumption and presumption as neither the main accused nor the exporter/owner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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