Custom, Excise & Service Tax Tribunal
Flavian Walter D Souza vs Nhava Sheva on 22 August, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEALS NO: C/670 to 672/2012
[Arising out of Order-in-Appeal No: 185 to189 (Adjudication Export)/2012 (JNCH)/EXP-34 to 38 dated 18th April 2012 passed by the Commissioner of Customs (Appeals), JNCH, Mumbai II.]
For approval and signature:
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Sarosh Nagarwala
Skylark Travels Pvt Ltd
Flavian Walter DSouza
Appellants
versus
Commissioner of Customs (Export)
Nhava Sheva
Respondent
Appearance:
Ms. Pooja Reddy, Advocate for the appellant Shri M.K. Sarangi, Dy. Commissioner (AR) for the respondent CORAM:
Honble Shri C J Mathew, Member (Technical) Date of hearing: 22/08/2016 Date of decision: 24/12/2016 ORDER NO: ____________________________ M/s Skylark Travels Pvt Ltd seeks the quashing of penalty of ` 5,00,000/- imposed under section 114 (i) of Customs Act, 1962 upheld by order-in-appeal no. 185-189 (Adjudication Export)/2012 (JNCH)/EXP-34-38 dated 18th April 2012 of Commissioner of Customs (Appeals), JNCH. Penalty was imposed for alleged involvement in attempt to smuggle out 6.9 metric tons of red sanders in containers entered for export lock washers in the shipping bills filed through the appellant in its capacity as customs house agent licenced under Customs House Agent Regulations, 2004. The other two appellants in the challenge to the impugned order are individuals imposed with penalties.
2. It is not in dispute that M/s Skylark Travels Pvt Ltd did file the shipping bill pertaining to the export. It is also admitted that this consignment was brought to them by one Flavian Walter DSouza, a logistics operator, who regularly referred his clients to them as he was not a licenced customs house agent. M/s Skylark Travels Pvt Ltd, however, submits that they had no reason to suspect the mala fides of the exporter as the documents indicated that the goods had been stuffed in the factory and sealed under the supervision of Central Excise officer. It is their contention that the individuals who had supplied the documents and admitted to cognizance of its fraudulent origin had not been made noticees in the proceedings under Customs Act, 1962 whereas they, who were not implicated in any of the statements as having been part of the conspiracy to smuggle, had been. A similar plea was raised by the two other appellants.
3. Heard Learned Counsel for appellants and Learned Authorised Representative. I find that the matter can be decided based on the facts on record.
4. M/s Skylark Travels Pvt Ltd is a customs house agent licenced to operate under the Customs House Agent Licencing Regulations, 2004 (now known as customs broker) whose responsibility and professional obligation it is to undertake clearance formalities on behalf of importers and exporters. There is no dispute that the containers for which shipping bill was filed by the agent on the recommendation of Flavian Walter DSouza did contain red sanders which is prohibited for export from India in pursuance of Convention on International Trade in Endangered Species (CITES) and was declared as lock washers; there has been no allegation that the consignment was substituted between the filing of the shipping bill and the entry into the export area. The role of a customs house agent in relation to export commences with the filing of the shipping bill and is completed when the consignment is handed over to the agent of the carrier. In the absence of an allegation, or a finding, that the substitution occurred during this window, responsibility cannot be fastened on the agent.
5. I find that the original authority has acknowledged that none of the perpetrators of the offence have implicated the agent in any act of omission or commission in connection with the contraband. It is also on record that those who provided the documents to the appellant have also not been issued with notice in connection with proceedings for confiscation and penalty. In these circumstances a finding that section 114 (i) of Customs Act, 1962 can be invoked is without any foundation.
6. Despite the original authority having noted the lack of any evidence or statement to link appellant with the offence, the impugned order has gone on to invoke the penal provision by relying, in passing, upon the allegations in the show cause notice. First appellate authority, too, relies solely on those allegations which were made with reference to alleged misconduct while discharging the functions of customs house agent and are, indeed, enumerated in the Customs House Agents Licencing Regulations, 2004 and its successor Regulations. These are framed by the Central Board of Excise & Customs in exercise of powers under section 146 of Customs Act, 1962. The enabling provision in the statute also empowers the notifying authority to incorporate penal measures and procedure to be followed for imposition of penalties. When a statutory instrument specifically provides for a code of conduct and penalty for breach thereof, it is not legal and proper to bring such breach within the ambit of another statutory provision which is intended to penalise smuggling of goods, or attempt thereof, unless that latter provision specifically intends such coverage. There can be no doubt that a customs house agent can be penalised under section 114 of Customs Act, 1962 but that penalty must follow a finding that an act of omission or commission on the part of customs house agent rendered the goods liable for confiscation. To link up carriage of contraband with failure to ascertain the identity of exporter or obtain the authorization is to infer that such ascertainment or obtaining would have prevented the attempt to smuggle. Nor is it credible to infer that failure to do so has encouraged the perpetrators. If enforcement were so ludicrously simple, the immense manpower resource appointed under the Customs Act, 1962 can be done away with. If deviations from the code of conduct enumerated in the Regulations were to be dealt with as abetting of smuggling, such provisions in the Regulations are redundant and a mere reference to section 112 and section 114 of Customs would have sufficed instead of the elaborate procedure laid down in the Regulations. It would appear that the findings of the original and first appellate authority are not in conformity with legislative intent.
7. That the two authorities did proceed to cite the alleged breaches of the Regulation as the sole basis for proceeding against the appellant is an act of quasi-judicial overreach. The Customs House Agents Regulations, 2004, and its successor instrument, empowers the Commissioner of Customs, and that authority alone, to proceed against a customs house agent for breach of the Regulations. Neither the original authority nor the first appellate authority can claim that power. I find that the two lower authorities have relied merely on this alleged breach to invoke section 114. That is patently without authority of law and cannot be allowed to sustain.
8. The adjudicating authority has held Shri Flavian Walter DSouza and Shri Sarosh Nagarwala to be connected with sub-letting of customs house agent licence, failure to ascertain credentials of exporter and failure to notice the forged nature of the documents. These do not, by any stretch, evidence culpability in abetment of smuggling of red sanders and on which the notice as well as impugned order, is conspicuously silent. On the contrary, the adjudicating authority notes the absence of any corroboration of allegation of abetment, involvement or knowledge of the two individuals in the statements of the masterminds or principal offender. The imposition of penalty is, therefore, not supported by a finding on the role of these two individuals as abettors.
9. For the above reasons, the penalty imposed on appellants are set aside and appeals allowed.
(Pronounced in Court on 24/12/2016) (C J Mathew) Member (Technical) */as 6 2