Custom, Excise & Service Tax Tribunal
M/S. Chakiat Shipping Services Pvt. Ltd vs Commissioner Of Customs (Exports), ... on 16 June, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal Nos. C/176 & 177/2007, C/191/2007
and C/227 & 228/2007
(Arising out of Order-in-Original No.5780/2007 dated 7.3.2007 passed by the Commissioner of Customs (Exports), Chennai)
1. M/s. Chakiat Shipping Services Pvt. Ltd.
2. M/s. Caravel Shipping Services Pvt. Ltd.
3. Shri V.S. Krishnan
4. M/s. NYK Line (India) Ltd.
5. M/s. Bengal Tiger Line (India) Pvt. Ltd. Appellants
Vs.
Commissioner of Customs (Exports), Chennai Respondent
Appearance Shri Derrick Sam, Advocate, for the Appellants at S. No.1 & 2 Shri Akhil Bhansali, Advocate for the appellant at S. No. 3 Dr. R. Sunita Sundar, Advocate for the appellants at S. No. 4 & 5 Ms. Indira Sisupal, AC AR) for the Respondent CORAM Honble Shri D.N. Panda, Judicial Member Date of Hearing / Decision: 16.06.2015 Final Order No. 40652-40656 / 2015 M/s. Chakiat Shipping Services Pvt. Ltd. and M/s. Caravel Shipping Services Pvt. Ltd. are represented by the Advocate Shri Derrick. V. S. Krishnan is represented by Shri Akhil Bhansali, Advocate and Dr. R. Sunita Sundar, Advocate represented M/s. NYK Line India Ltd. and M/s. Bengal Tiger Line India Pvt. Ltd.
All the 5 appeals having arisen out of common cause, these are heard analogous and disposed by this common order.
C/176 & 177/2007
2. The racket of red sander smuggling when busted out that brought the present appellants in this batch of appeals to the fold of law. The case against M/s. Chakiat Shipping Services Pvt. Ltd. and M/s. Caravel Shipping Services Pvt. Ltd. was booked by Customs alleging that they had close intimacy to the mis-declaration of the port of discharge. The goods although was destined to Malaysia and also loaded in the vessel bound to that destination shipping bill was made to show the port of discharge as Colombo. This resulted in mis-declaration of description of the destination for which they were penalized by an amount of Rs.10,000/- each under section 117 of the Customs Act, 1962.
3.1 So far as M/s. Caravel Shipping Services Pvt. Ltd. is concerned, it was brought to the fold of the adjudication by customs authorities noticing that M/s. Ascending Impex, the exporter was only a bubble and non-existent and shipping bill No. 2065190 dated 17.5.2005 was filed for that concern. Similarly, M/s. Chakiat Shipping Services Pvt. Ltd. came into fold when the customs found that the said appellant was also party to the misdeclaration of port of discharge. Learned adjudicating authority has recorded role of M/.s Caravel Shipping Services Pvt. Ltd. in para 5 of his order. According to investigation one Shri V.S. Krishnan, freight forwarder as partner of M/s. Premier Shipping Agency and appellant in appeal No. C/191/2007 in this batch of appeal was in contact with M/s. Caravel Shipping Services Pvt. Ltd. for dispatch of red sander from India to Malaysia. One Shri Kumar who was an abettor to the red sander smuggling along with Chitty Raja, a mastermind of the racket were aware of non existence of M/s. Ascending Impex, the exporter, who filed shipping bill of live consignment of red sander.
3.2 M/s. Caravel Shipping Services Pvt. Ltd. claimed to be Liner Agent (freight broker) but issued a bill of lading for a container on the vessel M.V. Tiger Pearl V. 283 with destination port as port Kelang. The documents for EGM declared the container to be delivered in Colombo.
4. Learned adjudicating authority has also brought out how M/s. Caravel Shipping Services Pvt. Ltd. was well aware about the destination of the export of the red sanders to Malaysia. The goods were shipped for delivery in Malaysia but no Colombo as stated in shipping bills. Similarly, the manner how smuggling of red sanders occured within the knowledge of M/s. Caravel Shipping Services Pvt. Ltd. was brought to record. All such story was described by Shri Kumar under section 108 of the Customs Act, 1962. That vital piece of evidence remained unrebutted.
5. When Chitty Raja brought out these two appellants in his statement under section 108 recorded on 22.5.2005 and 23.5.2005 fully more described in para 5 of the order, authority below found their involvement with the smuggling of red sander. Kumar who is also an appellant in this batch of appeals and was partner of M/s. Premier Shipping Agency, Chennai was in contact with Chitty Raja and his connection was also with Krishnan. The origin of red sanders and its destination was known to M/s. Caravel Shipping Services Pvt. Ltd. Adjudicating authority therefore did not rule out role of M/s. Caravel Shipping Services Pvt. Ltd. who misdeclared Port of discharge as Colombo while the real port was found to be Kelang, Malaysia. Shri Kumar and Chitty Raja were arrested on 23.5.2005 under COFEPOSA for breach of law.
6. When the statement of Muralidharan, Manager (Operations) of M/s. Chakiat Shipping Services Pvt. Ltd. was recorded under section 108 of the Customs Act, 1962 on 25.5.2005 in respect of consignment shipped by shipping bill No. 2036539 dated 1.4.2005 (are of the past shipping bills appearing in para 25 of the impugned order), he revealed that the destination of the goods was mis-declared. The goods were destined to Malaysia. But the port of discharge was declared as Colombo. Such statement was corroborated from statement of one N. Chandrasekhar, Senior Manager, Operations, M/s. Bengal Tiger Line (India) Pvt. Ltd. Chennai in respect of shipping bill No. 2058991 dated 6.5.2005 (Ref: para 29 of adjudication order). Similar such corroboration came out when Shri H. Gokulkrishnan, Assistant Manager (Operations) of M/s. NYK Line (India) was examined on 27.5.2005 under section 108 of Customs Act, 1962 (Ref. para 28 of adjudication order).
7. With the aforesaid background, penalty of Rs.10,000/- was imposed on both the appellants under section 117 of the Customs Act, 1962.
8. Shri Derrick representing both the appellants submitted that both of the appellants are innocent and they have no knowledge about the port of discharge. They only arranged shipping of the goods without any involvement in mis-declaration as to the port of discharge. Therefore, section 117 of the Customs Act does not apply when they had no conscious knowledge of the goods exported as well as the port of discharge. Accordingly, they should not be penalized.
9. Revenue on the other hand supports the case of customs.
10. Heard both sides and perused the record and examined the submissions.
11. It is an admitted case of mis-declaration of port of discharge as is revealed from the documents filed to form part of EGM which connected both the appellants. Customs area being a sensitive area, there was nothing to be hidden by the parties working in that area and particularly when connected with the export of goods. These two appellants did not detach themselves from the smuggling of red sander. They were in close association with the racketeers thereof. It cannot be said that they have no knowledge about the port of discharge when Raja as well as Kumar brought them to the stream of export which they failed to discard. They were closely connected and involved with the racket. Their active role has been recorded by the adjudicating authority. When the goods exported were prohibited goods and not permitted to be exported from India and the appellants assigned themselves to such export, they are not immune from penal consequence of law.
12. The plea of the appellants that imposition of penalty was uncalled for fails to stand when they were party to mis-declaration making documents for filing of EGM. These two appellants having been intimately connected with the red sander export had conscious knowledge of the port of discharge. Accordingly, imposition of penalty on both of them is justified for which their appeals are dismissed.
Appeal No. C/191/2007
13. So far as the appellant V.S. Krishnan is concerned, learned counsel submits that Krishnan was not at all connected with the red sander smuggling. Statements recorded from him by customs were under duress when he was ill and was not in good health. This has been revealed by him in reply to show-cause notice filed on 15.12.2005. In his statement under section 108 of the Customs Act, 1962, he revealed that he was not at all connected with dispatch of the goods to a wrong destination. On the basis of the letter received from Ascending Impex he acted in good faith. His role was limited. His arrest does not ipso facto bring him to the fold of penalty under section 114(i) of the Customs Act, 1962. Therefore, the proceeding against him fails to sustain since he had not issued shipping bill. That was issued by CHA.
14. Revenue supports adjudication.
15. Reading of para 15 of the adjudicating order reveals that Krishnan was partner of M/s. Premier Shipping Agency, Chennai which was a freight forwarder. Statement was recorded from him under section 108 of Customs Act,1 962 on 24.5.2005 and 26.5.2005. He stated to have acted on the basis of the liner M/s. Box Trans Shipping Agencies Pvt. Ltd. who required the container to be booked for port Kelang. He also stated to have received a letter from Ascending Impex requesting for switch Bill of Lading and showing the address of consignee as M/s. R&A Enterprises, Colombo. Accordingly, Bill of Lading was issued for that port. Request was made to the counterpart of Colombo to issue Bill of Lading to Port Kelang. His statement also reveals that the containers were loaded into vessels bound for Malaysia. That vessels did not go to Port in Colombo nor any transshipment was made to Colombo and the shipper asked for switch bill of lading. No amendment was intimated to customs about the port of discharge.
16. The smuggling racket of red sanders had a team. Smuggling does not occur single handedly. It is an organized bid and concerted effort of those who are actively involved in such venture to make the mission successful. This appellant was one of them. Export was attempted to be made through live shipping bill by non-existence firm Ascending Impex. Even in past such act was done. Racketeers submitted themselves to law by the evidence of each other. From their ill design on record, it cannot be said that this appellant was innocent.
17. In the case of the appellant, he was actively involved in mis-declaration of the port of discharge. In the course of smuggling, whisper about the modus operandi comes up. As a member of the racket this appellant had not isolated him. He was contributory to the smuggling concealing material fact till discovery by investigation. The plea that the appellant had given his evidence under section 108 under duress failed to lend any credence for the reason that after seven months of recording of the confessional statement, attempt was made to create a fiction of duress. There was no denial to the statement dated 24.4.2005 and 26.5.2005 immediately by any means. The pleading of duress has no legs to stand. There is no doubt about the knowledge of the appellant as to the actual port of discharge. Mis-declaration was within his knowledge. Accordingly, adjudication against this appellant does not call for any interference. That is confirmed and penalty of Rs.1,00,000/- (Rupees one lakh only) imposed is hereby confirmed. Appeal is dismissed.
C/227 & 228/2007
18. As regards M/s. NYK Line India Ltd. and M/s. Bengal Tiger Line India Pvt. Ltd., Customs found these two appellants were subjected to penalty under section 117 of the Customs Act, 1962 due to their involvement in the smuggling of red sanders as a vessel operator. They were implicated in respect of four consignments exported carrying red sanders through the container Nos. CRXU 2210365; CRXU 2512529; FSCU 3874077 AND TRIU 3743086 covered by shipping bill No. 2036539 dated 1.4.2005, 2044095 dated 15.4.2005, 2052145 dated 27.4.2005 and 2058991 dated 6.5.2005. When such fact came to the knowledge of customs, they examined Shri H. Gokulkrishnan, Assistant Manager, Operations M/s. NYK Line (India), Chennai. He stated under section 108 of the Customs Act, 1962 on 27.5.2005 that the containers CRXU 2512529 covered under shipping bill No. 2044095 dated 15.4.2005 was shipped by M/s. Box Trans Shipping Agencies Pvt. Ltd. and loaded ino the vessel MV Sagar VOY:011. Such cargo was delivered at the port of discharge Kelang in Malaysia. He also stated that there was contravention of provision of section 41 of the Customs Act since the certificate issued in the EGM was untruthful. The EGM No. 6801 was based on the details given by the liner agents.
19. Similarly, two consignments of red sanders covered by shipping bill No. 2058991 dated 6.5.2005 and 2052145 dated 27.4.2005 were also consigned by M/s. Carvel Shipping Services and M/s. Box Trans Shipping Agencies Pvt. Ltd. had placed order for containers. Both the containers were shipped to the port of discharge in Kelang in Malaysia. The EGM 6873 was based on the details given by the liner agents but that was untruthful.
20. With the aforesaid background, customs found that the vessel operator acted in defiance of law and there was lapse by them for which they were brought to the purview of adjudication. Their defence was called for by show cause notice dated 15.11.2005 The defence led by the appellant did not convince the adjudicating authority for which these two appellants were imposed penalty of Rs.10,000/- each under section 117 of the Customs Act, 1962.
21. Learned counsel Dr. Sunita Sundar appearing on behalf of both the appellants submitted that the vessel operators had no scope to know about the act of the shippers and liner agents. They were innocent as a mere carrier of the goods without being involved with the goods carried in the vessel. If at all there was violation of section 41 of Customs Act, 1962, these two appellants could have been proceeded for violation thereunder. But that was not done. The vessel operators left India in terms of an order under section 42 of the Customs Act, 1962 and let export order was also given by customs. The goods entered to customs area under section 50 of Customs Act, 1962 was within the knowledge of the Customs authority. Therefore these two appellants were not concerned with the goods that entered under section 50 of Customs Act and such goods left India.
22. It was further submission of the appellants that they were innocent and having no knowledge about mis-declaration of the port of discharge should not face any penalty.
23. On the other hand, Revenues contention is that vessel operators had knowledge about the goods, nature thereof and also the destination of the goods. Therefore, they were rightly dealt under section 117 of Customs Act, 1962.
24. Heard both sides elaborately and also gone through the record. Vessel operators duty commences from the port of origin upon filing of the EGM and ends on let export order issued by the proper officer under section 42 of Customs Act, 1962 for sailing of the vessel.
25. Law is very clear as to the role of vessel operator when combined reading of section 41 and 42 of Customs Act is made along with the contents of EGM in Form 66. These two vessel operators had their conscious knowledge about the consignor and consignee before they left India. It is clear from the Form 66 filed by the commander of the ship before the customs authority to get let export order that contents and nature of the goods, weight thereof, description of shipping bills as well as details of the consignor and consignee appearing in Form No. 66 was well within the knowledge of the commander of the ship who certified the description in that form.
26. The statement recorded from Gokulkrishnan, Assistant Manager (Operations) of M/s. NYK Line (India) Chennai and Shri N. Chandra Sekhar, Senior Manager, Operations of M/s. Bengal tiger Line (India) Pvt. Ltd. discloses the role of the appellants who acted contrary to declaration given to customs in Form No. 66. The materials utilized against these two appellants are the documents relating to the container No. CRXU 2512529 loaded in the vessel MV Sagar VOY 011 and the container No. TRIU 374306 and FSCU 3874077. When these two appellants were exposed to the statements of above two persons who admitted the breach of law in para 29 & 30 of the adjudication order, they did not deny about the shipment of the goods in the respective container meant for delivery in Port Kelang, Malaysia although port of discharge was declared in shipping bills as Colombo. They also did not rule out filing of the EGM with the description of the contents in the shipping bills. This clearly shows that the principles of cavet amptor makes the vessel operator liable for their conscious knowledge about the goods shipper, description and nature thereof, consignor and the consignee, as well as contents of the shipping bill misdeclaring port of discharge. Col. 6 of Form 66 which is EGM describes, shipping bill number. Therefore, the vessel operators had good knowledge about the shipping bill descriptions and port of discharge when they mentioned the shipping bill number in the EGM concerned.
27. The shipping bill described the port of discharge as Colombo. But the goods were loaded into vessel bound to Malaysia. That does not rule out breach of trust made by the appellants and their commitment of breach of law. Those two appellants carried the goods to the destination Malaysia. When the vessels were bound to that destination, still then they allowed loading of goods misdeclared to be delivered in Colombo. It does not appeal to common sense how these two vessel operators were not aware about the destination, contents, nature of goods, consignor and consignee of the exported consignment as well as port of discharge. They were concerned with the goods described in the shipping bill as a bailee. Therefore, it cannot be said that the vessel operators were innocent and having no knowledge about the goods which were shipped in their vessels for delivery in the port of discharge of Kelang in Malaysia.
28. It is very clear from the materials on record that the red sanders which were prohibited goods were shipped in the vessels of appellants. The vessel operators have duty to know about the nature and description as well as character of goods to ascertain permissibility of shipment thereof. When the goods were prohibited goods it was primary duty of the vessel operator not to allow the same to be loaded into the vessel.
29. So far as breach under section 41 is concerned, the vessel operator has duty to make a truthful declaration of the description in Form 66. The goods shipped being red sanders and also destined to be delivered in Malaysia there was breach of law made by the appellants. Thus, the vessel operator having conscious knowledge of the mis-declaration and exporting prohibited goods, it is not at all proper to intervene to the adjudication for which both the appeals are dismissed.
30. It is painful to note that the customs authority have very casually acted to allow export of 4 (four) consignments of red sander in past as per description appearing in para 25 of the adjudication order. This calls for appropriate cognizance by Board for which the Registry is directed to send a copy of this order to the Chairman, CBE&C, North Block, New Delhi and DG DRI, New Delhi for appropriate action. Further it may be added that levy of token penalty of Rs.10,000/- (Rupees ten thousand only) on the vessel operator sends a wrong message to the society as to weak tax administration and bonus to evasion for which appropriate dose of amendment in law deserves consideration.
(Dictated and pronounced in open court) (D.N. Panda) Judicial Member Rex 10