Madras High Court
R.Daniel Raj vs Customs on 23 December, 2016
Author: G.Jayachandran
Bench: G.Jayachandran
C.M.A.(MD)No.777 of 2017
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Date of Reserving the Judgment Date of Pronouncing the Judgment
05.02.2024 21.02.2024
CORAM:
THE HONOURABLE DR.JUSTICE G.JAYACHANDRAN
and
THE HONOURABLE MR.JUSTICE C.KUMARAPPAN
C.M.A.(MD)No.777 of 2017
and
C.M.P.(MD)No.2335 of 2017
R.Daniel Raj ... Appellant
vs.
1.Customs, Excise and Service Tax Appellate Tribunal,
South Zonal Bench,
Shastri Bhavan Annexe,
1st Floor, No.26, Haddows Road,
Chennai – 600 006.
2.The Commissioner of Customs,
Custom House,
Tuticorin – 628 004. ... Respondents
PRAYER: Civil Miscellaneous Appeal filed under Section 130 of the Customs
Act, 1962, against the final order No.42464/2016, dated 23.12.2016, in Appeal
No.C/41582/2013-SM, on the file of the Customs, Excise and Service Tax
Tribunal, Chennai.
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https://www.mhc.tn.gov.in/judis
C.M.A.(MD)No.777 of 2017
For Appellant : Mr.A.K.Jayaraj
For Respondents : Mr.R.Nandakumar
Senior Panel Counsel for Central Govt.
JUDGMENT
DR.G.JAYACHANDRAN, J.
and C.KUMARAPPAN, J.
This appeal preferred by the representative of the Forwarding Agent being aggrieved by the order passed by the CESTAT, dismissing his appeal directed against the order imposing penalty of Rs.5,00,000/-, for attempting to export 9.89 MTs. of red sanders in connivance with one Rajesh Gupta in contravention of the provisions of the Customs Act, 1962.
2. Based on the specific information, the cargo in the lorry bearing Registration No.TN-28-AA-5031, carrying goods declared as '100% Cotton Grey Sheetings' intended to be exported by M/s.Shiva Texyarn Limited, Coimbatore, through the Custom House Agent M/s.Jay Yess Agencies, was inspected and found red sander logs weighing 9.89 MTs., valued at Rs.49.45 Lakhs were concealed inside the cargo and the same were seized.
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3. The interrogation with one E.A.M.Ahamed Rabi, cleaner of the lorry revealed that the goods was loaded at the instance of one Kumaresan, who was the driver of the vehicle and the search of the business premises of M/s.Jay Yess Agencies, Tuticorin, and M/s.Sea Angel Logistics, Tuticorin, led to recovery of correspondence between T.Mariappan, Proprietor of the Forwarding Agency M/s.Sea Angel Logistics, Tuticorin, and Rajesh Gupta.
4. On interrogation, T.Mariappan, Proprietor of the forwarding agency M/s.Sea Angel Logistics, Tuticorin, stated that Rajesh Gupta contacted him over E-mail, seeking empty container for stuffing textile goods to Sharjah. Therefore, he booked empty container from MSC Container Liners on 29.11.2011. The exporter arranged trailer lorry for taking the empty container from Tuticorin for stuffing of Cargo at Palladam. After stuffing the goods, the container returned to Tuticorin on 01.12.2011. Rajesh Gupta informed Mariappan that the goods belongs to M/s.Shiva Texyarn Limited, which is the sister concern of Rajesh Gupta.
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5. R.Daniel Raj [the appellant] Managing Partner of Custom House Agency M/s.Jay Yess Agencies, Tuticorin, in his voluntary statement, recorded under Section 108 of the Customs Act, 1962, on 02.12.2011, had stated that he accepted the consignment on the basis of documents produced by T.Mariappan, Proprietor of forwarding agency M/s.Sea Angel Logistics, Tuticorin, through his marketing staff Thiagarajan and that the consignment was stuffed at Palladam by Central Excise Officers and sealed with Central Excise seal. He did not contact the exporter directly, but he accepted the consignment based on the documents produced by the forwarding agent.
6. The Shipping Bill, dated 29.11.2011, revealed that the Invoice, Packing List, Annexure – C1, AR-E1 for the export of cotton grey sheeting were authenticated by M/s.Shiva Texyarn Limited, Coimbatore. The jurisdictional Central Excise Officers attached to Coimbatore IV-E Range have authenticated the documents besides examining the stuffing report for the export of cotton grey sheeting. Later, the verification of the shipping Bill No.6446455, dated 29.11.2011 with ICES revealed that the subject shipping bill was indeed fake and 4/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017 filed in the name of M/s.Shiva Texyarn Limited, Coimbatore, a unit of Bannari Amman Group of Companies.
7. The examination of the General Manager (Marketing) of the exporter M/s.Shiva Texyarn Limted, revealed that they did not file any free shipping bill through M/s.Jay Yess Agencies. Their Customs House Agents are M/s.Index Logistics and M/s.Sree Shanmuga Shipping. On seeing the shipping bill, S.Shankar Kumar, General Manager, M/s.Shiva Texyarn Limited, had identified that it was not filed by them and they did not have any transport fleet for transporting the cargo from their factory to Tuticorin. The signatures and rubber stamps found in the export documents were forged and they were in the process of preferring Police complaint.
8. The enquiry with the Regional Transport Office, Sivagangai, revealed that C.Kumaresan, who is the driver of the lorry carrying contraband, is a resident of Thatchanendal, Periyakannanoor, Sivagangai District. But, the said Kumaresan was not available in that address. The fake rubber stamps in the name of M/s.Shiva Texyarn Limited was made by Lengaram of M/s.Murugan Plastics. 5/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017
9. The enquiry in the three Toll Plazas suggested that the loading of red sanders into the container and fabrication of the document ought to have been occurred at Madurai. The stuffing report, which has been signed by the Superintendent of Central Excise, Palladam Range, found to be a forged document, since no such Officer working in the Range. The factory premises of M/s.Shiva Texyarn Limited, Coimbatore, falls under the jurisdiction of Coimbatore IV-D Range and not under Coimbatore IV-E Range as mentioned in Annexure C-1 of the export document.
10. The e-mail communication between T.Mariappan and Rajesh Gupta recovered from the laptop revealed that Rajesh Gupta is a Madurai based businessman. The verification of the records maintained by the R.T.O. Office revealed that the seized vehicle bearing Registration No.TN-28-AA-5031 was not issued with any permit from the RTO Office, Chennai. The R.C. Book of the vehicle appears to be forged document. There was one lorry bearing Registration No.TN-28-AA-5707 owned by one K.Sumathy, W/o.U.Kannan, but on the date of seizure of the lorry, she was not the owner of the vehicle. The records seized not tallied with the original records in the RTO Office.
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11. Thus, on investigation, the Commissioner of Customs had arrived at a conclusion that under the guise of cotton grey sheeting, falsely mentioning M/s.Shiva Texyarn Limited, Coimbatore, as exporter, red sanders were attempted to be exported. Rajesh Gupta appears to be the kingpin behind the whole affairs and he had booked the empty container through T.Mariappan, Proprietor of the Forwarding Agency M/s.Sea Angel Logistics, Tuticorin. The cargo was stuffed by Rajesh Gupta. The shipping bill were made to be prepared furnishing false details. The involvement of T.Mariappan, Proprietor of M/s.Sea Angel Logistics, Tuticorin, as being instrumental in booking empty container at the behest of Rajesh Gupta, is corroborated by the statement of R.Daniel Raj (appellant), Managing Partner of M/s.Jay Yess Agencies, Tuticorin, who accepted the consignment on the basis of the documents produced by the forwarding agency M/s.Sea Angel Logistics, Tuticorin, owned by T.Mariappan. Since the goods are liable to be confiscated and penalty to be levied as per Section 114 (i) of the Customs Act, 1962, a show cause notice was issued to the persons concerned, including R.Daniel Raj [the appellant], describing him as Managing Partner of the Custom House Agency M/s.Jay Yess Agencies, Tuticorin. 7/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017
12. To the show cause notice, dated 28.05.2012, R.Daniel Raj [the appellant] replied with his explanation, vide letter dated 13.07.2012, wherein he has stated that he accepted the consignment only based on the documents produced by T.Mariappan, who is the Proprietor of forwarding agency M/s.Sea Angel Logistics, Tuticorin. However, he had no knowledge or intention of exporting red sanders. He had denied his involvement in the alleged attempt to export the red sanders illegally.
13. On 16.04.2013, the Commissioner of Customs, Tuticorin, passed Order- in-Original, wherein he has imposed penalty of Rs.5,00,000/- on the appellant R.Daniel Raj, Managing Partner, M/s.Jay Yess Agencies, Tuticorin, for his acceptance of the consignment containing prohibited goods for export on the basis of the fake documents produced by the unauthorized forwarding agency M/s.Sea Angel Logistics, Tuticorin, owned by T.Mariappan.
14. The said Order-in-Original passed by the Commissioner of Customs, came to be challenged before the Customs, Excise and Service Tax Appellate Tribunal [CESTAT], Chennai.
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15. The CESTAT, vide order dated 29.12.2016, dismissed the appeal filed by R.Daniel Raj, Managing Partner of M/s.Jay Yess Agencies, Tuticorin, holding that the fake document produced by T.Mariappan been knowingly accepted by R.Daniel Raj and he had submitted it to the Customs for clearance. He had not informed the Department about the fabrication of the document accompanying the offending goods.
16. The plea of R.Daniel Raj was that he is not the Managing Partner of M/s.Jay Yess Agencies. The CESTAT taking into account that R.Daniel Raj throughout his statement had referred M/s.Jay Yess Agencies as his Company, the non-disclosure of material facts to the Department, brings him within the fold of prosecution. His conduct showed that he was hand in glove with the smuggling racket to act detrimental to the Customs Department.
17. The said order of CESTAT is under challenge in this Civil Miscellaneous Appeal.
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18. The learned counsel appearing for the appellant submitted that the show cause notice per se erroneous and issued without application of mind. The appellant was not aware about the stuffing of the red sanders and misused the IEC [Import-Export Code] of M/s.Shiva Texyarn Limited. The correspondence is only between the exporter Rajesh Gupta and T.Mariappan, who is the owner of M/s.Sea Angel Logistics. The appellant handled only the documents produced by T.Mariappan and based on the information given by the said T.Mariappan, he had submitted it to the Customs Department. He had no knowledge about the mis- declaration. Therefore, he cannot be charged either for abetment or for attempt to export red sanders.
19. The learned counsel appearing for the appellant further submitted that the penalty imposed on the appellant under the Customs Act, 1962 is not sustainable and legal. According to the appellant, he is neither the Customs House Agent nor the Managing Partner of M/s.Jay Yess Agencies. He is only a paid staff of M/s.Jay Yess Agencies and therefore, it is not correct to levy penalty on him under the Customs Act, 1962, for the reason that, he had connection with M/s.Jay Yess Agencies.
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20. The learned counsel appearing for the appellant also relying upon the Customs House Agents Licensing Regulations, 2004 [hereinafter referred to as ''the CHALR''] governing the Customs House Agents, submitted that if an Agent or his representative failed to follow the CHALR, he is liable for action only under the CHALR and not under the Customs Act, 1962.
21. The substantial questions of law involved in this Civil Miscellaneous Appeal are,
(a) Whether the appellant as representative of Customs House Agent can be held liable for the forgery and fabrication of the documents purported to have been done by the exporter?
(b) Whether for the violation of CHALR provisions, the appellant as representative of the CHA, be imposed penalty under the Customs Act, 1962?
22. The learned Standing Counsel appearing for the Customs relying upon the judgment of this Court rendered in Sri Rama Thenna Thayalan vs. The 11/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017 Customs Excise and Service Tax Appellate Tribunal, Chennai and another [C.M.A.(MD)Nos.916 and 917 of 2014, dated 30.11.2021], submitted that the issue whether the penalty under the Customs Act, 1962 be imposed on the Customs House Agent, who is primarily governed by the CHALR, is no more res integra.
23. The learned Standing Counsel for the Department submitted that the appellant herein, in his own statement, had admitted that he is the Manager of M/s.Jay Yess Agencies, having CHA Licence, at Coimbatore. During the interrogation, he has stated that M/s.Jay Yess Agencies, Tuticorin, is functioning at Tuticorin Custom House on the basis of Form – C registration obtained from the Custom House, Tuticorin. Therefore, there is no mis-description of the appellant qua the Company M/s.Jay Yess Agencies.
24. The learned Standing Counsel appearing for the Customs submitted that under the CHALR, which was formulated under the Customs Act, 1962, the Customs House Agent and his representatives are supposed to be vigilant about the documents handle by them. They cannot claim ignorance of the exporter and 12/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017 the consignment supposed to be exported. When the appellant was questioned whether he verified the authenticity of the exporter before acceptance of consignment for shipment, he had admitted that he has not obtained any authorization from the exporter and also not verified the authenticity of the exporter.
25. The learned Standing Counsel for the Customs emphasised that the admission of the appellant that he accepted the consignment based on the document produced by the forwarding agent and he did not know anything about the consignment sufficient to impose penalty on him under Section 114(i) of the Customs Act, 1962.
26. At this juncture, it is also profitable to refer Section 114(i) of the Customs Act, 1962, which reads as under:-
''114. Penalty for attempt to export goods improperly, etc. Any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 113, or abets the 13/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017 doing or omission of such an act, shall be liable,-
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding three times the value of the goods as declared by the exporter or the value as determined under this Act, whichever is the greater;''
27. This Court, on perusing the record, finds that modus operandi involved in this case is by fabricating the shipping bill, giving forged address of the exporter and mis-declaration of goods, the red sander as cotton grey sheeting, attempted to be exported clandestinely. T.Mariappan had been the conduit between the exporter Rajesh Gupta and the Custom House handling Agent R.Daniel Raj [the appellant]. T.Mariappan in his statement recorded by the Superintendent (SIIB), Custom House, Tuticorin, had stated that he arranged empty container from Tuticorin for one Rajesh Gupta. The container was stuffed with cargo and returned back to Tuticorin on 01.12.2011. He has mentioned about R.Daniel Raj as his C & F Agent and had stated R.Daniel Raj informed about the seizure of red sanders in the container booked by him on behalf of Rajesh Gupta. 14/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017 The said statement of T.Mariappan is corroborated by the inculpatory statement of the appellant R.Daniel Raj, who admits that the consignment was accepted by him from T.Mariappan, the Forwarding Agent and Proprietor of M/s.Sea Angel Logistics, Tuticorin. While admitting the same, he also admits that he did not verify the credential of the exporter. He says that he was not aware that the parent licence at Coimbatore stands suspended. He claims that he handled the shipping bill based on the ''G'' Card given for Tuticorin operation. The element of negligence and failure to verify the authenticity of the bills and other documents produced to him indicates that without the active connivance of this appellant, the illegal transport of red sanders could not have occurred.
28. The case of the Department is that, in the shipping bill, the seal of the Customs Office and the seal of the alleged exporter were fabricated. The vehicle, which carried the illicit cargo did not have valid permit or genuine R.C. Book. M/s.Jay Yess Agencies, to which the appellant represents claims to be its Manager, did not have a valid parent licence, which was cancelled and based on the ''G'' Card, he has handled the documents and facilitated the movement of cargo containing red sanders upto Tuticorin. If the SIIB officials could not even 15/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017 intercept the cargo, it would have been crossed the border purely based on the fabricated documents produced by T.Mariappan, handled by the appellant R.Daniel Raj. Therefore, for lack of diligence and active assistance for the attempt to illegal export of the red sanders, the appellant is liable to be proceeded under the Customs Act, 1962.
29. The only defence taken by the appellant is that, he did not know about the exporter. He did not know about the illegal stuffing of red sanders, which is a prohibited goods. He emphasis that he only handled the documents given to him by T.Mariappan. In the scheme of conspiracy, the Customs House Agent or his representative, who has handled the tainted documents, cannot escape from the liability, pleading ignorance of the transaction, since CHALR framed under the Customs Act, 1962 mandates CHA to verify the authenticity of the exporter.
30. Without knowing about the actual exporter and the goods intended to be exported, handling the documents (Shipping Bill) is a serious lapse on the part of the Customs House Agent and violation of the Regulation framed under the Customs Act, 1962. Regulation 13 of CHALR imposes obligations on the 16/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017 Customs House Agent and one such obligation is to exercise due diligence to ascertain the correctness of any information, which he imparts to a client with reference to any work related to clearance of cargo or baggage. The correctness of Importer Exporter Code (IEC) Number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information to be verified as one of the important obligations caused on the Customs House Agent.
31. Since the Customs House Agents are governed by the Regulations, which are framed by the Government in exercise of power conferred under the Customs Act, 1962, imposition of penalty for violation of Section 114(i) of the Customs Act, 1962, is perfectly valid. The admission of the appellant that he did not know about the exporter and he had acted through the Agent T.Mariappan, though he did not make even preliminary enquiry about the credential of the exporter, he should be exonerated from imposing penalty is not tenable. His admitted lapse is singularly enough to impose penalty on him, since the identity of the exporter in this case itself been masked by misusing the name of M/s.Shiva Texyarn Limited. The failure to show the minimum diligence to verify the 17/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017 genuineness of the exporter's detail, has led to a grave offence of exporting the red sanders, a prohibited goods.
32. Having admitted his personal involvement in handling the document and having admitted that he has not shown due diligence to verify the authenticity of the exporter or nature of the goods attempted to export, the appellant cannot seek the relief stating he was ignorant. He cannot be exonerated for his apparent lapse of duty to the Customs Department. Hence, this Civil Miscellaneous Appeal is dismissed. There shall be no order as to costs. Consequently, connected Miscellaneous Petition is closed.
Index : Yes [G.J., J.] & [C.K., J.]
NCC : Yes 21.02.2024
smn2
To
1.The Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Shastri Bhavan Annexe, 1st Floor, No.26, Haddows Road, Chennai – 600 006.
18/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017
2.The Commissioner of Customs, Custom House, Tuticorin – 628 004.
19/20 https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.777 of 2017 DR.G.JAYACHANDRAN, J.
and C.KUMARAPPAN, J.
smn2 PRE-DELIVERY JUDGMENT MADE IN C.M.A.(MD)No.777 of 2017 21.02.2024 20/20 https://www.mhc.tn.gov.in/judis