Custom, Excise & Service Tax Tribunal
Marathon Corporation vs Commissioner Of Central Excise And ... on 21 February, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Single Member Bench
Customs Appeal No. 89265 of 2018
(Arising out of Order-in-Appeal No. NSK/EXCUS/SSP/APPL/106/2018 dated
29.06.2018 dated passed by the Commissioner of CGST & Central Excise
(Appeals), Nashik-I)
Nilesh Katira Appellant
(Partner, M/s. Marathon Corporation),
B-31-32, Mirani Nagar,
Ganesh Gawde Road,
Mulund (W), Mumbai 400 080.
Vs.
Commissioner of Central Excise & ST, Nagpur Respondent
Kendra Rajaswa Bhawan, Old Agra Road, Gadkari Chowk, Nasik 422 002.
WITH Customs Appeal No. 89276 of 2018 (Arising out of Order-in-Appeal No. NSK/EXCUS/SSP/APPL/106/2018 dated 29.06.2018 dated passed by the Commissioner of CGST & Central Excise (Appeals), Nashik-I) M/s. Marathon Corporation Appellant 637, Nirmal Galaxy Avoir, LBS Marg, Mulund (W), Mumbai 400 080.
Vs. Commissioner of Central Excise & ST, Nagpur Respondent Kendra Rajaswa Bhawan, Old Agra Road, Gadkari Chowk, Nasik 422 002.
Appearance:
Shri Prashant Patankar, Consultant, for the Appellant Shri Manoj Kumar, Deputy Commissioner and Shri Bhushan Kamble, Assistant Commissioner, Authorised Representatives, for the Respondent CORAM:
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO. A/85155-85156/2022 Date of Hearing: 21.02.2022 Date of Decision: 21.02.2022 These appeals are directed against order in appeal No NSK/EXCUS/SSP/APPL/106/2018 dated 29.06.2018 of the Commissioner (Appeals), CGST & Central Excise, Nashik. By the 2 C/89265,89276/2018 impugned order, the Commissioner (Appeals) has held as follows:
"ORDER The appeals filed by both the appellants are rejected and order in Original No 27/JC/Adj/2017 dated 21.03.2017 passed by the Joint Commissioner, Central Excise, Customs and Service Tax, Nashik-I Commissionerate is upheld.
So ordered."
1.2 Joint Commissioner has by his order in original held as follows:
"ORDER
(i) I cancel the Let Export Permitted under Shipping Bill No. 6196190 dated 01.03.2016.
(ii) I deny the duty drawback of Rs.5,527/-.claimed by M/s.Marathon Corporation, as the goods have not been exposed under the said Shipping Bill under the provisions of Rule 2 (c) read with Rule 3 of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995.
(iii) I order absolute confiscation of the logs of Red Sanders weighing 11.750MTs and valued at Rs.4.70 Crores seized under seizure memo dated 29.03.2016 which were attempted to be exported vide shipping bill no 6196190 dated 01.03.2016 under Section 113(d), 113(1), 113 (i) and 113(ia) of Customs Act, 1962 read with rule 11 of Foreign Trade (Regulation) Rules, 1993, provisions of Indian Forest Act 1927 and CITES Convention,1973.
(iv) I order absolute confiscation of the total quantity of 15190 kgs of onions in 311 jute bags having declared FOB value of Rs. 3,10,948/ seized under Section 110 of the Customs Act, 1962, under seizure memo dated 29.03.2016, cleared for exportation under claim of duty drawback under Section 74 of the Customs Act, 1962, used as cover cargo to conceal the offending goods i.e RED SANDERS under the provisions of Section 119 read with section 113 (ia) of the Customs Act, 1962.
(v) I order absolute confiscation of the total quantity of 11.810MTs of Onions (27000 Kgs declared wt - 15190 Kgs found in container along with red sanders) having FOB 3 C/89265,89276/2018 value of Rs. 2,41,757/-, cleared for exportation under claim of duty drawback under Section 74 of the Customs Act, 1962, but offloaded without the permission of the proper officer and not exported under section 113(ia) and 113(k) of the Customs Act, 1962.
(vi) I impose Penalty of Rs. 24,00,000/- (Rs. Twenty Four Lakhs only) on M/s. Marathon Corporation and Rs.
24,00,000/- (Rs. Twenty Four Lakhs only) on Shri Nilesh Katira, Partner in M/s.Marathon Corporation under Section 114(i) of the Customs Act, 1962."
2.1 On specific intelligence received by Mumbai Zonal Unit of Directorate of Revenue Intelligence on 07.03.2016 Shipping line Agent namely M/s. Freight Connection India Pvt Ltd. were requested to make available the container no. ARCU 4531856 for examination. As container had already sailed it was recalled back and examined at Maharashtra State Warehousing Corporation, CFS, Dronagiri Node, Uran, Dist- Raigad on 21.03.2016.
2.2 The container was examined in presence of Appellant 2 who is partner in the exporting firm Appellant 1 and proper panchnama dated 23.03.2016 drawn.
2.3 The container was found sealed with agent seal bearing 'ARC line Dubai 023275' and Central Excise seal number '027537' with markings "Central Excise & Customs, Nashik-1". After cutting the seals it was found to be stuffed with reddish brown coloured wooden logs of different sizes which appeared to be 'Red Sanders' concealed under 311 jute bags containing onions. The net weight ascertained of the wooden logs appearing to be red Sanders was found to be approximately 11750 kgs and that of Onions as 15190 Kgs. As the Red Sanders is listed in Appendix II of the Convention on International Trade in Endangered Species of Wild Flora & Fauna (CITES) and export of the same are Prohibited under the current export policy, representative sample from the Wooden Logs appearing to be Red Sanders were sent to the Regional Deputy Director, Wildlife Crime Control Bureau, Western Region, CBD, Belapur, for testing vide letter dated 29.03.2016.
2.4 The wooden logs having an illicit international value of Rs. 4,70,00,000/- and found concealed under declared goods i.e 4 C/89265,89276/2018 Onions in Jute bags having declared FOB value of Rs. 3,10,948/- were seized vide Seizure Memo dated 29.03.2016 under Section 110 of the Customs Act, 1962.
2.5 Wildlife Crime Control Bureau, Western Region, vide their letter no. C-13011/3/2009/Vol.6/15 dated 01.04.2016 confirmed that the samples drawn from container no. ARCU 4531856, of wooden piece forwarded for testing were of Red Sanders (Pterocarpus santalinus), listed in Appendix II of Convention on International Trade in Endangered Species of Wild Flora & Fauna' (CITES) and export of the same was prohibited under Export Policy.
2.6 Investigations undertaken revealed 11750 Kgs of wooden logs of Red Sanders (Pterocarpus santalinus) having an illicit international value of Rs. 4,70,00,000/- concealed under the cover cargo of 15190 kgs of onions in 311 jute bags having declared FOB value of Rs. 3,10,948/-were attempted to be smuggled out of India in container no. ARCU 4531856 vide Shipping bill No. 6196190 dated 01.03.2016. The Shipping Bill was filed for export in ICD Janori, Nashik from where the subject container arrived on Trailer no. MH 06 AC-8867 to JNPT Port in Nhava Sheva, to be exported to Jabel Ali Port, Dubai, UAE.
2.6 The investigations conducted revealed that one Shri Sanjay Pawar (absconding) is the main conspirator who hatched a criminal conspiracy to smuggle Red Sanders and he not only arranged the Red Sanders, but also managed to pose as an agent for overseas clients for vegetables and contacted appellants, for supply of the vegetables, who were considered as bonafide and regular exporters from the ICD Janori.
2.7 Appellants neither asked for any documents nor verified the credentials of Sanjay Pawar, and allowed the container booked by them along with the goods to be transported by the truck trailer arranged by Sanjay Pawar, who replaced the declared goods with the prohibited Red Sanders enroute ICD Janori to JNPT Port. Shri Sanjay Pawar not only replaced the declared cargo with prohibited goods but also replaced the original Central Excise & Custom Bottle Seal put on the said container with a fake seal.
5 C/89265,89276/2018 2.8 Thus appellant aided and abetted Shri Sanjay Pawar in the smuggling of prohibited Red Sanders by exhibiting gross negligence in not verifying his address, not asking for his PAN Card and also allowing the container booked by them along with the goods to be transported by the truck trailer to be arranged by him. Appellants failed to give any explanation as to why they agreed to lose temporary control of their goods, for the short period from their premises to ICD Janori, to be transported by the truck trailer arranged by Sanjay Pawar and allowing it to be taken by Sanjay Pawar's person and not by their regular transporter.
despite having agreed upon that the payment should be received in advance they still went ahead with shipment of the cargo in spite of the fact that the first consignment of export of tomatoes was diverted at a last moment to one of their regular buyers because of non-receipt of payment in advance from Sanjay Pawar.
2.9 Appellant 2 who is the main acting partner of the Appellant 1 admitted that he was responsible for all affairs of the firm as only he looked after all the matters and has been in the export business for quite some time. Despite being aware he was very casual in his dealings with Shri Sanjay Pawar.
2.10 On completion of investigations a show cause notice was issued to the appellants and any person concerned asking to show cause as to why:
(i) Let Export permitted under Shipping Bill No. 6196190 dated 01.03.2016 should not be cancelled.
(ii) The duty drawback of Rs. 5,527/ - claimed by M/s.Marathon Corporation should not be denied as the goods have not been exported under the said Shipping Bill under the provisions of Rule 2(c) read with Rule 3 of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995.
(iii) The logs of Red Sanders weighing 11.750 MTs and valued at Rs 4.70 Crores seized under seizure memo dated 29.03.2016 which were attempted to be exported vide shipping bill no 6196190 dated 01.03.2016 should not be confiscated under Section 113(d), 113(1), 113
(i) and 113(ia) of Customs Act, 1962 read with rule 11 6 C/89265,89276/2018 of Foreign Trade (Regulation) Rules, 1993, provisions of Indian Forest Act 1927 and CITES Convention 1973.
(iv) The total quantity of 15190 kgs of onions in 311 jute bags having declared FOB value of Rs. 3,10,948/- seized under Section 110 of the Customs Act, 1962, under seizure memo dated 29.03.2016, cleared for exportation under claim of duty drawback under Section 74 of the Customs Act, 1962, used as cover cargo to conceal the offending goods i.e RED SANDERS should not be confiscated under the provisions of Section 119 read with section 113 (ia) of the Customs Act, 1962.
(v) The total quantity of 11.810 MTs of Onions (27000 Kgs declared wt - 15190 Kgs found in container along with red sanders) having FOB value of Rs. 241757, cleared for exportation under claim of duty drawback under Section 74 of the Customs Act, 1962, but offloaded without the permission of the proper officer and not exported are liable for confiscation under section 113 (ia) and 113(k) of the Customs Act, 1962.
(vi) Penalty should not be imposed on M/s Marathon Corporation (Appellant 1) and its partner Shri Nilesh Katira (Appellant 2) under Section 114 (i) of the Customs Act, 1962.
2.11 The show cause notice was adjudicated by Joint Commissioner as per the order referred in para 1.2 above. This order was challenged by the appellant before the Commissioner (Appeals) who has by the impugned order upheld the order of Joint Commissioner and dismissed the appeal.
2.12 Aggrieved by the impugned order, the appellants have filed these appeals.
3.1 I have heard Shri Prashant Patankar, Consultant for the appellants and Shri Manoj Kumar, Deputy Commissioner and Shri Bhushan Kamble, Assistant Commissioner, Authorized Representatives for the revenue.
4.1 Have considered the impugned order along with the submissions made in appeal and during the course of arguments.
4.2 In the order in original Jt Commissioner has recorded the findings as follows:
7 C/89265,89276/2018 "10.1 The Noticees has contended that both the noticees i.e. M/s. Marathon Corporation, Mumbai and Shri Nilesh Katira one of the partners in M/s.Marathon Corporation had no role in the attempted export of prohibited goods and they didn't abet the act of Commission of Sanjay Pawar rendering the goods liable for confiscation, hence they are not liable for penal action under Section 114(i) of the Customs Act, 1962. I have gone through the present SCN and the reply submitted by the noticees and find that Sanjay Pawar is the main conspirator who hatched a criminal conspiracy to smuggle Red Sanders and he not only arranged the Red Sanders, but also managed to pose as an agent for overseas clients for vegetables and contacted M/s.
Marathon Corporation, for supply of the vegetables. Sanjay Pawar chose M/s.Marathon Corporation, Mumbai because he required a bonafide exporter for booking a container to load the red sanders and the said company was a regular exporter from ICD Janori, and this would have ensured smooth clearance through Customs at ICD Janori. Further, he was aided by M/s Marathon Corporation, who neither asked for any documents about the credentials of Sanjay Pawar nor verified the credentials of Sanjay Pawar, and also allowed the container booked by them Marathon, along with the goods to be transported by the truck trailer arranged by Sanjay Pawar. The said Sanjay Pawar also appears to have replaced the declared goods with the prohibited Red Sanders enroute ICD Janori to JNPT Port. Sanjay Pawar not only replaced the declared cargo with prohibited goods but also appears to have removed the original Central Excise & Custom Bottle Seal number affixed on the said container while replacing the goods and faked the same with the tampered Seal with the same mark and number in order to hoodwink the authority in case the container was checked enroute to Port for smooth sailing of the cargo. 10.2 M/s. Marathon Corporation, Mumbai have aided and abetted Sanjay Pawar in the smuggling of prohibited Red Sanders by exhibiting gross negligence in not verifying the address of Sanjay Pawar, not asking for the PAN Card of Sanjay Pawar and also allowing the container booked by them along with the goods to be transported by the truck trailer to be arranged by Sanjay Pawar. I find that M/s.Marathon Corporation, 8 C/89265,89276/2018 Mumbai have filed the impugned shipping bill under claim of drawback and hence they are responsible for the goods as exporters. These actions on the part of M/s.Marathon Corporation have aided and abetted the purported smuggling of Red Sanders by Sanjay Pawar and his accomplices. 10.3 I find that Shri Nilesh Katira, the partner of M/s.Marathon Corporation, the main acting partner of the said exporting firm, by his own admission, he had stated that he was responsible for all affairs of the firm as only he looked after all the matters. He is in this export business since long as before Marathon as he was operating M/s.Siddhivinyak Exports. This amply clarifies that he was well aware of the Rules / Acts and provisions made therein under and compliance thereof by an exporter/ importer. Despite being aware of these facts, he dealt with so called Sanjay Pawar in a very casual manner without taking into consideration the basics of the care and precautions any exporter/importer is required to exercise before making any deal. As a prudent businessman/exporter, he was required to know the credentials of the person he was dealing with. The failure on the part of Shri Nilesh Katira shows that he had taken his business too lightly and had also taken least care of the provisions of rule of land governing the exports. While he attempted to export the first consignment of Tomotoes to buyer linked with the Sanjay Pawar, he got the experience that overseas buyer or the Sanjay Pawar is not trust worthy. Despite that experience he went ahead in dealing with the said Sanjay Pawar for further exports and in this dealing also, the amount agreed was not received by him in advance as agreed upon in spite of the repeat experience, he went ahead with future exports. Shri Nilesh Katira neither attempted to verify the credential of Sanjay Pawar nor of the overseas buyer named by Sanjay Pawar, despite of he was a frequent visitor to Dubai for his export business as most of their overseas clients were based there. Same applies to the case of Sanjay Pawar as well as the driver with whom the container was sent by Sanjay Pawar for stuffing. Shri Nilesh Katira inexplicably neither asked for the driver's particulars in the form of PAN Card nor address proof or aadhar card or any identification proof containing his photograph nor verified his credential before handing over the goods to him.
9 C/89265,89276/2018 These actions of Shri Nilesh Katira of M/s. Marathon Corporation, Mumbai clearly have aided and abetted the purported smuggling of Red Sanders by Sanjay Pawar and his accomplices. 10.4 Further, I find that the noticees have knowledge of Public Notice No. 17/2012 and at the cost of their KYC documents they arranged the empty container and allowed the container booked by them (Marathon) along with the goods to be transported by the truck trailer arranged by Sanjay Pawar without asking for any documents about the credentials of neither Sanjay Pawar nor the driver of the truck trailer. The Sanjay Pawar took stock of this approach of M/s.Marathon Corporation and Shri Nilesh Katira and make them part of his plot of smuggling of Red Sender. Their careless approach and non-compliance of the know your customer (KYC) norms "enabled said Sanjay Pawar in the illegal attempted export of Red Sanders in violation of prohibition imposed under the provisions of Foreign Trade Policy, rule 11 of Foreign Trade (Regulation) Rules 1993, and Sections 33, 34, 50 & 115 (d) of Customs Act 1962. Said acts of omission and commission of M/s.Marathon Corporation and Shri Nilesh Katira rendered the Red Sanders liable to confiscation under Section 113(d), 113(1), 113(i) and 113(ia) of Customs Act 1962 read with Rule 11 of Foreign Trade (Regulation) Rules 1993, relevant provisions of Indian Forest Act 1927 and for violation of CITES convention. Hence M/s. Marathon Corporation & Shri Nilesh Katira, Mumbai are liable for penal action under section 114 (i) of Customs Act, 1962.
10.5 Further the noticees have cited several case laws. However on comparison of the facts and circumstances of the instant case, it is observed that the said case laws are not squarely applicable in this case. In this context, in the case of Bhavnagar University Vs. Palitana Sugar Mills P. Ltd. - 200312SCC 111, the Hon'ble Supreme Court has observed: -It is well settled that a little difference in facts or additional facts may make a lot difference in the precedential value of a decision." 10.6 The Sanjay Pawar (absconder and still to be apprehended) is the main conspirator in organising the illegal attempted export of Red sanders of international value of Rs 4.70 crores vide Shipping Bill No. 6196190 dated 01.03.2016 with his accomplices. The Summons under Section 108 of the Customs 10 C/89265,89276/2018 Act 1962 could not be issued to Yadav, the Driver as no addresses could be assigned to him. As regards transporter company M/s.Soham Transport, summons was issued but could not be served as it was not found existing on the given address. Since Sanjay Pawar is absconding and is yet to be apprehended, action against him is kept in abeyance. Whenever he and his accomplice are apprehended, their statement(s) will be recorded under Section 108 of the Customs Act, 1962 and used as evidence against him/them and/or any other person to initiate action under Customs Act 1962, Foreign Trade (Regulation) Rules 1993, and relevant provisions of Indian Forest Act 1927 and for violation of CITES convention."
4.3 From the above findings the adjudicating authority has proceeded to impose penalties under Section 114 (i) of the Customs Act, 1962. The said section is reproduced below:
"Section 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 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;"
4.4 From the findings as recorded by the adjudicating authority in para 10.1 to 10.6 of the order in original, I do not find even a whisper that the Appellants before me have performed an act of omission or commission in the respect of the prohibited "red sander wood" which was substituted in the container which was stuffed by them at ICD Janori in the presence and supervision of proper officer of Customs. Appellants admittedly were dealing in the export of Vegetable and Fruits. Undisputedly and admittedly the container at ICD Janori was stuffed with 27000 Kgs of the onions, for which the proper shipping bill was filed by them. After stuffing the 11 C/89265,89276/2018 container was sealed with the Central Excise Bottle Seal and was handed over to the ICD Janori for transportation to the gate way port. When the container was being transported from the ICD to the gateway port the substitution has been done with the prohibited red sanders in the container. In terms of the Board Circular, 57/98-Cus dated 04.08.1998, the responsibility of transportation of the goods is on the custodian and custodian is also accountable for the said goods.
"3. For accountability, in case the goods are moving from the factory of manufacture, it will be the responsibility of the factory owner or exporter and in case the goods are moving from ICD / CFS, it would be the responsibility of the custodian of the ICD / CFS. The custodian shall accept responsibility for shortages in the goods during transit and will be required to pay the amount equal to drawback / duty amount and other benefits availed by the exporters. They may be asked to execute separate bond for the transport of the goods from ICD to Ports / Airports and vice versa.
4. In case of movement of goods from ICD / CFS, the exporters are required to bring their goods meant for export to ICD / CFS and to file six copies of Shipping Bill along with all necessary documents like GR Form, AR Form, certificates issued by Export Promotion Councils, documents regarding quotas wherever applicable, etc. The Shipping Bills will be assessed as usual, the goods examined, samples drawn, if required, inspection carried out by other agencies under any one of Allied Acts. After the assessment of Shipping Bills, original and duplicate Shipping Bills along with two more copies (transference copies) and original GR from will be retained at the ICD. The original GR form will be forwarded to respective branch of Reserve bank of India.
5. The examination order would be given on duplicate and both transference copies of Shipping Bill. The report would also be recorded on all these copies, duplicate copy of S/B would be retained in ICD and transference copies would be forwarded to the Airport \ Port. FOB value of goods would be debited from the continuity bond
12 C/89265,89276/2018 executed by the custodians. After the examination is over, all the packages would be handed over by the Customs Authorities to the custodians of goods along with two transference copies of Shipping Bill, certified copy of invoice, packing list and other documents in sealed cover. The goods are to be transported by container or truck, the entire cargo body of which can be sealed with tamper proof bottle seals, all the packages would be stuffed can be sealed with tamper proof bottle seals, all the packages would be stuffed in the container/trucks under supervision of customs and representatives of the custodians. After the stuffing, the containers/trucks would be sealed with tamper proof bottle seals. The examination order and endorsements that the trucks are sealed would be made on both copies of Shipping Bill and AR4 from, it would be signed by customs as well as custodian's representatives. The seal number would be endorsed on all documents.
6. The custodians would be required to move the goods by road or rail upto Gateway Ports / Airports."
After stuffing and sealing of the container in terms of this circular, all the responsibility and accountability vests with the ICD and exporter cannot be held liable for the substitution thereafter. That being so even if it is admitted that the appellants have by their acts of not verifying the credentials of Shri Sanjay Pawar have by their act of omission or commission have aided or abetted in his nefarious acts, then their act of omission/ commission can only be in respect of "onions" which are not prohibited for exportation under Customs Act, 1962 or any other law in force at the relevant time, hence no penalty could have been imposed on them under Section 114 (i), which is in respect of "prohibited goods".
4.5 Commissioner (Appeals) has in para 20, 21 & 22 of his order just repeated what has been stated by the Joint Commissioner in para 10.2, 10.3 and 10.5 of the order to record his findings in the appeals before him against the appellant so I do not take up the same again for discussions.
13 C/89265,89276/2018 4.6 Learned Authorized Representative had during the course of arguments relied upon the decision of Chennai Bench in case of Farooq Basha and Mohamed Naseer [2021 (10) TMI 855 - CESTAT Chennai]. The facts of that case are distinguishable as will be evident from the following observations made in that decision;-
"33. Though. it is contended that the trailor truck was sold and delivered to the purchaser Sh.Anslam on 14.11.2017, there is no evidence for the passing of consideration. Interestingly as per the documents, the gate pass were issued for entry of truck with above two persons name from 17.11.2017 to 23.11.2017. The shipping bill was filed on 15.11.2017 after which container was loaded to the vessel. The DRI Officers intercepted and offloaded the container on 22.11.2017. During the time of investigation Sh.Farook Basha has produced the sale agreement contending that he sold the vehicle to Shri Anslam. This document is produced only after coming to know about the documents unearthed from M/s.ASSA-CFS. Further, the sale agreement is not a stamped document. Shri Farook Basha admits that the truck belongs to him. The truck or Shri Anslam or Shri Raja are traceable after the incident. If Shri Farook Basha was employing Shri Anslam as acting driver and also sold vehicle to him, he ought to be able to furnish details of Shri Anslam. All these lead to the strong inference that the agreement of sale is an afterthought to absolve from liability.
34. The appellants plead total ignorance about the attempted smuggling of red sanders. The contention of the appellants that they kept the blank signed letter heads in the vehicle at the time of sale is too fanciful to digest. It is admitted by Shri A. Mohamed Naseer that there was omission on his part by giving the signed blank letter heads to Shri Farooq Basha. There is also an admission on the part of Shri Farooq Basha that he committed a mistake by leaving the said blank letter heads in the vehicle at the time of sale. These are serious omissions on the part of the appellants which has aided in the attempt for smuggling. The question then is as to whether omissions are illegal omissions so as to be an ingredient to fall within the third limb of Section 107 IPC. An omission can be considered to be illegal if what has been omitted was required to be done by such 14 C/89265,89276/2018 person under law. Thus, there should have been an obligation to do a particular act under some law. Such obligation may be under any Act, Rules, Regulations, Instructions. In the present case, entry into CFS/Port is restricted. Access to this area can be obtained only if a request is made by the transport agency along with recommendation letter of the Trailor Organizers' Association. It is also necessary to give details of the driver and the trailer truck/lorry in such applications. After obtaining the gate pass, the transport agency is required to keep a record with regard to the movement of the vehicles for which he has obtained gate pass. These are regulations, which the appellants have to oblige with care and caution.
35. The intention of the person who has aided in the offence has to be inferred from the circumstances. The department need not establish facts beyond reasonable doubt. In quasi-judicial proceedings, the test is that of preponderance of probabilities. These are facts which stands admitted/established and also facts which are probable. When the established facts and the probable facts give a wholesome connection, the test of preponderance of probability would stand established. The signatures in the letters being admitted, the appellant cannot wriggle out of the liability by putting forward a plea of passing over blank signed letter heads by mistake. Similarly, the vehicle being owned by Shri Farooq Basha, he cannot escape by contending that during the relevant time the vehicle was sold.
36. In my view, the case of appellants that blank letter heads were left by omission in the vehicle which was sold is only put forward to get out of the charges levelled against them and cannot be accepted. I find that department has been able to establish the guilt/charge of abetment on the part of appellants. The penalties imposed on each of the appellants are legal and proper."
It is further observed from the para 12 of the order that the adjudicating authority has in that case imposed penalty under Section 114, without specifying the relevant clause of that section, whereas in the present case the penalty has been imposed specifically in terms of Section 114 (i) which is very specific and applicable only to the exportation of prohibited goods.
15 C/89265,89276/2018 4.7 In similar facts and circumstances in case of Maheshwari Rocks (I) Pvt Ltd [2010 (262) ELT 574 (T-Chennai)] following was held:
"Heard both sides. While dealing with the stay applications filed by the appellants, the following order was passed :
"A shipping bill was filed on 12-7-2006 in the name of M/s. Maheshwari Rocks India Pvt. Ltd., (MRIPL) Bangalore for export of a consignment of polished granite tiles. When the consignment reached the Chennai Port, officers of DRI inspected the container and the cargo. It was found that the one-time seal and the Customs seal affixed on the container were intact. The rivets at the other end of the container doors had been deftly cut and the container stuffed with red sanders logs. Further investigation revealed that two persons by name S/Sh. Muralikrishna and Ramesh had befriended the exporter as representatives of the buyer in Malaysia. They behaved with the authorities as if they represented the exporter. The goods were examined at the ICD, Bangalore in the presence of S/Sh. Muralikrishna, Ramesh and the representative of the CHA and the container sealed. M/s. Caravel Shipping Services Pvt. Ltd., (CSSPL), the steamer agents had arranged container and the vehicle to carry the consignment to Chennai Port. After due process of law, the Commissioner confiscated 16.27 MTs of the red sander logs valued at Rs. 50 lakhs seized from the container under Section 113(d) of the Customs Act, 1962 (the Act). He also imposed penalties on various persons found to have associated with the attempt to smuggle out red sanders. An amount of Rs. 3 lakhs each was imposed on the exporter M/s. MRIPL and M/s. CSSPL both under Section 114 of the Act. The Commissioner had found that M/s. MRIPL and M/s. CSSPL had, by their acts of commission and omission, rendered the red sanders logs under seizure liable for confiscation. Moving the application for waiver of predeposit and stay of recovery of the impugned penalties, the counsel for the appellants submit that, once the export goods had been stuffed in the presence of Customs officials 16 C/89265,89276/2018 and the container sealed with the Customs seal and the steamer agent's seal, both the appellants ceased to be responsible for its safe transport to the gateway port. The learned counsel representing the exporter invited our attention to Circular No. 57/98-Cus. Dated 4-8-98 issued by the Central Board of Excise & Customs where it has been clearly stated that in case the goods are moving from an ICD, the responsibility to account for the goods-in- transit is that of the custodian, namely the ICD. The ld. Counsel for the appellants took us through the findings of the Commissioner as regards the roles of the appellants in the offending transactions. The Commissioner had not found any active or positive role on the part of the appellants in rendering the seized red sander logs liable for confiscation. Therefore, they pray that the predeposit of penalties may be waived and their recovery.
2. Ld. JDR reiterates the findings of the Commissioner.
3. We have carefully considered the submissions by the learned counsel for the parties. We observe from the impugned order that the Commissioner has found that the exporter had not behaved in a responsible and sensible manner. They had entrusted the export goods with two unknown persons S/Sh. Muralikrishna and Ramesh to transport the same to the ICD, Bangalore. Like-wise, the other appellant M/s. CSSPL had arranged the vehicle to carry; the impugned goods on the request of S/Sh. Muralikrishna and Ramesh, who were neither the exporter nor the CHA. According to him, the steamer agent should have verified the antecedents of the above two persons before handing over the vehicle to carry the goods. He also records in the order that at the time of examination of the goods at the ICD, they were found as declared.
4. We observe that the Commissioner has not found that both the appellants were aware of the design of S/Sh. Muralikrishna and Ramesh to substitute the export goods tiles with contraband red sander logs. He has only found that the exporter did not behave sensibly and responsibly.
17 C/89265,89276/2018 The observation of the Commissioner about the conduct of the steamer agent is also to the same effect. We find that these are not good enough reasons in arriving at a finding that the appellants had rendered the impugned goods liable for confiscation. The appellants have made prima facie case against the penalties imposed on them. In the circumstances, we order waiver of predeposit and stay of recovery of the impugned penalties till the disposal of the appeals."
We have not heard anything from the department's side to change our prima facie view. Shri T.H. Rao, Ld. SDR, appearing for the appellants reiterates the finding in the impugned order and emphasizes that as per the statements recorded, not only this consignment but nine other similar consignments have been exported adopting the similar modus operandi. He states that the exporter should have been careful in ensuring that the container is not tampered with and the goods are not substituted.
2. Shri B. Venugopal, Ld. Advocate, appearing for the appellant exporter states that the exporters are not involved in the smuggling of red sanders nor any evidence has been found to that effect. On the other hand, the adjudicating Commissioner has given a clean chit to the exporter but has penalized them on mere suspicion. He also refers to Circular No. 57/98-Cus dated 4-8-98 under which it is specified under para-6 that the custodian would be required to move the goods by road or rail upto the gateway port/airport. In view of this circular, the exporter's liability is over once the goods have been examined by the customs in the ICD and the seals are put on the container. The appellant exporter is therefore not liable for substitution of the cargo during movement from ICD, Bangalore to Chennai port.
3. After hearing both sides, we find that the ICD has not been issued with a show cause notice and it is not known why Shri R. Baskaran and Shri Murali got access to the cargo enroute to Chennai when ICD, Bangalore as the custodian was supposed to be in charge of moving the cargo from ICD to gateway port. In 18 C/89265,89276/2018 the absence of any positive findings, regarding the involvement of the appellant exporter, we confirm our prima facie view, grant the benefit of doubt to him and set aside the penalty imposed on him. Appeal No. C/214/08 filed by the appellant exporter is allowed."
4.8 In view of the discussions as above I do not find any merits in the impugned order.
5.1 In view of the discussion as above I set aside the impugned order and allow the appeals filed by the appellants.
(Order pronounced in the open court) (Sanjiv Srivastava) Member (Technical) tvu