Custom, Excise & Service Tax Tribunal
) Blossom Grocery & Food India Pvt. Ltd vs Commissioner Of Customs (Export), ... on 30 September, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL Nos. C/323, 201 & 449/09 (Arising out of Order-in-Original No. 126/2009 dated 30.1.2009 passed by Commissioner of Customs (Exports), Nhava Sheva) For approval and signature: Honble Mr. Sahab Singh, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
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1) Blossom Grocery & Food India Pvt. Ltd. Appellants
2) Delta Logistics
3) Neptune Container Line & Logistics Pvt. Ltd.
Vs. Commissioner of Customs (Export), Nhava Sheva Respondent Appearance:
Shri N.D. George, Advocate, for appellant No.1 Shri A.V. Naik, Advocate, for appellant No.2 Shri Mayur Shroff, Advocate, for appellant No.3 Shri Sanjay Kalra, Authorised Representative (JDR), for respondent CORAM:
Honble Mr. Sahab Singh, Member (Technical) Date of Hearing: 23.9.2011 Date of Decision: 30.9.2011 ORDER NO These three appeals are filed by M/s. Blossom Grocery & Food India Pvt. Ltd., M/s. Delta Logistics and M/s. Neptune Container Line & Logistics Pvt. Ltd. against a common order-in-original No. 126/2009 dated 30.1.2009 passed by the Commissioner of Customs (Export), Nhava Sheva.
2. Brief facts of the case are that three containers were found to be shipped out of India on 21.5.2008 on vessel Wan Hai 317-Voyage E-005 without obtaining Let Export Order (LEO) from the Customs authority. In the shipping bill filed by the exporter, the goods were reported to be Basmati rice and the total FOB value declared of the goods was Rs.46,68,300/-. These containers were called back on 10.6.2008 by the shipping agency and examined on 18.6.2008 by the Customs authorities and on examination, the containers were found to contain 960 bags of Basmati rice as per invoice. Since these three loaded containers had sailed out and attempted to export the goods without proper document and LEO, the same were seized for violation of the Customs Act as the goods were liable for confiscation under Section 113(g) of the Customs Act. Later on, the goods were allowed to be exported on provisional basis on execution of bond by the exporter and duly supported by a bank guarantee furnished by the exporter. A show cause notice was issued to the exporter, M/s. Blossom Grocery & Food India Pvt. Ltd., the CHA, M/s. Delta Logistics and the shipping line, M/s. Neptune Container Line & Logistics Pvt. Ltd., asking them to show cause why the goods, Basmati rice, exported without proper Customs documentation should not be confiscated under Section 113(g) of the Customs Act and why penalty under Sections 114 and 117 of the Customs Act should not be imposed on them and why the bank guarantee furnished by the exporter should not be adjusted against the penal action. The show cause notices were contested by the appellants and the case was adjudicated by the Commissioner of Customs vide the impugned order. The Commissioner of Customs imposed a fine of Rs.9,00,000/- on M/s. Blossom Grocery & Food India Pvt. Ltd. under Section 125 of the Act and also imposed a penalty of Rs.5,00,000/- each on all the three appellants under Section 114 of the Customs Act. All three appellants are before this Tribunal in appeal.
3. The learned Advocate appearing for the exporter submitted that the goods were stuffed under the Customs supervision and were 100% examined and sealed as per the declaration made in the invoice. He submitted that due to some problem in the EDI system, the CHA could not get the Customs duty paid TR-6 challan as the same was not generated and consequently the Let Export Order was obtained only on 22.5.2008 and the containers could be loaded without obtaining the LEO and permission of the Customs officer, which was done by the shipping line on their own for which the exporter is not liable. He further contended that the containers were loaded on the ship which sailed on 21.5.2008 and 20.5.2008 was a holiday on account of Budha Purnima. He relied upon the statement of the manager of the shipping line, who informed the department as well as the appellant about the incident only on 5.6.2008 and after receiving the message, they had called back the containers. On 10.6.2008 the containers were opened and examined and the goods were found to be as per the declaration. All the charges relating to the calling back of the containers were borne by the exporter. On arrival of the goods, the same were seized by the department and were allowed to be re-exported on execution of bond and bank guarantee. He also referred to the statement of the CHA and the manager of the shipping line, who have stated that the containers were loaded not at the instance of the exporter. He, therefore, prayed that there was no role of the exporter with regard to the departure of the goods without obtaining the LEO. He further submitted that since there was no mens rea on the part of the exporter, there should not be any fine and penalty imposable on the exporter and he requested that the fine and penalty imposed on the exporter need to be set aside. He referred to various case law submitted by him as detailed below:-
(i) CC(E) vs. Kusters Calico Machinery Ltd. 2010 (257) ELT 368 (Bom.);
(ii) Mohini Organics Pvt. Ltd. vs. CC(E), Nhava Sheva 2009 (240) ELT 589 (Tri.-Mumbai);
(iii) N. Karim & Sons vs. CC(E), Nhava Sheva 2010 (251) ELT 444 (Tri.-Mumbai);
(iv) Hindustan Steel Ltd. vs. State of Orissa 1978 (2) ELT (J 159) (SC);
(v) Emirates Shipping Agencies (I) Pvt. Ltd. vs. CC(E), Nhava Sheva 2009 (243) ELT 689 (Tri.-Mumbai).
4. The learned counsel for the CHA submitted that insofar as the role of CHA is concerned, the Commissioner has given finding in paragraphs 23 and 24 of the impugned order and in paragraph 25 the learned Commissioner himself has admitted that the CHA had informed the shipping line to ship the goods on the next vessel whereas the Commissioner has given his finding in direct contradiction of his observation in the order. There is nothing on record to show that the CHA had asked the shipping line to get the goods without any document and load them in the vessel. On the contrary, the appellant-CHA had informed the shipping line to ship the goods on the next vessel. He, therefore, prayed that the appellant-CHA cannot be penalized because they had informed the shipping line not to export the goods on the vessel which was about to sail and to ship the goods on the next vessel. He, therefore, requested that the penalty imposed on the appellant-CHA should be set aside. He relied upon the decision of Soham Logistics Pvt. Ltd. vs. CC(E), Nhava Sheva 2010 (261) ELT 1176 (Tri.-Mumbai), Hindustan Steel Ltd. (supra).
5. The learned counsel appearing on behalf of the shipping line submitted that without informing the appellant-shipping line or their ship brokers, the three containers were gated in at 2300 hrs on 20.5.2008 by the CHA of the exporter and the containers could not be checked by the surveyor as the containers arrived without notice in the port after 2300 hrs on 20.5.2008, by which time the surveyor of the shipping line had left. These containers got loaded unchecked by the surveyor on the vessel. In fact the appellant-shipping line had received the message from their ship broker on 2230 hrs to load the containers on the next sailing. However, the container cargo was sneaked in without the knowledge of the original shipping line. By the time they were informed by the CHA that the containers were already loaded on the vessel and the vessel already sailed at 1425 hrs on 21.5.2008. Once it came to their notice, the three containers shipping without the LEO were called back. He has shown the various e-mail correspondences between the shipping line and the ship broker in this regard. He contended that the Commissioner did not appreciate that there was no lapse attributable to the appellant-shipping line and when it came to their notice that the containers have been loaded without getting the LEO, the containers were called back by them. These facts are also clear from the statement of Mr. Anand Kartik Iyer who is the line manager of the appellant-shipping line. He, therefore, prayed that the shipping line should not be penalized for a lapse which was not in their knowledge at any point of time before the vessel sailed outward. He, therefore, requested that the penalty imposed on the appellant-shipping line should be set aside. He referred to the following case law in support of his contention:-
(i) Technospin Pvt. Ltd. vs. CCE(I), Chennai 2008 (228) ELT 420 (Tri.-Chennai);
(ii) Kee Yes Impex vs. CCE, Salem 2008 (228) ELT 569 (Tri.-Chennai);
(iii) Ahammad Said vs. CCE, Cochin 1999 (110) ELT 496 (Ker.).
6. The learned counsel for the shipping line has made a plea that the penalty on the shipping line has been imposed under Section 114 of the Customs Act. He submitted that under Section 114, there are three situations for imposition of penalty. Under Section 114(ii), the penalty is imposable in case of dutiable goods other than prohibited goods to a penalty not exceeding duty sought to be evaded or five thousand rupees whichever is greater. He submitted that since the goods in question were dutiable goods and not prohibited goods, their case will fall under Section 114(ii) and under this provision penalty cannot be imposed more than the duty involved or Rs.5,000/- whichever is greater.
7. The learned DR appearing for the Revenue submitted that in this case the goods have been exported without completing the Customs formalities by the exporter, the CHA and the shipping line. He referred to Section 50 of the Customs Act whereunder the shipping bill is to be filed in respect of the export goods and under Section 51 of the Customs Act, whenever the proper officer is satisfied that the goods entered for export are not prohibited goods and the exporter had paid the duty, if any, then the proper officer may make an order permitting clearance and loading of the goods for exportation. In this case the exporter as well as his agent, CHA, have not obtained the permission for loading of the goods in the form of LEO from the Customs department and have proceeded to load the goods on the vessel. He also referred to Sections 40 and 41 of the Customs Act under which the person in charge of the conveyance shall not permit loading of export goods unless a shipping bill duly passed by the proper officer has been handed over to them and under Section 41 the person in charge of the conveyance is required to deliver to the proper officer an export manifest showing the details of the goods being exported. The provisions in Sections 40 and 41 have not been complied with by the shipping line. The submission of the appellant that the goods have been called back and on examination nothing incriminating was found is not in violation of the Customs Act as the goods were exported without LEO which is the requirement under the Customs Act. He, therefore, defended the order-in-original and stated that the penalties and fine imposed under the Customs Act on the appellants need to be upheld. He also relied upon the following case law in support of his contention:-
(i) Nichrome India Ltd. vs. CC(E), Nhava Sheva 2010 (251) ELT 147 (Tri.-Mumbai).
(ii) Zenith Rubber & Plastic Works vs. CC(E), Nhava Sheva 2009 (238) ELT 646 (Tri.-Mumbai).
(iii) LMJ International Ltd. vs. CC(E), Nhava Sheva 2008 (224) ELT 91 (Tri.-Mumbai).
(iv) Emirates Shipping Agencies India Pvt. Ltd. vs. CC(E), Nhava Sheva 2009 (240) ELT 384 (Tri.-Mumbai).
He submitted that in all these cases penalty was imposed on the exporter and shipping line. Regarding the arguments of the appellant that there was no mens rea, he submitted that in the case of CC(E), Chennai vs. Bansal Industries 2007 (207) ELT 346 (Mad.), it was held by the Honble Madras High Court that the element of mens rea is not required for imposition of penalty. He also referred to the Honble Supreme Courts decision in the case of Weston Components Ltd. vs. CC, New Delhi 2000 (115) ELT 278 (SC), where it was held that redemption fine is imposable even after release of goods on execution of bond.
8. On hearing both sides, I find that in this case penalties have been imposed by the Commissioner on the exporter, the CHA and the shipping line under Section 114 of the Customs Act as the goods in this case were loaded on the vessel without obtaining the Let Export Order. Redemption fine was also imposed in respect of the goods exported by the exporter. The fact that the goods were loaded on the vessel and the vessel had left without obtaining the LEO is not disputed by any of the appellants. As regards the exporter and the CHA, under Section 50 they are required to complete all the formalities and get the assessed copy of the shipping bill from the Customs officer for further loading of the goods on the vessel, which has not been done in this case. Therefore, the contravention of Section 50 by the exporter and the CHA is clearly established. Similarly, under Sections 40 and 41, the person in charge of the shipping line is required to have a copy of the order from the Customs before loading the goods on the vessel and he was supposed to deliver the copy of the export manifest to the department, which has also not been done before the goods left in the vessel. Therefore, the contravention of Sections 40 and 41 also stands established by the shipping line. Section 113(g) of the Customs Act reads as follows: Any dutiable or prohibited goods loaded or attempted to be loaded on any conveyance, or water- borne, or attempted to be water- borne for being loaded on any vessel, the eventual destination of which is a place outside India, without the permission of the proper officer. In such case the goods shall be liable for confiscation. Since the exporter, the CHA and the shipping line have contravened the provisions of Sections 50 and 40 & 41 for not obtaining the Let Export Order, the goods are liable for confiscation under Section 113(g) of the Customs Act and the appellants are liable for penalty under Section 114 of the Customs Act.
9. All the appellants have referred to various case law in support of their contention that penalty is not imposable on them. On the other hand, the learned DR cites the case law that penalties are imposable on the appellants. I find that since the goods are liable for confiscation under Section 113(g) of the Customs Act, the appellants are liable for penal action under Section 114 of the Customs Act.
10. Another point raised by the learned counsel for the shipping line is that penalty can be imposed under Section 114(ii) as the goods are dutiable goods. In find that this is not the case of export duty evasion as the duty payable was already paid by the exporter. Therefore, the case will not be covered under Section 114(ii) of the Customs act and it will fall under Section 114(iii) as held by the Honble Bombay High Court in the case cited supra. As regards the plea that there was no mens rea on the part of the appellants, it is held by the Honble Madras High Court that mens rea is not required for imposition of penalty under the provisions of the Customs Act. I, therefore, uphold the findings of the Commissioner with regard to imposing fine and penalty on the appellant. However, in the facts and circumstances of the case, I reduce the redemption fine from Rs.9,00,000/- to Rs.1,00,000/- (Rupees one lakh only) and the penalty from Rs.5,00,000/- to Rs.1,00,000/- (Rupees one lakh only) each on the exporter and the CHA and Rs.2,00,000/- (Rupees two lakhs only) on the shipping line.
11. The appeals are disposed of in the above terms.
(Pronounced in Court on 30.9.2011) (Sahab Singh) Member (Technical) tvu ??
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