Custom, Excise & Service Tax Tribunal
Sylvester & Co vs Commissioner Of Customs (Export) on 20 March, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.C/174/12 (Arising out of Order-in-Original No.63/2011-12 dated 17/01/2012 passed by Commissioner of Customs (Export), Nhava Sheva) For approval and signature: Honble Mr. P.R. Chandrasekharan, 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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Sylvester & Co. Appellant
Vs.
Commissioner of Customs (Export),
Mumbai Respondent
Appearance:
Shri.S.N.Kantawala, Advocate for appellant
Shri.C.Singh, Asst. Comm. (AR) for respondent
CORAM:
Honble Mr. P.R. Chandrasekharan, Member (Technical)
Date of Hearing : 20/03/2015
Date of Decision : 20/03/2015
ORDER NO
The appeal is directed against Order-in-Original No. 63/2011-12 dated 17/01/2012 passed by the Commissioner of Customs (Export), Nhava Sheva.
2. The appellant, M/s. Sylvester & Co. is a CHA. The appellant was the CHA for the exporter M/s. Permionics Membranes Pvt. Ltd. and filed three shipping bills, namely, 671343 dated 30/09/2008, 6713773 dated 30/09/2008 and 6716701 dated 01/10/2008. The containers containing the export goods were loaded on vessel MV Oel Integrity which sailed on 09/10/2008 before Let Export Order was issued by the Customs authorities in respect of the said shipping bills. Therefore, a show cause notice was, inter alia, issued to the appellant for violation of the provisions of Section 51 of the Customs Act, 1962 read with Section 147 proposing to impose penalties. The notice was adjudicated and a penalty of Rs.7.00 lakhs was imposed on the appellant-CHA in addition to penalties on the exporter and the steamer agent. The penalty was imposed under Section 114(iii) as the goods were held liable to confiscation under Section 113(g) of the Customs Act, 1962. Aggrieved of the same, the appellant is before me.
3. The learned counsel for the appellant submits that, once the containers are brought to the container yard of the port, the responsibility of the containers safety, storage and loading on to the vessel, etc. are solely that of the shipping line and there is no omission on the part of the CHA as he did not instruct the shipping line to load the container before LEO was obtained and shipping bills submitted to the shipping line. Thus, it is his contention that it is the fault of the shipping line and the appellant is not involved in the matter. The learned counsel also submits that in a similar matter in the case of The Universal Traffic Co. vs. Union of India wherein a penalty was imposed on the CHA for loading the goods on to the vessel without obtaining LEO, the matter has been taken up before the honble Bombay High Court and the matter has been admitted vide order dated 23/08/2013 in Customs Appeal No. 16 of 2013. The appellant has also placed reliance on the decision of this Tribunal in the case of Mohini Organics Pvt. Ltd., Vs. CC (Exports), Nhava Sheva 2009 (240) ELT 589 (Tri-Mumbai), N Karim & Sons Vs. CC (Exports), Nhava Sheva 2010 (251) ELT 444 (Tri-Mumbai) and DCM Shriram Industries Ltd., vide Final Order No.A/239 to 241/10/SMB/C-IV dated 01/06/2010 in support of its contention.
4. The learned Dy. Commissioner (AR) appearing for the Revenue, on the other hand, strongly refutes the contentions raised by the CHA. He points out that in the impugned order, the adjudicating authority has given a clear finding in para 13 thereof, wherein he has observed as follows:
13. The exporter had procured the container, booked space in the vessel which was scheduled to depart on 09/10/2008 for their export cargo; had got the shipping bill Nos. 6713743 dated 30/09/2008, 6713773 dated 30/09/2008 and 6716701 dated 01/10/2008 filed through their CHA, which also contain the name of vessel and other particulars related to the export. Having booked the space on the vessel scheduled to depart on 09/10/2008, as well as provided the containers for export through their CHA, it was incumbent upon them to have remained proactive and kept themselves abreast of the status of the container and documentations related thereto at all stages. Therefore, neither exporter nor CHA can plead that they were not aware that the vessel was scheduled to leave on 09/10/2008. 4.1. He further submits that this Tribunal in a number of cases, namely, Zim Integrated Shipping Services (I) Pvt. Ltd. vide order No. A/347-348/13/SMB/C-IV DATED 25/07/2013, Patkar & Sons Shipping Agency Pvt. Ltd. 2013-TIOL-91-CESTAT-MUM; D.P. Logistics Pvt. Ltd. 2013 (288) ELT 107; Gill & Co. Pvt. Ltd. 2012-TIOL-900-CESTAT-MUM have held that the CHA is liable to penalty if goods are exported without obtaining LEO from the Customs Officers inasmuch as the goods are liable to confiscation under the provisions of Section 113(g) of the Customs Act, 1962 and consequently the CHA becomes liable to penalty under Section 114(iii) of the Customs Act, 1962.
5. I have considered the rival submissions very carefully and have perused the statutory provisions.
5.1. The issue for consideration is whether the CHA is liable to penalty. Sections 50 & 51 of the Customs Act, 1962, prescribes the procedure for export of goods and they read as follows:-
SECTION 50. Entry of goods for exportation. (1) The exporter of any goods shall make entry thereof by presenting electronically to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form.
Provided that the Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically, allow an entry to be presented in any other manner.
(2) The exporter of any goods, while presenting a shipping bill or bill of export, shall make and subscribe to a declaration as to the truth of its contents.
SECTION 51. Clearance of goods for exportation. Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation. The exporter or the CHA on his behalf has to comply with the above statutory provisions.
5.2. The Customs Manual prescribes the detailed procedure to be followed which are briefly as under:-
Customs clearance formalities for goods meant for export have to be fulfilled by presenting what are termed as shipping bills and other related documents to the export wing of the custom houses or EDI service Centres. The appraising staff in the Custom House/Air Cargo Complex checks the declarations to assess the duties/cess if leviable, propriety of export incentives where claimed under different schemes like duty drawback or duty free exemption schemes etc. Appropriate orders for examination before shipments are allowed are given on the Shipping Bill. The staff in the docks/cargo complexes/ICDs examines the goods meant for export on percentage basis, and allow shipment if there are no discrepancies/ mis-declarations etc., and no prohibitions/violations come to light. Appropriate penal action as per law is initiated where any fraudulent practices get detected during initial stage of scrutiny or at the time of examination etc. . These provisions similarly help customs to regulate the outflow of the goods out of the country and enable them to subject the goods to proper checks before allowing final exit out of the country by sea/air/land/rail routes. They also help detect any attempts of smuggling or commercial frauds by unscrupulous parties. 5.3. Para 40 of the Manual specifically provides that Once, the shipping bill is passed by the Export Department, the exporter or his agent present the goods to the shed appraiser (export) in docks for examination. The shed appraiser may mark the document to a Custom officer (usually an examiner) for examining the goods. The examination is carried out under the supervision of the shed appraiser (export). If the description and other particulars of the goods are found to be as declared, the shed appraiser gives a let export order, after which the exporter may contact the preventive superintendent for supervising the loading of goods on to the vessel. Thus from the statutory provisions and the supplemental instructions issued, it can be easily seen that the responsibility of the CHA does not end with filing of the shipping bill. He has to ensure the assessment of the shipping bill, examination of cargo and obtain the Let Export Order after which he has to contact the customs staff for loading of the goods. Thus unless and until the loading of the export goods on to the vessel is completed, the duty and responsibility cast on the CHA does not come to an end. In case the CHA fails to comply with these statutory provisions, he would be liable for penal consequences.
5.4. As per the provisions of section 113(g) of the Customs Act, any 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 shall be liable to confiscation; Thus any goods which are loaded on to a vessel without the Let Export order issued by the proper officer of customs shall be liable to confiscation. In such an eventuality, under section 114, -
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, to a penalty not exceeding five times the value of the goods or one thousand rupees, whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods. to a penalty not exceeding five times the duty sought to be evaded on such goods or one thousand rupees, whichever is the greater;
(iii) in the case of any other goods, to a penalty not exceeding five times the amount of drawback claimed or one thousand rupees, whichever is the greater. Thus any act or omission to do any act, which renders the goods liable to confiscation attracts penalty. The said provision does not speak of the requirement of any mens rea on the part of the person committing the act or omission. Mere act or omission would suffice to attract the penalty. Thus applying these provisions to the facts at hand, the CHA failed to ensure that the goods were loaded on to the vessel only after let export order was obtained, thereby making the goods liable to confiscation under section 113(g). For the omission on the part of CHA, he is liable to penalty under section 114(iii).
5.5. The learned Counsel for the CHA has relied on certain case laws in support of his contention that the CHA is not liable for penalty. In these cases, the vessels set sail prior to the scheduled date of departure and the CHA did not have knowledge of the prior departure of the vessel. Those are not the facts obtaining in the present case. It is not the case of the appellant that he did not know when the vessel was set to sail. In fact normally, the arrival and departure of the vessels are made known in advance to all the parties concerned by the shipping line. It is for the CHA to complete the formalities before the departure of the vessel. In the present case, the export documents had been filed on 30/09/2008 and 01/10/2008 whereas the vessel set sail only on 09/10/2008. Thus, adequate time was available to CHA to complete all the formalities before the vessel set sail. Therefore, the CHA can not pass on the blame on to the shipping line and the omission to obtain LEO before departure of the vessel was fairly and squarely on the CHA and for this omission he is liable to penalty under section 114 and I hold accordingly.
5.6. An identical issue came up for consideration of this Tribunal in the case of Nichrome India Ltd. [2009-TIOL-1902-Cestat-Mum] and this Tribunal held as follows:-
Section 51 of the Customs Act is not a meaningless provision of law. It provides that the proper officer of customs may make an order for permitting clearance and loading of the goods for exportation, which would mean that the goods for exportation could not be loaded in the vessel without obtaining permission of the proper officer of customs. It is this permission of the proper officer of customs which is referred to as 'Let Export Order' (LEO) issued to the exporter and therefore the exporter is entitled to the benefit of that order. Conversely, if the exporter chooses to export the goods without obtaining LEO from the proper officer of customs, he is liable for the consequences. What emerges from the provisions of Section 51 of the Act is that any exportation without LEO is prohibited. It would thus appear that goods exported without LEO are liable to confiscation under Section 113 (g) of the Act. Whoever is found to have committed something paving the way for shipment of the goods without LEO or to have omitted to do anything to ensure compliance with the requirement of Section 51 of the Act must be held to have rendered the goods liable to confiscation. All the three appellants are coming within this domain and consequently they have a penal liability under Section 114 of the Act. Actual confiscation of the goods is not necessary for this penalty. A mere liability of the goods to confiscation is enough. 5.7. The same issue came up for consideration before this Tribunal in the case of LCL Logistics (India) Pvt. Ltd. [2011(273) ELT 571] and it was held that when goods loaded and taken out of India without permission of the proper officer, then the goods are liable to confiscation and penalty is imposable on the CHA even when there was no mala fide intention on his part.
5.8. The Honble apex court in the case of Gujarat Travancore Agency Vs. CIT, Kerala [1989 AIR 1671] while considering certain provisions of the Income Tax Act, held as follows:-
3. The creation of an offence by Statute proceeds on the assumption that society suffers injury by the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence.
4. Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. A similar view was held by the Honble apex court in the case of SEBI vs. Shriram Mutual Fund [2006-TIOL-72-SC-SEBI] in the context of the SEBI Act as follows:-
In the provisions and scheme of penalty under Chapter VI A of the SEBI Act, there is no element of any criminal offence or punishment as contemplated under criminal proceedings. Therefore, there is no question of proof of intention or any mens rea by the appellants and it is not essential element for imposing penalty under SEBI Act and the Regulations. 5.9. There is nothing in the language of the provisions of section 114 of the Customs Act, 1962, to suggest that mens rea is essential for imposition of penalty . Mere act or omission to act would suffice for imposition of penalty if such act or omission violates statutory provisions. Proceedings under section 114 of the Customs Act are not criminal proceedings but quasi -judicial proceedings and hence mens rea is not required to impose penalty under the said section and I hold accordingly.
6. As regards the reliance placed by the appellant in the case of Mohini Organics Pvt. Ltd., Vs. CC (Exports), Nhava Sheva 2009 (240) ELT 589 (Tri-Mumbai), N Karim & Sons Vs. CC (Exports), Nhava Sheva 2010 (251) ELT 444 (Tri-Mumbai) and DCM Shriram Industries Ltd., these are all Single Member Bench decision. In the case of Inox India Ltd., Vs. CC (Export),Nhava Sheva - 2013 (294) ELT 630 (Tri-Mumbai) an identical matter was considered by a Division Bench and the imposition of penalty on the CHA was upheld. The said decision of the Division Bench would prevail over the decisions of Single Member Bench. In view of the above, I am of the considered view that the appellant is liable to penalty under Section 114 of the Customs Act. However, considering the circumstances of the case, I reduce the penalty imposed on the appellant to Rs.2.5 lakhs. But for the above modification, the impugned order is sustained so far as it relates to imposition of penalty on the CHA.
(Operative part of the order pronounced in Court) (P.R. Chandrasekharan) Member (Technical) pj 1 11