Madras High Court
Shri. K.V.Shivaraj vs The Customs on 3 November, 2016
Author: Nooty.Ramamohana Rao
Bench: Nooty.Ramamohana Rao, Anita Sumanth
In the High Court of Judicature at Madras
DATED : 03.11.2016
C O R A M
THE HON'BLE MR. JUSTICE NOOTY.RAMAMOHANA RAO
AND
THE HON'BLE Dr. JUSTICE ANITA SUMANTH
Civil Miscellaneous Appeal No.2215 of 2016
and C.M.P.No.15797 of 2016
Shri. K.V.Shivaraj ... Appellant
Vs
1. The Customs, Excise and Service Tax
Appellate Tribunal,
South Zonal Bench,
No.26, Shastri Bhavan Annexe Building,
Haddows Road, Chennai 600 006
2. The Commissioner of Customs, Central
Excise and Service Tax (Appeals),
6/7, A.T.D.Street, Race Course Road,
Coimbatore 641 018 ... Respondents
Prayer:- Appeal filed under Section 130A of the Customs Act, 1962, against the Final Order No.40782/2016, dated 18.05.2016 on the file of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai.
For Appellant : Mr. S.Murugappan
For Respondents : Mr. A.P.Srinivas, for R-1 & R-2
- - - - - -
J U D G M E N T
(Judgment of the Court was delivered by Nooty.Ramamohana Rao, J.,) This Civil Miscellaneous Appeal is directed against the order made by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai, in Final Order No.40782/2016, dated 18.05.2016.
2. The facts lie in a very narrow compass. The petitioner has obtained an Import Export Code (in short IEC), but, however, since he could not carry on the import and export business fruitfully, permitted the IEC to be used by a person known to him (very closely) and that too for a consideration, though for a very insignificant amount.
3. A shipping bill for export has been lodged on 23rd November 2009, in the name of the appellant herein and the Customs House Agent being M/s.Anchorage Shipping, Coimbatore. The goods intended to be exported are described as 'Incense Raw Material' of 20.50 Metric Tonnes. Upon verification of the goods, a suspicion has arisen as to whether the goods are raw material of incense sticks or under the guise of the said description and classification, prohibited goods are being exported. Fifteen sample packets were collected and five of them have been sent for examination and for reporting by the Institute of Wood Science and Technology (IWST), Indian Council of Forestry Research and Education, Malleswaram, Bangalore. Mercifully, the said institute had cleared the air that the samples collected are totally different from Red sanders. Red sanders are completely an export prohibited item. But, however, in terms of Chapter II of the Foreign Trade (Development and Regulation Act) 1992, the Central Government has announced an Export and Import Policy and as per the said policy, in the list of goods prohibited for export, wood and wood products in the form of logs, timbers, stumps, roots, barks, chips, powder, flakes, dust, pulp and charcoal, except saw timber made exclusively out of imported teak logs / timbers, subject to conditions, are included against the 7th entry. Thus, wood power, wood chips, flakes of wood and wood-dust stand prohibited from being exported.
4. As per Clause (d) of Section 113 of the Customs Act, 1962, (henceforth called the said Act), any goods attempted to be exported contrary to any prohibition imposed by or under this Act or any other law for the time being in force, become liable for confiscation. Therefore, if the export of goods is prohibited either by virtue of Section 11 of the said Act or under any other law for the time being in force any attempt of export of such goods would render them liable to be confiscated. Consequently, the goods which are sought to be exported in the name of the appellant herein, have rendered themselves liable for confiscation under Section 113 of the said Act.
5. Under Section 114 of the said Act, any person who chooses or omits to do any act, which act has rendered the goods liable for confiscation, shall be liable to a penalty not exceeding three times the value of the goods as declared by the Exporter or the value as determined under the said Act, whichever is greater. Consequently, the appellant has also exposed himself to the liability of imposition of penalty under Section 114 of the said Act.
6. All through, the burden of song of the appellant before us was that it is not he, who has physically lodged the impugned shipping bill of export and someone unauthorizedly used his name and IEC for filing such a Bill of Shipping and that he is not in the know or aware of the scheme of export undertaken by such an individual and that he was a bona-fide individual and hence, discretion should be used not to penalize such an innocent person.
7. This explanation of the appellant has not cut much of ice, either with the Adjudicating Officer, who passed the Order-in-Original or the Appellate Authority or with that of the Tribunal and the explanation of the appellant was not found satisfactory by all of them inasmuchas apart from allowing a third party to gain unauthorized access to his IEC and allowing it to be used, the appellant has also made available the letterheads and rubber stamps of his firm. Such acts of the appellant, the three authorities have found to have been pre-loaded with a risk element of possible abuse or misuse.
8. The view taken by all the three authorities below is incapable of being described as perverse finding of fact. When once the IEC is allowed to be used by someone else, the associated risks could be understood to have been well within the realm of knowledge of such an individual. In that view of the matter, we think that for the acts of lending IEC, rubber stamp and letter heads of the firm, the consequences which follow from Sections 113 and 114 of the said Act, cannot be avoided.
9. However, what still remains to be examined by us is the justification behind the adjudicating authority in imposing a penalty of Rs.1,00,000/- on the appellant before us, while all others, including the individual who has misused the IEC of the appellant and also the Customs House Agent, were imposed with lesser punishment of penalty of Rs.50,000/-. Thus the appellant has been singled out for the imposition of penalty of Rs.1,00,000/-, even though this explanation was used to penalise the abuser of the IEC.
10. As we have noticed, Section 114 of the said Act has provided for discretion in the hands of the Adjudicating Authority to impose a penalty, which can go up to three times the value of the intended goods to be exported. Therefore, it is axiomatic that such a discretion should be exercised on sound lines. When discretion has been used while imposing the penalty of Rs.50,000/- on all others, the same does not appear to have been exercised properly and even handed manner. At any rate, when it came to the appellant, in the absence of any specific mallacious intent attributable to the appellant exclusively for the entire episode, imposition of greater amount of penalty of Rs.1,00,000/-, which is double the amount of penalty imposed on the others, does not appear to be justifiable. Only on that count, we prefer to modify the Order-in-Original passed by the second respondent in C.No.VIII/10/11/2010 Cus. Adjn/176, dated 02.08.2011, by substituting the amount of penalty against the appellant also to Rs.50,000/- as against Rs.1,00,000/-.
11. All the orders passed by the three authorities stand accordingly modified to the extent indicated above.
12. We do not find any further merit in this appeal and the appeal stands accordingly disposed of. No order as to costs. Consequently, the connected MP is closed.
(N.R.R.,J) (A.S.M.,J) 3rd November 2016 Index: Yes / no Internet: Yes/no srk NOOTY.RAMAMOHANA RAO, J., AND DR.ANITA SUMANTH, J., srk C.M.A.No.2215 of 2016 and C.M.P.No.15797 of 2016 03.11.2016 http://www.judis.nic.in