Custom, Excise & Service Tax Tribunal
Shri Nandu Raghunath Shinde vs Commissioner Of Customs (Exp.), Nhava ... on 31 October, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. C/87636-87637/2013-Mum. (Arising out of Order-in-Appeal No. 297 & 298 (ADJN)-EXP.)2013(JNCH)/EXP.74 & 75 dt.28.3.2013 passed by the Commissioner of Customs (Appeals) Nhava Sheva ) For approval and signature: Honble Mr. P.S. Pruthi, Member (Technical) ============================================================
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Shri Nandu Raghunath Shinde
:
Appellants
Shri Ashok Jaiswal
VS
Commissioner of Customs (Exp.), Nhava Sheva
:
Respondent
Appearance
Shri Jhammansingh, Advocate for Appellants
Shri D.D. Joshi, Superintendent (A.R) for respondent
CORAM:
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 31/10/2014
Date of decision : /11/2014
ORDER NO.
These two appeals are filed by the appellants against the impugned order of Commissioner (Appeals) who upheld the order-in-original in which the goods involved in smuggling were absolutely confiscated and, apart from penalties on others, penalty of Rs.1,00,000/- each was imposed on the appellants, namely Shri Nandu Shinde Director of M/s. Staad Akshay Marine Services Pvt. Ltd. and Shri Ashok Jaiswal, Partner of CHA Firm M/s. Jai International, under Section 114(i) of the Customs Act, 1962. I am passing a common order for both appeals.
2. The facts are that DRI , Mumbai Zonal Unit, on prior intelligence intercepted a container at Nhava Sheva Port, which was meant for export and detected Red Sanders Wood weighing 8600 kg, instead of the goods coir ropes which were declared in the invoice and the shipping bill. The export firm M/s. Ratan International has not been traced out and the holder of IEC code mentioned in the shipping bill also could not be traced out. Investigations revealed that the fraud was initiated by one Shri Raju Koyande with the help of Shri Suresh Kumar Jain. Shri Suresh Kumar Jain had approached Shri Nandu Shinde for export of the consignment. The export invoice was handed over to his employee. This appellant did not verify from Shri Sanjay whether the factory stuffing permission (as the goods had been factory stuffed before entry into Nhava Sheva Port) had been taken. This appellant agreed to undertake the work of Customs clearance of the consignment on payment of Rs. 8,900/- from Shri Raju Koyande. This appellant although having his own firm M/s. Staad Akshay Marine Services Pvt. Ltd., also undertook Customs clearance work for the other appellant Shri Ashok Jaiswal partner of CHA M/s. Jai International. In the attempt to export the present consignment he did not obtain a proper authorization from the IEC holder. After procedural and legal formalities undertaken by DRI, the consignment was seized. In adjudication, the same was duly confiscated being a banned item for export. In the present appeals we are dealing only with the appellants on whom a penalty of Rs.1 lakh each has been imposed.
3. Heard both sides.
4. The Ld. Advocate contended that Shri Shinde is innocent and except for the omission to take authorization from the IEC holder as required under Rule 13(a) of the Customs House Agents Licensing Regulations, (CHALR), he is not at fault as he acted in good faith. He relied on the judgment of Honble Bombay High Court in the case of Commissioner of Customs (EP) Vs. P.D. Manjrekar reported in 2009 (244) E.L.T. 51 (Bom.) and in the case of Commissioner of Customs, Mumbai Vs. M. Vasi reported in 2003 (151) E.L.T. 312 (Tri.-Mumbai) to contend that in cases of abetement, department has to prove knowledge on the part of the accused for sustaining penalty under the Customs Act.
5. The Ld. AR relied on the findings of the adjudicating authority and the appellate authority which have described in detail the acts of omission and commission on the part of the appellants which led to smuggling of Red Sandalwood.
6. I have carefully gone through the submissions of both sides. I note that the attempt to smuggle Red Sandalwood was a carefully planned operation involving various people but for whose acts of commission or omission, the attempt to smuggle would not have taken place. The role of the appellant Shri Shinde does not appear to be free from doubt at all. On the one hand, he has his own firm and on the other hand he is working on consignment basis and payment basis for another CHA M/s. Jai International. He obtains CHA passes on behalf of M/s. Jain International but he was not an employee of M/s. Jai International. He took these passes on payment of Rs.6,000/- per month from Shri Ashok Jaiswal partner of M/s. Jai International which itself is illegal and amounts to subletting of a CHA license. Even, ignoring this wrong practice, I find that the appellant had at no stage taken the most elementary of all precautions i.e. to know his supplier and his Customer. He agreed to receive a consignment said to be of M/s. Ratan International from Shri Suresh Kumar Jain without checking or even trying to know as to who, M/s. Ratan International is. He accepted the export invoice and did not verify the factory stuffing permission or even care to see whether the factory stuffing documents and seal on container are genuine. In his statement , he admitted to his mistake. Another grave omission on his part is that he did not obtain an authorization from the IEC holder or exporter to undertake the Customs clearance work as required under Rule 13 (a) of the CHALR. Even if he was not in direct contact with the IEC holder or the exporter, he could have asked Shri Suresh Kumar Jain to bring authorization along with the IEC holder. He did not advise his client to comply with he provisions of the Customs Act as required under Rule 13(d) and did not exercise due diligence to ascertain the correctness of any information with reference to clearance of cargo as required under Rule 13(e). For ready reference the text of the Regulation 13 is reproduced below:
REGULATION 13. Obligations of Customs House Agent. A Customs House Agent shall
(a) obtain an authorization from each of the companies, firms or individuals by whom he is for the time being employed as Customs House Agent and produce such authorization whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs;
(b) transact business in the Customs Station either personally or through an employee duly approved by the Deputy Commissioner of Customs or Assistant Commissioner of Customs;
(d) advise his client to comply with the provisions of the Act and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs;
The fact that Shri Shinde was undertaking the work as an employee of the CHA M/s. Jai International and at the same time being paid for using the pass issued by the CHA, itself raises reasonable doubt that he was carrying on business in contravention of Section 146 of the Customs Act. The judgments referred to by the appellant do not come to his aid. The question here is not merely of knowledge on his part regarding the attempted smuggling. The question is whether he has omitted to do any act which have rendered the goods liable to confiscation under Section 113. I have discussed above, the various acts of omission which may appear to be trivial but which are actually of a very serious nature in the case of smuggling of prohibited goods. Nothing can be more serious than not even finding out as to who the exporter or the IEC holder, is before agreeing to undertake the Customs clearance work of export goods. Shri Shinde is liable to penalty under Section 114 ibid and I see no reason to disagree with the Commissioners findings.
7. In the case of the second appellant Shri Ashok Jaiswal partner of M/s. Jai International CHA firm, I note that illegally lent out his CHA license to Shri Nandu Shinde. In his statements he admitted that he agreed to lend his CHA License to Shri Nandu Shinde on a monthly payment basis. He agreed with the confessional statements given by Shri Nandu Shinde. He agreed that being the CHA licence holder under which the consignments were attempted to be smuggled, he should have ensured that the correct legal procedures should have been followed before undertaking the export clearance work of the consignment. He also agreed that it was incorrect on his part to have allowed the use of the CHA License and for not obtaining the authorization under Rule 13(a) of CHALR. He failed to exercise due diligence and he also violated Regulation 13(b) by letting Shri Nandu Shinde, who is not an employee, to transact the business under his CHA license. I also note that he did not take due precaution to even verify as to who the exporter or the IEC holder is. As the shipping bill was filed under his CHA license it was obligatory on his part to verify the antecedents of the exporter and the IEC holder. By not insisting on the authorization of the IEC holder he failed miserably in his duties as a CHA agent and the omission resulted in the grave consequence of smuggling of prohibited goods by allowing Shri Nandu Shinde to use his licence. He contravened the provisions of Section 146 of the Customs Act under which only the CHA holder is authorized to carry on the business as a Custom House Agent relating to import of export of the goods.
8. The appellants have relied on the case of P.D. Manjekar (supra) as well as other cases to justify their contention that for imposition of penalty under Section 114, Revenue has to prove knowledge on the part of the assessee regarding the incident of export of banned goods. Section 114 is reproduced below for ready reference.
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.
It is seen that the Section has two components. The first component deals with commission of an act or omission to do any act which would render the goods liable to confiscation. The second component is abetting the omission or commission. The first part does not depend on mens rea on the part of the person who omitted to do any act. Therefore mere contravention of the provisions of the Act and Regulations justifies the imposition of penalty under Section 114 of the Act. The Apex Court in the case of Raghuveer Metal Industries Ltd. Vs. Commissioner 2012 (284) E.L.T. A93(S.C.) was dealing with the case where penalty was leviable for violation of Rules relating to compounded levy framed under Section 3A of the Central Excise Act. It was held that mens rea is not a necessary ingredient and there is no scope for any discretion in imposition of any penalty. In the present case mens rea is not an ingredient as explained above. Therefore penalty is imposable.
9. In view of the above, the appeals are dismissed.
(Pronounced in court on ./11/2014) (P. S. Pruthi) Member (Technical) Sm ??
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