Custom, Excise & Service Tax Tribunal
M/S. Punjab State Container & ... vs Commissioner Of Customs (Export), ... on 19 September, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. C/1257/2009-Mum. (Arising out of Order-in-original No. 23/2009 dated 19.8.2009 passed by the Commissioner of Customs (Export, JNCH, 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?
=============================================================
M/s. Punjab State Container & Warehousing Corpn. Ltd.
:
Appellant
Vs.
Commissioner of Customs (Export), Nhava Sheva
Respondent
Appearance:
Shri Arun Mehta, Advocate for appellant
Shri S.r. Bhati, DC (AR) Authorized Representative for respondent
CORAM:
Mr. Sahab Singh , Member (Technical)
Date of hearing : 19/09/2011
Date of decision : 19/09/2011
ORDER NO.
This is an appeal against the Order-in-Original passed by the Commissioner of Customs (Export) dated 19.8.2009.
2. The brief facts of the case are that area of M/s. Punjab Stat Container & Warehousing Corporation Ltd. (CONWARE), Dronagiri Node, Navi Mumbai was notified as Customs Area for the purpose of storage, stuffing/de-stuffing and clearance of export /import goods under Section 8 of Customs Act, 1962 vide Notification No.01/2000 dated 19.01.2000, and appellants were appointed as custodian of the Container Freight Station (CFS) under Section 45 of the Customs Act, 1962. The appellants have submitted a Custodian-Cum-Carrier Bond inter alia agreeing to comply with all the provisions of the Customs Act as well as Rules and Regulations and instructions made there under issued in this regard from time to time. As per Boards Circular No. 128/1995-Cus dated 14.12.1995 and Public Notice No. 3/1996 dated 29.1.1996, the Custodian is required to bear the cost of customs staff posted in the CFS and to abide by all rules and regulation under the Customs Act. In case the Custodian wants to sublet any of the functions inside the customs area or connected with the customs area, the same should be done with the prior approval of the Commissioner of Customs and custodian remains responsible for the omissions and commissions of the said agency. The appointment of the custodian is initially for 5 years and subject to the satisfaction of the Commissioner of Customs and Commissioner of Customs shall have the right to terminate the appointment at any time after assigning specific reasons. The appointment shall be reviewed after every 5 years. A show-cause notice dated 12.5.2008 was issued to the appellant asking them to show cause why notifications issued under Section 8 and 45 of the Customs Act, notifying their area as Customs Area and appointing them as Custodian area should not be withdrawn and outstanding amount of cost recovery charges should not be recovered from them and why the penalty for violation of provisions of the Customs Act as well as Rules and Regulation and instructions issued in this regard should not be imposed on them. The show-cause notice was contested by the appellant. Same was adjudicated by the Commissioner of Customs vide the impugned order imposing a penalty of Rs. 1,00,000/- (Rupees one lakh only) on the appellant under Section 117 of the Customs Act.
3. The learned Counsel appearing for the appellant submitted that in the show-cause notice dt. 12.5.2008 no specific provisions of the Customs Act, has been invoked for imposition of penalty. Therefore, the penalty cannot be imposed on the appellants. He further submitted that as regards the allegations regarding subletting of the Customs Area, they have made some arrangements with their operator for some of the functions in connection with the operation of the CFS. Arrangement existing between the appellant and the operator is an operations and management contract for a period of 15 years w.e.f. 01.02.2007 in lieu of consideration in form of Fixed Upfront Fees, Annual Fees and Performance Bank Guarantees. The arrangement grants in favour of operator the right to operate and maintain the CFS facility and carry on permitted activities as per the agreement. The appellant has complete lien over the CFS facility and the CFS facility is continued to be offered to its customers for patronage in the name of appellant only and all statutory payments to various authorities are being made in the name of appellant under valid registration numbers and operator is under a legal obligation for being monitored by the appellants on its activities to be carried at the CFS. In view of this, it cannot be said that they have sublet the CFS facility to the operator.
4. Regarding the non-payment of the cost recovery charges he submitted that the show-cause notice was separately issued in this regard on 21.6.2007. He also pointed out that penalty has been imposed under Section 117 of the Customs Act. Prior to amendment on 10.5.2008 maximum penalty imposable under Section 117 of the Customs Act, was Rs. 10,000/- only. Since the offence was committed prior to this period the amended Section 117 cannot be applied in this case.
5. The learned DR appearing for the Revenue stated that as per the Boards Circular dt. 14.12.1995 and Public Notice No.3/96 dt. 29.1.96 custodian is required to follow all the Rules and Regulations and instructions and also bear the cost of Custom staff, posted in the CFS. He further submitted that no portion of the area can be Subletted without prior approval of the Commissioner of Customs and initial appointment of the custodian is for 5 years. The appellants have violated the provisions of the Board Circular in as much as they have not paid the cost recovery charges and even after expiry of 5 years they were working as custodian without approval from the department. They have transferred some of the functions of the CFS to the operator without prior approval of the Commissioner of Customs. Learned DR referred to the letter dt. 24.7.2007 of the appellant wherein it was stated that CFS of the appellant has been leased out to the operator for its operations and management. He, therefore, submitted the order-in-original is proper and legal and needs to be sustained..
6. After hearing both sides. I find that short question in this case is whether appellant have violated any of the conditions of the Board Circular dt. 14.12.1995 and Public Notice No. 3/96 with regard to the responsibilities entrusted to the custodian appointed at the Section 45 of the Customs Act. Under the provisions of circular cost of the customs staff posted in CFS is required to be borne by the custodian. This is a fact that custodian has not made the payments with regard to cost of staff and as submitted by the Counsel, the show cause notice was separately also issued to them on 21.6.2007. Therefore, the finding of the learned Commissioner that there was non-payment of Cost Recovery charges of the customs staff despite remindersfrom time to time is sustained. Second charge against the appellant is that they have transferred/sublet some of the functions inside of the customs area to their operator without prior approval of the Commissioner of Customs. It is the submission of the appellant that there was no transfer or subletting but an arrangement with regard to some of the activities inside the CFS. This is a fact that there was no prior approval taken from the Commissioner of customs before making this arrangement. Therefore the Commissioners finding that transfer/subletting of some functions for the custodian to operator without permissions of the Commissioner of Customs is also sustainable. Third allegation against custodian is that appellant continued to work as custodian without approval after expiry of notification No.1/2000. There is nothing on the record or any reply submitted to the Commissioner of Customs to prove that notification was further renewed. Therefore Commissioners finding for violation of this condition is also sustained.
7. It is a fact that in the show cause notice no specific provisions has been quoted for imposition of penalty and under Section 117 of the Customs Act, the penalty is imposable for violating any provision of the Customs Act, only in those cases where no specific provisions has been made for imposition of penalty. Non mention of the Section 117 of the Customs Act., in show cause notice will not vitiate the imposition of penalty, since Section 117 is a general provisions for imposition of penalty. Hence penalty was rightly imposed by the Commissioner of Customs under Section 117 of the Customs Act. However, in the facts and circumstances of the case and also taking into consideration the fact that most of the violations were prior to 10.5.2008, penalty is reduced to Rs.10,000/-. The appeal is disposed of in the above terms with consequential relief.
(Dictated in Court) (Sahab Singh) Member (Technical) Sm 6