Custom, Excise & Service Tax Tribunal
Commissioner Of Customs-Kandla vs Mundra International Container ... on 28 February, 2017
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, O-20, NMH Compound Ahmedabad Appeal No. Order-in-Original No. Date of Order-in-Original Passed By Appellant Respondent
C/306/2008-SMC OIO-KDL/COMMR/18/2008 31/03/2008 Commissioner of CUSTOMS-KANDLA Arvind Limited C.C.-Kandla C/337/2008-SMC OIO-KDL/COMMR/18/2008 31/03/2008 Commissioner of CUSTOMS-KANDLA Volkart Fleming Shipping And Services Pvt Ltd C.C.-Kandla C/42/2009-SMC OIO-KSL/COMMR/18/2008 31/03/2008 Commissioner of CUSTOMS-KANDLA Master Marine Ser6ces Pvt Ltd C.C.-Kandla C/320/2008-SMC OIO-KSL/COMMR/18/2008 31/03/2008 Commissioner of CUSTOMS-KANDLA Mundra International Container Terminal Pvt. Ltd.
C.C.,-Kandla C/307/2008-SMC OIO-KSL/COMMR/18/2008 31/03/2008 Commissioner of CUSTOMS-KANDLA Chinubhai Kalidass & Bros.
C.C.-Kandla Appearance:
Present S/Shri S.J.Vyas, Anil Balani, Hardik Modh, and Dhaval K. Shah, Advocates for the appellants Present Shri Alok Srivastava, A.R. for the Respondent-Revenue Coram: Honble Dr. D.M. Misra, Member (Judicial) Date of hearing: 2.1.2017 Date of pronouncement: 28.02.2017 Final Order No.A/10478-10482/2017, dt.28.02.2017 Per Dr. D.M. Misra:
These five appeals are filed against a common Order-in-Original No. KDL/COMMR/18/2008 dated 31.3.2008 passed by the Commissioner of Customs, Kandla.
2. Briefly stated the facts of the case are that the Appellant M/s Arvind Mills Ltd. cleared for export 100% cotton knitted men and women shirts packed in 110 cartons claiming DEPB benefit for the said export. On scrutiny of the shipping bill No.6070048 dated 26.6.2006 filed by the CHA M/s Chinubhai Kalidass & Brothers for verification of the description of the goods contained in the said shipping bill, Customs Preventive staff was deputed for verification, but it was noticed that the containers loaded on vessel MV Mac Andrews America sailed from Mundra Port at 13.30 hours on 28.6.2006, without examination and assessment of documentation; also without Let Export Order permitting clearances by the proper officer. All relevant documents namely, checklist for shipping bill, invoice, packing list, computerized sheets of MICT etc. resumed under Panchnama dated 28.6.2006 and thereafter statements of various persons were recorded and on completion of investigation, a show cause notice was issued alleging violation of various provisions of Customs Act, 1962 and proposed for confiscation of the goods along with container, denial of DEPB benefit to the appellant M/s Arvind Mills Ltd. and also proposal for imposition of penalty under Section 114 (iii) of the Customs Act, 1962 on the exporter M/s Arvind Mills Limited and other appellants. On adjudication, ld. Commissioner of Customs imposed penalty of Rs.8 lakhs on each of the appellants, M/s Arvind Mills Ltd., M/s Chinubhai Kalidas & Bros., M/s Volkart Fleming Shipping & Services Pvt. Ltd; Rs.5 lakhs each on Mundra International Container Terminal (P) Ltd. and M/s Master Marine Services Pvt. Ltd u/s 114(iii) of the Customs Act,1962. Aggrieved by the said order, the appellants are before this forum.
3. Ld. Advocate Shri S.J. Vyas, Advocate for the appellant exporter M/s Arvind Mills Limited submitted that the penalty was imposed on the ground that the exported goods loaded on the vessel and it sailed without the Let Export Order (LEO) of the Customs Officer before assessment of the goods. He has submitted that the goods exported were stuffed in their factory under Central Excise supervision. The appellant had entrusted and appointed the CHA, M/s Chinubhai Kalidass & Bros. for undertaking necessary paper work relating to export of the goods at the Port. The appellant had not appointed the Shipping Line, it was appointed by the foreign buyer. He has further submitted that no instruction was given to the appellants CHA or the Shipping Line to load the container on vessel without awaiting LEO and effect the export. Hence, no penalty can be fastened on the exporter-appellant. It is his contention that the appellant was not aware of the loading of the goods by the Shipping Line without LEO. It is his contention that the ld. Commissioner referring to Section 147 of the Customs Act has erred in observing that since the CHA was liable, therefore, appellant was also liable for penalty. It is his contention that in the cases of Aspinwall & Co. Vs. Commissioner of Central Excise,Trichy 2001 (132) ELT I44 (Tr-Chennai) later upheld by the Honble Apex Court reported as Commissioner of Central Excise,Trichy Vs. Aspinwall & Co. 2002 (142) ELT A80 (SC) and Gajanan B Sudrik 2014 (304) ELT 159 (Tri-Mumbai), it has been held that the CHA is the Power of Attorney Holder of the appellant and hence there exists no master and servant relationship between the CHA and Exporter, accordingly Section 147 of the Act, is not applicable. It is his contention that since there is no evidence indicating the involvement of the appellant in the sail of the vessel without LEO, therefore, penalty cannot be imposed on them under Section 114 of the Customs Act, 1962.
4. Ld. Advocate Shri Anil L. Balani for the appellant-CHA M/s Chinubhai Kalidass & Co. & Brothers submitted that documentation of the export of garment in question was assigned to them by the exporter M/s Arvind Mills Ltd. The necessary Form No.6 was issued by the steamer agent for gating in the containers into the Mundra International Container Terminal (P) Ltd. (MICT).The appellant undertook to hand over the shipping bill with LEO to the steamer agent. The container was gated in on 24th June, 2006 (Saturday); 25th June 2006 was a Sunday, hence shipping bill was filed on Monday, 26th June, 2006. When the appellant - CHA was in process of completing the Customs formalities, however, on Tuesday, 27th June, 2006, the steamer agent loaded the container on the vessel without their knowledge and permission and also the vessel sailed on Wednesday, 28th June, 2006. The appellant - CHA came to know of this fact while making an attempt to locate the containers along with Customs officer for scrutiny of the description of goods and learnt that the container loaded on vessel had already sailed.
5. Ld. Advocate further submitted that penalty under Section 114 (iii) of the Customs Act, 1962 was imposed on the ground that Sections 34 and 40 of Customs Act, 1962 were violated. It is his contention that these two provisions are do not applicable to either the exporter or the CHA. Ld. Advocate submitted that the appellant - CHA never prompted the shipping line to export the goods in contravention of the Law. It is his contention that the shipment happened without prior notice or intimation to the exporter or the appellant-CHA. Thus, the appellant CHA has not committed any act or omission rendering the goods liable for confiscation. Consequently, penalty under Section 114(iii) is unwarranted and unjustified against the appellant - CHA. He refers to the judgment of this Tribunal in the case of N. Karims & Sons 2010(251) ELT 444 ; Sudershan Cargo Pvt. Limited (2009 (245) ELT I66; Soham Logistics Pvt. Ltd. 2010 (261) ELT 1176 ; Ryal Logistics 2014 (312) ELT I94 ; Venkatesh Agencies 2014 (300) 543; Apollo Tyres Ltd. 2014 (304) ELT 427 and Permonics Membranes Pvt. Ltd. 2015 (323) ELT 595 and the Bombay High Court decision in C.C. (Export) vs. Kusters Calico Machinery Limited 2010 (257) ELT 368 (Bom.)
6. Ld. Advocate , Shri Hardik Modh, for the appellant M/s Master Marine Services Pvt. Ltd. the surveyor, submitted that Form No.6 is not a statutory document submitted by them under the Customs Act, 1962. It is submitted that as per business practice being followed by the surveyor, the appellant prepared Form No. 6 for offloading the containers in MICT yard. Generally, the appellant prepares the Form No.6 after receiving exporters invoice copy and shipping bills duly endorsed by the Customs but it is not strict criteria for issue of form No.6 based on shipping bills duly endorsed by the Custom. In many instances, when shipping bills remain under process with the Custom Department, form No.6 is issued on receipt of undertaking from CHA that shipping bills endorsed by the Custom would be submitted before loading of containers into the vessel. Referring to the statement of Shri David Ignatius Joseph dated 29.6.2006, he submitted that it is clearly mentioned that Form No.6 was issued on the basis of an undertaking received from CHA along with invoices for it. The Shiping Line M/s Volkart Fleming Shipping & Pvt Ltd. appointed them for issue of Form No.6 and preparation of daily activity report showing movement of containers inside the CFS area and the responsibility gets over upon issuance of Form No.6 and said report indicating the container movement to port area. As stated by Shri C.R. Gharat, Executive Operation of the Shipping Line, Export Advance List was prepared by them and based on such Export Advance List, the vessel agent loads container into vessel. The appellant never prepared Export Advance List nor was a party to it. As the container was loaded in the present case based on the Export Advance List prepared by the shipping line, the appellant is not liable for the act for which penalty was imposed. It is his argument that the appellant was never appointed by shipping line to prepare Export Advance List based on which the container was loaded into the vessel. It is his contention that Section 40 of the Customs Act imposed responsibility on a person in-charge of conveyance to permit loading of container at Customs Station upon receipt of shipping bill duly endorsed by the proper officer. Such responsibility cannot be extended to the appellant who is merely acted as a surveyor of the shipping line to facilitate to bring container from yard to port area. He submitted that on identical circumstance in the appellants own case, the ld. Commissioner vide Order-in-Appeal No.417/2009-Cus/Commr(A)/KDL dt.31.8.2009 allowed their appeal and quashed the penalty imposed on them observing that the appellant statutorily not responsible for any act for which goods were liable for confiscation.
7. Ld. Advocate, Shri Dhaval K. Shah for the appellant M/s Volkart Fleming Shipping & Services Pvt. Ltd. , the Shipping Line, submitted that the appellant had appointed M/s Master Marine Services Pvt. Ltd. as surveyor for compliance of the Customs documentation and on the basis of various documents, the surveyor issued form No.6 and daily activity report. On the basis of these documents, the appellant prepared Export Advance List and no other documents namely, shipping bill or export bill endorsed with LEO from Customs, Packing List, invoices etc. were handled by them. The appellant had submitted Form No.6 and Export Advance List to the vessel agent, M/s Hi-Tos Liner Agency Pvt. Ltd., and in turn, it was submitted to MICT who after verification of Form No.6 placed the said container in the yard. It is a chain of activity which has been admitted in the respective statements of concerned person. The appellant liability ceased when they handed over all documents to the vessel agent and the final authority to allow to load these containers on the vessel lies with the vessel agents and MICT and not the shipping line, therefore, ingredients of Section 114(iii) are not attracted in the appellants case. It is his contention that for any lapse on the part of the surveyor, the appellant cannot be vicariously held liable. In support, he refers to the decision in the case of Hemangi Enterprises vs. C.C.E., Pune I 2015 (40) STR 945 (Tri-Chennai). Further, he has submitted that Section 34 of the Customs Act applies to the MICT and not to the appellant because the said provision lays down that export goods shall not be loaded on any conveyance except under supervision of the proper officer, the container was loaded on the conveyance/vessel by the vessel agent and MICT and not the shipping agent. The shipping agent does not have any control once they hand over the papers namely, Export Advance List to the vessel agent, hence, for any contravention of Section 34 of the Customs Act, 1962, they are not liable. It is his contention that Section 40 of the Customs Act not applicable to the appellant because it is directed against the person in-charge of conveyance and the person in-charge of the conveyance, is the vessel agent and not the appellant. Further, he has submitted that penalty cannot be imposed on them as there is no finding about their involvement contrary to the provision of law. In support, he has referred to the decision of the Tribunal in the case of C.C (Export), Nhava Sheva vs. Emirates Shipping Agencies (I) P. Ltd. -2011 (271) ELT 101 (Tri-Mumbai).
8. Heard the Advocates for the concerned parties and the Ld. A.R for the Revenue extensively and perused the records.
9. The undisputed facts are that around 110 cartons of 100% Cotton Mans and womans shirt in container No.CL HU-815922 stuffed in the factory of the appellant-Arvind Mills under the supervision of the Excise officer, after being loaded on the vessel MV Mac Andrews America on 27.6.2006 at 23.35 hrs., exported on 28.6.2006 at 13.30 hours, without Let Export Order (LEO) and pending assessment of Shipping Bill No.6070048 dated 26.6.2006. The ld. Commissioner in the impugned order even though held that the said exported goods are liable for confiscation under Section 113(f) and 113(g) of the Customs Act, 1962 but did not pass any order confiscating the goods since the said goods were not available for confiscation at he material time. He has imposed penalties on all the appellants under Section 114(iii) of the Customs Act, 1962. The limited question now that needs to be addressed is: whether penalty on each of the appellants is justified in the facts and circumstance of the case. The relevant provisions of the Customs Act,1962 which alleged to have been violated inviting imposition of penalty are as follows:
SECTION 34. Goods not to be unloaded or loaded except under? supervision of customs officer. Imported goods shall not be unloaded from, and export goods shall not be loaded on, any conveyance except under the supervision of the proper officer :
Provided that the Board may, by notification in the Official Gazette, give general permission and the proper officer may in any particular case give special permission, for any goods or class of goods to be unloaded or loaded without the supervision of the proper officer.
SECTION 40. Export goods not to be loaded unless duly passed by? proper officer. The person-in-charge of a conveyance shall not permit the loading at a customs station -of export goods, other than baggage and mail bags, unless a?(a) shipping bill or bill of export or a bill of transhipment, as the case may be, duly passed by the proper officer, has been handed over to him by the exporter; of baggage and mail bags, unless their export has been duly?(b) permitted by the proper officer.
SECTION 51. Clearance of goods for exportation Where the proper officer is satisfied that any goods entered for export?[(1)] 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 :
[Provided that the Central Government may, by notification in the Official Gazette, permit certain class of exporters to make deferred payment of said duty or any charges in such manner as may be provided by rules.] Where the exporter fails to pay the export duty, either?[(2) in full or in part, under the proviso to sub-section (1) by such due date as may be specified by rules, he shall pay interest on said duty not paid or short-paid till the date of its payment at such rate, not below five per cent. and not exceeding thirty-six per cent. per annum, as may be fixed by the Central Government, by notification in the Official Gazette.]
10. As stated above, the export of the subject goods was effected, without having proper permission from the Customs Officer and pending assessment of the relevant Shipping Bill. Ld. Commissioner after analyzing the evidence on record and role of each of the appellant in the export of said goods has held that each of the appellant is liable to penalty under Section 114(iii) of the Customs Act, 1962.
11. The procedure that is required to be followed in the export of the manufactured goods, which are factory stuffed, has been stated at Para 4 of the Show Cause Notice. It is stated that the container sealed under the Central Excise supervision at factory received by the shipping line agent or his nominated agent was subsequently placed at the MICT yard on the basis of Form No.6 issued by the shipping agent. Thereafter, the CHA files checklist, for the shipping bill with the Customs EDI System. After processing of the shipping bill necessary verification/examination of the container number and seal number are done which are fed into the EDI system. Thereafter, the LEO was given by the proper officer under Section 51 of the Customs Act and copies of shipping bill are generated. After granting the LEO the containers are allowed to be loaded on board under the supervision of the Customs on the basis of shipping bill. The form No.6 prepared is not a prescribed document under the Customs Act and Rules made thereunder. It is an admitted fact that after factory stuffed container gated in on 24.6.2006, and that day being Saturday and the next day Sunday, therefore, the CHA filed shipping bill on Monday i.e. on 27.6.2006. During the pendency of the assessment of shipping bill and verification by the Customs authorities before issuing LEO, the container was loaded into the vessel on 27.6.2006 and the vessel sailed on 28.6.2006. In these circumstances, the principle laid down for imposition of penalty on the exporter and the CHA in various judgments is consistent in observing that once the factory stuffed container is gated in, no control remains with the exporter and/or CHA, hence , in the event of sailing of the vessel with the container of exported goods before issuance of LEO, imposition of penalty on the exporter and the CHA is unwarranted. In the present case, there is no substantial evidence either against the exporter or the CHA brought on record attributing their involvement for loading of the container and thereafter sailing of the vessel,l without LEO, resulting into contravention of relevant provisions of the Customs Act namely 34, 40 and 51 of the said Act. The Honble Bombay High Court in the case of C.C. (Export) vs. Kusters Calico Machinery Limited- 2010 (257) ELT 368 (Bom.) dropped the penal proceeding against the exporter and the CHA. Following the said precedent, I am also of the opinion that penalty on the appellant exporter M/s Arvind Mills Limited and the CHA M/s Chinubhai Kalidass & Bros cannot be sustained, accordingly, set aside.
12. On behalf of surveyor, M/s Master Marine Services Pvt. Ltd it IS vehemently argued that only because they prepared the Form No.6, therefore, they cannot be penalized. It is not a statutory document and the same is not prepared on the basis of assessed shipping bill. It is for the limited purpose of entry of the container inside the MICT and its onward journey. Also, they had prepared the daily activity report showing the movement of the container inside the CFS area. It is their contention that their responsibility gets over on issuing Form No.6 and daily activity report. Shri Hardik Modh, Advocate submitted that in similar circumstances, penalty imposed on the surveyor has been dropped by the Department in an earlier case. I find that in the show cause notice itself it is acknowledged and stated that Form No.6 is not prescribed document under the Customs Act, 1962 or rules made there under. It is clear from the submission advanced that the same is prepared for the purpose of facilitating entry of the container into the CFS port area. In its letter dated 24.6.2006, the CHA addressed a letter to CFS, Mundra( which later they claimed an error as it is to be addressed to the Shipping line agent) providing the details of the container seal number etc. for issuance of Form No.6 to offload of the container. Also in the daily activity report dated 25.6.2006 prepared by the surveyor, it records the container number, destination etc. but no way these documents could be considered as indicating or allowing loading of the container on the vessel and thereafter for its export. I find force in the contention of the appellant-surveyor that the container was loaded and later sailed without the LEO and in violation of the relevant provisions of Customs Act,1962, without their involvement. Hence, the penalty imposed on them is also set aside.
13. Now, coming to the role of the shipping agent , I find that the shipping line agent, M/s Volkart Fleming Shipping & Services Pvt. Ltd. was appointed by the overseas purchasers as stated in the statement of Shri C.R. Gharat, Executive Operation of the said company. Their role was to release the empty container through yard as per requirement and the container after stuffed in the factory, on its arrival at the at Port area, issuance of Form No.6 to the shipper/CHA for movement of the container to port terminal on the basis of invoice issued by the shipper. On the basis of entry of the loaded containers at the port terminal, a list of such containers, that is Export Advance List is prepared recording the number of containers to be exported in the specific vessel and handed over to the vessel agent before arrival of the vessel, who in turn, submit it to the Port authority i.e. Mundra International Container Terminal Services Pvt. Limited. Further, it has been accepted by Shri Gharat that they were aware of the procedure that without Customs clearance, the goods cannot be exported and the surveyor was appointed for looking and ensuring proper clearance of the export consignment/container. He was not aware of the fact that the subject container loaded in the vessel of MV Mac Andrews America and sailed on 28.6.2006 at 13.30 hours. Also, he has stated that it is their responsibility to ensure that any container loaded with export cargo is received on Board after proper Customs clearance and not in contravention of the Customs Act. Thus, considering the active role of the shipping line agent, in discharging/loading the export cargo on the vessel, I am of the view that ld. Commissioner has rightly arrived at the conclusion that for sailing/export of the said container on 28.6.2006 without LEO, the shipping line agent is at fault and accordingly penalized them. The same view is also expressed by the Honble Bombay High Court in the case of C.C. (Export) vs. Kuster Calico Machinery Ltd - 2010(257) ELT 368 (Bom.) and other cases by the Tribunal involving similar facts and circumstances of the case. Also from the statement the General Manager Shri Sai Kumar (Port), MICT, it is clear that on the basis of the report from the shipping line agent the container was loaded in the vessel on 27.6.2006 at 23.35 hrs. and thereafter, the vessel sailed on 28.6.2006 at 13.30 hours. However, I find force in the contention of the learned Advocate Shri Dhaval Shah that the penalty imposed on the shipping line agent is too harsh as no evidence for intentional violation of the provisions of the Act has been brought on record, but their act or omission attributes to negligence or lack of co-ordination/communication. Keeping in mind the judgment of the Honble Bombay High Court in the case of C.C. (Export) vs. Kusters Calico Machinery Ltd. (supra), the penalty on the shipping line is reduced to Rs.50,000/-(Fifty Thousand only).
14. I do not find any justification in imposing penalty on the terminal operator M/s MICT as before loading the container in the vessel they had been communicated by the shipping line agent through the advance export list mentioning therein the list of containers that were to be loaded. Accordingly, the penalty imposed on M/s MICT is also set aside.
15. Appeals are disposed off as above.
(Pronounced in the open Court on 28.02.2017) (Dr. D.M. Misra) Member (Judicial scd/ Appeal No.C/306, 307, 320, 337 of 2008, C/42/2009-SM 1