Bombay High Court
Container Corporation Of India Ltd vs Commissioner Of Customs, Nhava Sheva on 6 December, 2023
Author: G.S. Kulkarni
Bench: G. S. Kulkarni
2023:BHC-OS:14269-DB
cuappl 33496-23@ ial 33531-23.doc
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CUSTOMS APPEAL (L.) NO. 33496 OF 2023
WITH
INTERIM APPLICATION (L.) NO. 33531 OF 2023
Container Corporation of India Ltd. ..Appellant/Applicant
Vs.
Commissioner of Customs, Nhava Sheva ..Respondent
__________
Mr. Sriram Sridharan with Ms. Riya Sinha for Appellant/Applicant.
Mr. Subir Kumar with Ms. Kavita Shukla and Ms. Janhavi Hirlekar for
Respondent.
__________
CORAM : G. S. KULKARNI &
JITENDRA JAIN, JJ.
RESERVED ON : DECEMBER 05, 2023
PRONOUNCED ON : DECEMBER 06, 2023
JUDGMENT (Per G.S. Kulkarni, J.):
1. This appeal under Section 130 of the Customs Act, 1962 (for short, "Customs Act") is directed against the order dated 11 September, 2023 passed on the appellant's appeal filed before the Customs, Excise & Service Tax Appellate Authority, Mumbai (for short "the tribunal"), which has been rejected by the impugned order.
2. The appellant have raised the following questions of law:
"(a) Given that the goods were pilfered, whether, in the facts and circumstances of the case, Regulation 5(6) of the Handling of Cargo in Customs Area Regulations, 2009, entitles the Respondent to recover the value of the lost goods from the Appellant?Page 1 of 22
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(b) Whether, in the facts and circumstances of the case, penalty can be imposed on the Appellant under Regulation 12(8) of the Handling of Cargo in Customs Area Regulations, 2009?
(c) Whether, in the facts and circumstances of the case, penalty can be imposed on the Appellant under Section 117 of the Customs Act, 1962?
(d) Whether, in the facts and circumstances of the case, the impugned order was correct in imposing penalty on the Appellant under Regulation 12(8) of the HCCAR and Section 117 of the Customs Act, 1962, simultaneously for the same contravention?"
3. The facts relevant for the adjudication of this appeal are as follows:-
The appellant is a Public Sector Undertaking, having Container Freight Stations (for short "CFS") at different locations in India. It is stated to have presence at all the major ports. The present proceedings concern the appellant's CFS at Dronagiri Rail Terminal, which is close to the Jawaharlal Nehru Port Trust (for short, "JNPT").
4. It is not in dispute that the appellant's CFS is governed by the provisions of the Handling of Cargo in Customs Areas Regulations, 2009 (for short, "2009 Regulations"). Under these regulations, the appellant is recognized as a "Customs Cargo Service Provider" (for short, "CCSP") for which a licence was issued to the appellant, which was renewed from time to time. The latest approval of the licence period was notified by Public Notice No. 134 of 2020 dated 14 October, 2020, for a period of five years with effect from 15 March, 2020.Page 2 of 22
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5. Having noted the statutory recognition of the appellant's CFS, we now proceed to refer to the facts, in relation to which an order on the show cause notice came to be passed against the appellant by the Commissioner of Customs, leading to appellant's appeal before the tribunal and the consequent order passed by the tribunal on the appellant's appeal.
6. A Shipping Bill No. 5807023 dated 05 June, 2013 was filed by an exporter namely M/s. Krish Exports, Mumbai before the Commissioner of Customs, JNPT for export of "household articles of stainless steel, SS Utensils" to Hong Kong, in a factory stuffed container GESU-3997518.
Such container was given "Let Export Order" (LEO) from the appellant's CFS.
7. A Special Intelligence and Investigation Branch (SIIB) of the Customs received specific information in regard to smuggling of "Red Sanders wood logs" stuffed into Container No. GESU-3997518. The said container was put on hold. Thereafter, the container was opened and a panchanama was drawn on 14 June, 2013 at the appellant's CFS. It was revealed that as against the declared goods of 7454 kgs. of stainless steel household articles mentioned in the said shipping bill, the goods present in the container were 12695 kgs of 'Red Sanders', which were prohibited Page 3 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc goods, as the export of Red Sanders was prohibited. Such prohibited goods attempted to be illegally exported, were seized under the provisions of the Customs Act and were stored in a sealed container, kept in the custody of the appellant's CFS under a panchanama dated 14 June, 2013.
8. On 14 August, 2014, a surprise visit was conducted by the customs officials, at the premises of the appellant, when it was noticed that an empty container having unique No. XINU 1349960 was placed near another container, having customs seized goods, bearing an identical/same unique No. XINU 1349960. It was, thus, found that two containers with similar unique container number were found to be kept adjacent to each other in the area for storage of customs seized containers. On a detailed examination, it was found that the empty container was marked with the said container number on all four sides of its body. However, on the top of the empty container and on the CSC plate, which was affixed at the time of its manufacture, the actual was No. XINU 1106045. It was thus noticed that the modus operandi was of removing seized 'red sanders' kept in safe custody in the appellant's CFS, by substituting the container having seized goods, with another empty container pasted with same unique container number, similar to the seized goods. The custom officials also undertook a complete physical inventory of containers and having seized the goods, that were put on hold by Customs. It was found that the Page 4 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc container in question containing red sanders No. GESU-3997518 as handed over to the appellant's CFS for safe custody, vide a panchanama dated 14 June, 2013 was tampered/ pilfered and the entire red sanders of 12695 Kgs. was found stolen by such modus operandi.
9. In the above circumstances, the department initiated proceedings inter alia against the appellant as also the exporters. The appellant was issued a show cause notice dated 16 March, 2020 under Regulation 12(1) of the 2009 Regulations, setting out in extenso the facts as inter alia noted by us. On the basis of the investigation and materials which were available with the department, the show cause notice alleged that a fraudulent activity was allowed to take place, for clandestine removal of seized red sanders and that the original seized container along with red sanders was moved out.
10. The show cause notice issued to the appellant alleged that as per sub-regulation 6(f), 6(i) and 6(q) of the 2009 Regulations, safe custody and movement of containers to and from the CFS with proper authorization was the prime responsibility of the CFS. It was alleged that there was an apparent violation of sub-regulation 6(1)(a) and (b), as there appeared to be complete lack of internal control, security system, proper accounting of containers and supervision on the part of the CFS. It was Page 5 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc next alleged that there was not only non-compliance of the regulations, but also there was a violation of Section 45(2) and Section 141 of the Customs Act. The show cause notice recorded that the value of pilfered red sanders was determined to be Rs.3500/- per Kg with total value of goods being ascertained to be Rs.4,44,32,500/-, which was required to be indemnified by the appellant as per the provisions of Regulations 5(6) of the 2009 Regulations, which although was demanded by several letters and reminders of the Department, was not paid. In these circumstances, the appellant was called upon to show cause as to why the following action shall not be taken against the appellant in so far as its Dronagiri Rail Terminal was concerned:-
"11. In view of the above, by their acts of omission and commission, CFS M/s DRT-CONCOR appears to have violated provisions of Section 45(2) & Section 141 of the Customs Act, 1962 read with Regulations 6(1) (a), (b), (f), (i) & (q) of the HCCAR, 2009 and CBEC Notification No. 13/2009 dated 23.04.2009 and thus appeared to have made themselves liable for penal action under the provisions of Handling of cargo in Customs Area Regulations, 2009 and Customs Act, 1962.
12. Now, therefore, under regulation 12 of HCCAR, 2009, the CCSP i.e. CFS M/s. DRT-CONCOR, Dronagiri Rail terminal, Sector-2, Plot No.33, 34 & 35, Navi Mumbai- 400707 are hereby called upon to Show Cause to the Commissioner of Customs (General), Nhava-Sheva through the Assistant Commissioner of Customs, CCSP Cell, Jawaharlal Nehru Customs House, Nhava Sheva, Maharashtra, within 30 days of receipt of this Notice as to why;
(i) The appointment of M/s. DRT-CONCOR CFS as CCSP shall not be suspended/revoked under regulation 11 of the HCCA Regulations, 2009 after following the procedure under regulation 12 ibid.Page 6 of 22
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(ii) The total value of pilfered goods amounting to Rs. 4,44,32,500/- (Rupees Four Crores Forty Four Lakhs Thirty Two Thousands and Five Hundred only) should not be held as liability arising under regulation 5(6) of HCCAR, 2009 and why the same should not be recovered.
(iii) Penalty under Section 158(2)(ii) and Section 117 of the Customs Act, 1962 should not be imposed upon them.
(iv) Penalty under Regulation 12(8) of the Handling of Cargo in Customs Areas Regulations, 2009 should not be imposed on them."
(emphasis supplied)
11. By an Order-in-Original dated 18 April, 2023 passed by the Commissioner of Customs, the show cause notice came to be confirmed in the following terms:-
" ORDER
40. I, therefore, pass the following Order:
(i) I order to suspend the approval granted vide Public Notice
No.134/2020 dated 14.10.2020 for operation as Customs Cargo Service Providers (CCSP) to M/s. Container Corporation of India Limited (CFS CONCOR DRT) under Regulations 11 (1) of the Handling of Cargo in Customs Area Regulations 2009 with effect from 01.05.2023 to 15.05.2023 with following conditions:
(a) Existing consignments in the CCSP meant for export may be allowed.
(b) Import Cargo-live consignments pending for clearance in the CCSP may be allowed to be cleared.
(c) Import Cargo-for which action under Section 48 initiated and Auction Notice has been issued, may be allowed.
(ii) I hold that the CFS M/s Container Corporation of India L imited (CFS CONCOR DRT) is liable to pay an amount of Rs.
4,44,32,500/-(Rupees Four Crores Forty Four Lakhs Thirty Two Thousands and Five Hundred only) as value of pilferage goods (Red Sanders logs weighing 12695 kgs in Container no. GESU3997518) as per Regulation 5 (6) of the Handling of Cargo in Customs Area Regulations, 2009.
(iii) I impose Penalty of Rs. 50,000/- (Rs. Fifty Thousand only) Page 7 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc on CFS M/s. Container Corporation of India Limited (CFS CONCOR DRT) under Regulation 12 (8) of HCCAR 2009.
(iv). I impose Penalty of Rs. 4,00,000/- (Rs. Four Lakhs only) on CFS M/s Container Corporation of India Limited (CFS CONCOR DRT) under Section 117 of the Customs Act, 1962.
41. This order is issued without prejudice to any other action that may be initiated against the noticee or any other person under the provisions of the Customs Act, 1962 or any other law for the time being in force in the Republic of India."
(emphasis supplied)
12. The appellant assailed the aforesaid order-in-original before the tribunal by filing an appeal, which has been dismissed by the tribunal by the impugned order. It is on such backdrop, the appellant is before us. Submissions
13. Mr. Sriram Sridharan, learned counsel for the appellant has limited submissions in assailing the impugned order. He submits that in passing the impugned orders, there is an apparent overlooking of the purport of the provisions of Regulation 5(6) of the 2009 Regulations, in as much as, the provisions of such regulation cannot fasten any liability on the CFS/appellant, to indemnify the value of the stolen goods. According to Mr. Sridharan, the liability to indemnify can only be a liability arising on account of damages caused or suffered on imported or exported goods due to accident, damage, deterioration, destruction or any other similar unnatural cause during their receipt, storage, delivery, dispatch or otherwise handling. It is his submission that a situation where an illegality Page 8 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc has taken place namely of the goods being pilfered or stolen in the course of storage would not fall under the provisions of Regulation 5 sub- regulation (6) of the 2009 Regulations. It is hence submitted that there was no question of the Commissioner of Customs seeking an indemnification from the appellant when the appellant's obligation/function was limited, which was merely storage of the seized containers. It is hence his submission that the impugned order on such ground needs to be set aside.
14. Mr. Sridharan's next submission is in regard to the penalty as imposed on the appellant. It is submitted that the provisions of Regulation 12(8) were certainly not attracted, as no fault could be attributed to any actions of the appellant. It is also his submission that there cannot be a simultaneous penalty under Section 117 of the Customs Act, as also penalty under Regulation 12(8) of the 2009 Regulations. It is his contention that thus, the order imposing penalty on the appellant is also an illegality as reflected from the impugned orders.
15. On the other hand, Mr. Subir Kumar, learned counsel for the respondent has supported the impugned order. He submits that the facts of the case are gross in as much as the modus operandi in removal of the Page 9 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc goods was a serious action on the part of CFS and contrary to the regulations. It is submitted that the provisions of the Regulations and the provisions of the Customs Act as referred above stood ex-facie breached by the appellant's CFS and thus, the show cause notice was appropriately confirmed by the order-in-original by directing the appellant, to indemnify the Commissioner by making payment of the amount in question. He submits that this is a case wherein there was an apparent breach by the appellant of the provisions of the 2009 Regulations and the provisions of the Customs Act, hence the indemnification and the penalty as imposed by the order-in-original and as confirmed by the tribunal, need no interference. He would hence submit that the appeal deserves to be dismissed.
Discussion
16. Having heard learned counsel for the parties and having perused the record, it clearly appears that the following facts are not in dispute. The Red Sanders were sought to be smuggled under the garb of stainless steel utensils. Such goods were apprehended by the Customs officials, and after a valid panchnama being drawn, they were kept in a "sealed Container" on the premises of the appellant's-CFS. There is also no dispute in regard to the valuation of the stolen Red Sanders, which were Page 10 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc valued at Rs.4,44,32,500/-.
17. It is thus quite clear that Red Sanders stored in the container, which was in the legal custody of the Customs, stored at the appellant's CFS, were subjected to pilferage/theft at the appellant's premises and attributable to the appellant's CFS. It is in these circumstances, a show cause notice came to be issued to the appellant by the Commissioner inter alia invoking the provisions of Regulation 11, Regulation 5(6) and Regulation 12(8) read with provisions of Section 158(2)(ii) and Section 117 of the Customs Act. The Order-in-Original confirmed the show cause notice in imposing liability on the appellant of an amount of Rs.4,44,32,500/-, being the value of the pilfered goods/Red Sanders-logs, weighing 12695 kgs. required to be indemnified by the appellant as per the provisions of Regulation 5(6) of the 2009 Regulations. A penalty of Rs.50,000/- under Regulation 12(8), and a penalty of Rs.4,00,000/- under section 117 of the Customs Act was also imposed. The said Order-in- Original has been confirmed by the Tribunal in appeal.
18. On such backdrop, to appreciate the contentions as urged on behalf of the appellant on the applicability of Regulation 5(6) of the 2009 Regulations, insofar it requires the appellant to indemnify the Commissioner of Customs for the loss of goods, as also, qua the provisions Page 11 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc of Regulation 12(8) insofar as the penalty of Rs.50,000/- is imposed on the appellant, we note the said regulations, which reads thus:
"Regulation 5. Conditions to be fulfilled by Customs Cargo Service provider - The Customs Cargo Service provider for custody of imported goods or export goods and for handling of such goods in a customs area shall fulfill the following conditions, namely:-
(1) Provide the following to the satisfaction of the [Principal Commissioner of Customs or Commissioner of Customs, as the case may be) namely:
(i) Infrastructure, equipment and adequate manpower for loading, unloading, stacking, handling, stuffing and de-stuffing of containers, storage, dispatch and delivery of containers and cargo etc., including:-
(a) standard pavement for heavy duty equipment for use in the operational and stacking area;
(b) free of cost or rent fully furnished office accommodation for Customs, Customs Electronic Data Interchange (EDI) Service Centre, with required amenities and facilities and residential accommodation and transportation facilities for customs staff;
(c) premises for user agencies with basic amenities and facilities;
(d) storage facility, separately for imported, export and transshipment goods;
(e) gate complex with separate entry and exit;
(f) adequate parking space for vehicles;
(g) boundary wall;
(h) internal service roads;
(i) electronic weigh-bridge and other weighing and
measuring devices;
(j) computerized system for location and accountal of
goods, and processing of documents;
(k) adequate air-conditioned space and power back up,
hardware, networking and other equipment for secure connectivity with the Customs Automated system; and for exchange of information between Customs Community partners;
(l) facilities for auction, including by e-auction, for disposal of uncleared, unclaimed or abandoned cargo;
(m) facilities for installation of scanning equipment;
(n) security and access control to prohibit unauthorized access into the premises, and
(o) such other facilities as the Commissioner of Customs may specify having regard to the custody and handling of imported or export goods in a customs area;Page 12 of 22
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(ii) safe, secure and spacious premises for loading, unloading, handling and storing of the cargo for the projected capacity and for the examination and other operations as may be required in compliance with any law for the time being in force;
(iii) insurance for an amount equal to the average value of goods likely to be stored in the customs area based on the projected capacity, and for an amount as the Commissioner of Customs may specify having regard to the goods which have already been insured by the importers or exporters.
(2) Undertake to bear the cost of the Customs officers posted, at such customs area, on cost recovery basis, by the Commissioner and shall make payments at such rates and in the manner prescribed, unless specifically exempted by an order of the Government of India in the Ministry of Finance;
(3) Execute a bond equal to the average amount of duty involved on the imported goods and ten per cent of value of export goods likely to be stored in the customs area during a period of thirty days and furnish a bank guarantee or cash deposit equivalent to ten per cent of such duty:
Provided that the condition of furnishing of Bank guarantee or cash deposit shall not be applicable to ports notified under the Major Ports Act, 1962 (38 of 1963) or to the Central Government or State Governments or their undertakings or to the Customs Cargo Service provider authorised under Authorised Economic Operator Programme.
(4) Execute a separate bond for an amount equal to ten percent of value of export goods with a bank guarantee for an amount equal to ten percent of the value of the bond, towards the export goods transported from the customs area to any other customs area for export or transshipment, as the case may be;
(5) Undertake to comply with the provisions and abide by all the provisions of the Act and the rules, regulations, notifications and orders issued thereunder.
(6) Undertake to indemnify the Commissioner of Customs from any liability arising on account of damages caused or loss suffered on imported or export goods, due to accident, damage, deterioration, destruction or any other unnatural cause during their receipt, storage, delivery, dispatch or otherwise handling."
Regulation 12 - Procedure for suspension or revocation of approval and imposition of penalty-
(1) .....
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(2) .....
(3) .....
(4) ....
(5) ....
(6) ....
(7) ....
(8) If any Customs Cargo Service provider contravenes any of the
provisions of these regulations, or abets such contravention or who fails to comply with any provision of the regulation with which it was his duty to comply, then, he shall be liable to a penalty which may extend to fifty thousand rupees."
(emphasis supplied)
19. The primary contention as urged by Mr. Sridharan referring to the wordings of Regulation 5(6) under which recovery of the value of goods from the appellant is sought for, is to the effect that there is total misapplication of said Rule, which according to him is not attracted in the present circumstances. We are not persuaded to accept Mr. Sridharan's contention for more than one reason. We may observe that Regulation 5 provides for "Conditions to be fulfilled by Customs Cargo Service Provider". It provides that Customs Cargo Service Provider (appellant in the present case), for custody of imported goods or export goods and for handling of such goods in a customs area, is under a mandate to fulfill the conditions as set out in such Regulation. The opening words of Regulation 5 itself makes the provision mandatory when it uses the word " shall fulfill the following conditions". It is manifest that sub-regulations (2), (5) and (6) of Regulation 5 are in the nature of undertakings. Regulation 5(6) clearly provides that the CFS is required to indemnify the Principal Page 14 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc Commissioner of Customs or Commissioner of Customs, as the case may be, from any liability arising on account of damages caused or loss suffered on imported or export goods, due to accident, damage, deterioration, destruction or any other unnatural cause during the receipt of the goods, storage, delivery, dispatch or otherwise handling. Thus, Regulation 5(6) is quite widely worded, so as to take into account different situations, so as to cover not only the liability arising on account of damages, but also, loss suffered on imported or export goods, which may be on account of factors like accident, damage, deterioration, destruction or any other unnatural cause. The phrase "any other unnatural cause" would mean any cause other than the natural cause. Theft and/or pilferage of goods which are in the custody and seal of the Customs certainly is an unnatural cause, which has taken place during the storage of the goods as in the present case. Regulation 5(6) not only covers "storage" but also any unnatural event in regard to the goods during the 'receipt', 'delivery', 'dispatch' or otherwise handling of the goods. Such is the wide canvass of the Regulation 5(6) of the 2009 Regulation.
20. Thus, the purport and interpretation of Regulation 5(6) as canvassed on behalf of the appellant is not correct and acceptable. It is also not possible to accept an interpretation which goes contrary to the plain Page 15 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc language of the regulation. In fact such interpretation of Regulation 5(6) as urged on behalf of the appellant, in our opinion, would lead not only to an absurdity but would cause a serious prejudice to the interest of the revenue, which is sought to be protected under the varied circumstances the regulation would ordain. This, not only as seen in the explicit wordings of the said Regulation, but also implicit, in the consequences the such regulation would take within its ambit, in the event there is loss of goods and any liability arising therefrom. Further, it cannot be overlooked that the compliance of such regulation is in the form of a statutory undertaking by the CFS. If the obligation and the indemnity stipulated by Regulation 5(6) is absent, it would lead to serious consequences, in the CFS having no accountability in handling the nature of the cargo. In the absence of such rule, in fact, it would amount to conferring a licence on CFS without an accountability interalia on the storage and handling of valuable goods, which is sought to be remedied by the said regulation.
21. Now applying Regulation 5(6) to the facts of the present case, it is not in dispute that there is an "undertaking" on the part of the CFS to indemnify the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, inter alia in regard to the loss suffered, and in the present case on export goods, by an unnatural cause, during storage of Page 16 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc goods. Once the appellant was bound by such undertaking as contemplated by Regulation 5(6) and having consciously accepted the fact that the goods worth Rs.4,44,32,500/- have been stolen/pilfered, then certainly statutory obligation under Regulation 5(6) kicks in, so as to make the appellant liable to indemnify the said loss of goods which had occurred due to theft of the goods.
22. Thus, in the facts of the present case, certainly it is crystal clear that the Commissioner had become entitled to such amount of loss as suffered. It also cannot be said that the Commissioner was not entitled for recovery of loss from the appellant for the reason that the exporter was facing criminal proceedings. The goods were prohibited goods not capable of being exported. They were of high value. It thus cannot be said that there was no loss suffered on account of theft of the said goods. Even otherwise, there needs to be a holistic reading of Regulation 5(6) taking into consideration the scheme of the 2009 Regulations read with substantive provisions of the Customs Act, namely, the provisions of Section 141 which become relevant in the present context. Section 141 reads thus:
"141. Conveyances and goods in a customs area subject to control of officers of customs (1) All conveyances and goods in a customs area shall, for the purpose of enforcing the provisions of this Act, be subject to the control of officers of customs.Page 17 of 22
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06 December, 2023 cuappl 33496-23@ ial 33531-23.doc (2) The imported or export goods may be received, stored, delivered, dispatched or otherwise handled in a customs area in such manner as may be prescribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed."
(emphasis supplied)
23. Section 141(2), therefore applies to the imported or export goods which may be received, stored, delivered, dispatched or otherwise handled in a customs area only in a manner "as may be prescribed", so as to provide that the responsibilities of persons engaged in the said activities shall be such as may be prescribed. As per the provisions of Section 2(32) of the Customs Act "prescribed" is defined to mean prescribed by regulations made under the Act, hence, all activities of the appellant were required to be undertaken as per the Regulations as framed under the Customs Act and in the present case 2009 Regulations. Thus, insofar as the appellant's contention on the misapplication of Regulation 5(6) is concerned, the contentions are untenable and are required to be rejected.
24. We may observe that the provisions of Regulation 6(1)(a), (b), (f),
(i) and (q) were also invoked by the department, which provide for "Responsibilities of Customs Cargo Service Provider". It is clear that the appellant had breached its responsibility in discharging its duties insofar as the custody of goods in question was concerned and which were stolen/pilfered from CFS of the appellant. The said Regulation reads thus: Page 18 of 22
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6. Responsibilities of Customs Cargo Service provider:
(1) The Customs Cargo Service provider shall -
(a) keep a record of imported goods, goods brought for export or transshipment, as the case may be, and produce the same to the Inspector of Customs or Preventive Officer or Examining Officer as and when required;
(b) keep a record of each activity or action taken in relation to the movement or handling of imported or export goods and goods brought for transhipment;
(c) ....
(d) ....
(e) ....
(f) not permit goods to be removed from the customs area, or
otherwise dealt with, except under and in accordance with the permission in writing of the Superintendent of Customs or Appraiser;
(g) ....
(h) ....
(i) be responsible for the safety and security of imported and
export goods under its custody;
(j) ....
(k) ....
(l) ....
(m) ....
(n) ....
(o) ....
(p) ....
(q) abide by all the provisions of the Act and the rules, regulations, notifications and orders issued thereunder.
(2) ....
(3) .... "
(emphasis supplied)
25. We are, hence, of the clear opinion that there was no error much less any illegality in the Commissioner directing the appellant to indemnify the Commissioner for the loss of the goods.
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26. Now coming to the next contention as urged by Mr. Sridharan that there could not have been a double penalty imposed on the appellant, inasmuch as, the penalty of Rs.4,00,000/- was imposed under the provisions of Section 117 of the Customs Act, as also a penalty of Rs.50,000/- has been imposed under Regulation 12(8) of the 2009 Regulation. To appreciate Mr. Sriram Sridharan's contention, having already noted the provisions of Regulation 12(8), we would also note the provisions of Section 117, which reads thus:
"117. Penalties for contravention etc. not expressly mentioned Any person who contravenes any provision of this Act or abets any such contravention or who fails to comply with any provision of this Act with which it was his duty to comply, where no express penalty is elsewhere provided for such contravention or failure, shall be liable to penalty not exceeding four lakh rupees."
27. On a plain reading of Section 117 of the Customs Act, it is quite clear that the provision pertains to penalties for contravention of the provisions of the Act or in the event of abetment of any such contravention and /or failure to comply with the provisions of the Act, with which the person was under a duty to comply and where no express penalty elsewhere is provided for such contravention or failure, it is only in that event, Section 117 can be invoked. Thus, Section 117 of the Customs Act is an independent provision inter alia dealing with the contravention of the provisions of the Act.
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28. In the facts and circumstances of the present case, the Commissioner was justified in imposing a penalty for contravention of the provisions of Customs Act by the appellant in relation to the goods in question. Also the appellant has not raised a dispute, as the contention of the appellant is that there cannot be a simultaneous penalty under Section 117 of the Customs Act and Regulation 12(8) of the 2009 Regulations. Thus, no fault can be found on the penalty of Rs.4,00,000/- as imposed under Section 117.
29. Insofar as the imposition of penalty under Regulation 12(8) is concerned, Regulation 12(8) of the 2009 Regulation mandates that if the Custom Cargo Service Provider (appellant in the present case) contravenes any of the provisions of the said Regulations or abets such contravention or fails to comply with any provisions of the regulation with which it was his duty to comply, then he shall be liable to a penalty which may extend to fifty thousand rupees. In the present case, there is a clear contravention of Regulation 5 and Regulation 6, as noted above, hence, the penalty under Regulation 12(8) cannot be faulted.
30. In the light of the above discussion, the appeal is without merit, it is accordingly dismissed. No costs.
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31. Interim Application would also not survive, it is accordingly disposed of.
[JITENDRA JAIN, J.] [G. S. KULKARNI, J.]
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Signed by: Vidya S. Amin
06 December, 2023
Designation: PS To Honourable Judge
Date: 06/12/2023 22:07:50