Customs, Excise and Gold Tribunal - Mumbai
Air Freight Ltd. vs Commissioner Of Customs (Airport) on 9 March, 2004
Equivalent citations: 2004(95)ECC437, 2004(172)ELT229(TRI-MUMBAI)
ORDER K.D. Mankar, Member (T)
1. The appellants M/s Airfreight Ltd. are the Custom House Agents (CHA). They deal with the clearance of diplomatic mails bags for various consulates. It was alleged that on 4.4.89 two diplomatic mail bags originating from consulate of Belgium and addressed to Belgian consulate of Bombay had arrived by Air India Flight AI 7000. The bags were examined in the presence of panchas and it was revealed that 360 gold bars of 1 Tola each had been smuggled through the said mail bags. The consulate of Belgium disowned the said bags as being their diplomatic cargo. The bags alongwith their contents were seized. Going by the past record of clearances of similar consignments which arrived by Air India, the investigations approached M/s Airfreight for further enquiries. It was revealed that Mr. Nagesh Nayak Assistant and Mr. Suradkar another employee of the CHA had been instrumental in taking delivery of similar consignments. It was also revealed that, though such clearances were made by the said employees on the past three occasions, the consignments (mail bags) were not delivered to the Belgium consulate. Based on the investigation conducted, wherein some more players in the smuggling racket have been named, the show cause notice was issued to various persons, including the appellants and adjudicating order was passed whereby the seized gold was absolutely confiscated, and penalties were imposed on various persons including a penalty of Rs. 5,00,000/- (Five lakhs) on the appellants M/s Airfreight, the CHA, under Section 112(a) of the Customs Act. On appeal against the said order the Commissioner (Appeals) reduced the penalty to Rs. 2,50,000/- (two and half lakhs). Hence the instant appeal to the Tribunal.
2. Heard both sides.
3. In the brief enumeration of various facts connected with the smuggling of the seized gold, it has been noticed that two employees of the appellants viz S/Shri Nayak and Suradkar, had cleared consignments, similar to the seized consignment declared as diplomatic mail bags in the past. The duo could not take delivery of the seized consignment, though they had reached the Air India direct delivery counter to collect the consignment. However, on learning that the customs Air Intelligence unit had seized the bags on noticing concealed gold in the bags, both persons left, the place. Subsequently both surfaced and appeared before customs authorities and revealed the conspiracy and modus operandi adopted by them in smuggling the gold in the past using diplomatic mail bags, which were never delivered to the concerned consulates. The Belgium consulate had denied to have received any consignment in the past which figure in the Air India's register, having originated from Belgium consulate in Dubai.
4. In this case, I note that, the seized consignment having not been cleared either by the employees of CHA or no document having been filed by the CHA seeking clearance thereof, no penal liability can be fastened on the CHA so far as seized consignment is concerned. Therefore the justification for imposition of penalty under Section 112(a) of the Act, as done in the impugned order has to be examined with reference to the alleged clearance of past similar consignments.
5. Shri Nayak in his statement had revealed that the import manager of M/s Airfreight, Shri T.J. Delima used to sign a certain number of blank kachha bills of entry in advance, without indicating any details of the airway bill Nos/bill of lading etc. and hand over the same to him (Nayak) to take delivery of the diplomatic bags from the carrier. Shri Delima did not keep any account of the number of kachha bills of entry handed over to Nayak. As per the procedure, the kachha bills of entry, are to be converted into pucca bills of entry. It is revealed that, in respect of Air India's Direct Delivery register - against entry Nos. 742, 760 and 784, though Nayak and Suredkar have taken the delivery it is alleged that M/s Air Freight have failed to file pucca bill of entry.
6. While clearance procedure adopted by the appellant CHA is the same for all the diplomatic consignments, and the kachha bills of entry signed in advance by the authorised signatory are invariably converted into pucca bills of entry, in respect of the missing mail bags in respect of entries at Sr. Nos. 742, 760 & 784, it has been alleged that the appellant could not produce any pucca bill of entry.
7. It is to be noted that the statements of Nayak and Suradkar, do not implicate the appellants in any manner, as being a part of the conspiracy. The investigation has also not pin pointed any particular act of commission or omission on or on behalf of the appellant CHA to suggest that in respect of the 3 missing consignments, they had any prior knowledge of the contents of the so-called diplomatic bags being liable to confiscation.
8. The adjudicating authority in his findings has held that, the system of advance signing of blank kachha bills of entry facilitated the smuggling as indulged by the employees. The appellants in their defence have stated that Mr. Delima used to sign in advance blank kachha bill of entries of correct numbers only, on the basis of prior knowledge given to M/s Airfreight by the concerned consulate of the proposed arrival of mail bags.
9. In the fact of this defence, first and foremost, the department is required to produce the relevant kachha bills of entry, which allegedly facilitated the employees to misuse the said documents to indulge in smuggling. The adjudicating authority has noted that merely because the copies of the advance kachha bills of entries cited in the show cause notice have not been made available by the department, it does not ipso facts shift the burden of proof.
10. The above findings recorded above by the adjudicating authority to penalise the appellants cannot be supported. The practice of advance signing of blank kachha bill of entries in advance had not been resorted to by the appellants only in respect of missing diplomatic mail bags. The practice is universally adopted for all the bags. It is stated by the appellants that though there is no fool proof monitoring to ensure that all the kachha bills of entry get converted into pucca bills of entry, it is claimed that the number of blank kachha bills of entry comprise of the exact number of the diplomatic bags expected to land, on the basis of advance communication received from the consulate. In the case of missing bags, it is claimed by the appellants that, since they had no prior intimation from the consulate, there was no possibility of any blank kachha bill of entry having been handed over to Nayak.
11. Against background narrated above, in order to hold that, the appellants have facilitated smuggling by handing over pre-signed blank kachha bills of entry to seek clearance of the diplomatic bags in question, the customs are required to make available the said documents. In the absence of the said kachha bills of entry, it is not possible to conclude that the appellants have in any manner contributed to the act of smuggling by their employees. Except for stating that the system of blank signed kachha bills of entry and the absence of mentoring mechanism to ensure full accounted of such kachha bill of entries helped them to carry out smuggling, there is no other evidence to link the appellants with the act of smuggling.
12. Since the allegation of facilitation to smuggling is based on the fact that the appellants had issued pre-signed blank kachha bills of entry in the I case of missing diplomatic bags, the allegation cannot be sustained without the production of the said documents. This is specially so, when the appellants have clearly demonstrated that the same system was operating without any malpractice for clearance of the other diplomatic bags which are accounted for. Therefore, on account of this failure alone to produce the missing kachha bills of entry the orders of the lower authorities deserve to be set aside.
13. Besides, the levelled allegations can at best be termed as an act of negligence for which no penalty can be imposed under Section 112(a). Provisions of Section 112(a) require that the person must have a knowledge or reason to believe that his acts of commission or omission would lead to confiscation of imported goods. It is nobody's case that the appellants had prior knowledge, that the goods imported through missing diplomatic bags would be liable to confiscation. It is not even established that the appellants had any knowledge of arrival of such bags. The question of knowledge of the contents can arise only thereafter. In the absence of any such findings by the lower authorities, the penalty imposed on the appellants can not be sustained.
14. In the light of above discussion, I allow the appeal and set aside the orders of the lower authorities.
(Announced in Court)