Custom, Excise & Service Tax Tribunal
Nichrome India Ltd vs Commissioner Of Customs (Export), ... on 30 July, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal Nos. C/650/08, 809/08 and 1057/08 (Arising out of Order-in-Original No. 84/2008 dated 02.05.2008 passed by Commissioner of Customs (Export), Nhava Sheva.) For approval and signature: Honble Mr.P.G. Chacko Member (Judicial) ======================================================
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?
====================================================== Nichrome India Ltd Emirates Shipping Agencies (India) Pvt Ltd Sudarshan Cargo Pvt Ltd Appellants Vs Commissioner of Customs (Export), Nhava Sheva Respondent Appearance:
Ms Rukmini Menon, Advocate and Ms Arti Bhide, Advocate for Appellant Shri Manish Mohan, S.D.R, for Respondent CORAM:
Honble Mr.P.G. Chacko Member (Judicial) Date of Hearing: 30.07.2009 Date of Decision: 30.07.2009 O R D E R NO..
1. The exporters, their CHA and the shipping line in respect of export consignment covered by Shipping Bill No 485/783 dated 21.12.06 are the appellants, who are aggrieved by the penalties imposed on them under Section 114 of the Customs Act. The exporter has also challenged the redemption fine imposed on them. The goods in a container were taken inside the port for loading in a vessel Emirates Freedom on 23.12.06 (Saturday). 24.12.06 (Sunday) 25.12.06 (Xmas day) were holidays for the Customs department. Let Export Order (LEO) in respect of the consignment was issued by the proper officer of customs on the next working day (26.12.06). Without waiting for this order, the vessel had sailed off on 25.12.06 itself. On these facts, a show-cause notice was issued by Commissioner of Customs to these appellants. The proposal, in that notice, to confiscate the goods under Section 113 (g) of the Customs Act and impose of penalties under Section 114 (iii) of the Act was contested by the parties concerned. It was in adjudication of this dispute that the impugned order was passed, wherein (a) the goods were confiscated and a fine of Rs 2.60 lakhs was imposed in lieu of confiscation, (b) penalties of Rs 2.60 lakhs each were imposed on the exporter (appellant in appeal C/1057/08), and their CHA (appellant in appeal No C/650/08), (c) a separate penalty of Rs 4 lakhs was imposed on the shipping line (appellant in appeal C/809/08).
2. The learned Counsel appearing for the exporter and the CHA points out, at the outset, that as regards penal liability under Section 114 of the Customs Act she has come across an adverse order of this Bench which was passed in more or less a similar situation. However, the learned Counsel seeks to distinguish the instant case on the strength of certain provisions of the Customs Act. The Tribunals order referred to by the learned Counsel is Order No. A/124-125/09/C-IV/SMB dated 6.4.09 in appeal Nos C/982&1030/08 (Mehta Exports and another vs Commissioner). The provisions of law referred to by the learned Counsel are Sections 34, 36, 40, 41 and 42 of the Customs Act. With reference to these provisions, the learned Counsel submits that none of these provisions can be said to have placed any liability on the exporter in relation to the customs procedure for export clearance. According to the learned Counsel, the burden is on the shipping line in terms of these provisions and Section 51 of the Act and no penalty is liable to be imposed on the exporter and/or the CHA. In this connection, reference has been made to a decision in the case of Shree Shipping Services va Commissioner of Customs 2005 (179) ELT 284 (Tri-Mumbai) and also the decision in Safe C & F Agency Pvt Ltd vs Commissioner of Customs 2007 (210) ELT 225 (Tri-Mumbai). In both these cases personal penalties on CHA were set aside. As regards redemption fine, the learned Counsel submits that no such fine was liable to be imposed on the exporter, as the exported goods were not available for confiscation. In this connection the learned Counsel has relied on the decision in the case of Commissioner of Customs vs Raja Impex (P) Ltd 2008 (229) ELT 185 (P&H), wherein the Honble High Court held that, where imported goods were not available for confiscation, any redemption could not be imposed except where the goods were cleared under bond/undertaking. The learned Counsel has also submitted, without prejudice to other relevant grounds, that the quanta of penalties imposed on the exporter and on the CHA are exorbitant.
3. The learned Counsel for the shipping line has adopted some of the arguments of the learned Counsel for the other appellants. Further, she has pointed out that the Honble High Court in a similar case reduced penalty from Rs 5 lakhs to Rs 2 lakhs in the case of another shipping line. She cited the High Courts order dated 15.7.09 in Customs Appeal No 57/09. The learned counsel prays for similar reduction of penalty.
4. The learned S.D.R. has argued in defence of the Commissioners order. He has also cited a decision of this Tribunal viz Order A-316-317/09SMB-CIV dated 4.6.09 in appeal Nos C/419, 420 & 530/08. It is submitted that the facts of the present case are similar to those of the case considered in order dated 4.6.09 and therefore penalties in the present case should be sustained by following the precedent.
5. I have given careful consideration to the submissions. The essential facts of this case are not in dispute. The crucial fact is that the vessel carrying the export goods covered by the shipping bill sailed off on 25.12.06 without waiting for Let Export Order (LEO) which was issued only on 26.12.06 by the proper officer of customs. Section 51 of the Customs Act is not a meaningless provision of law. It provides that the proper officer of customs may make an order for permitting clearance and loading of the goods for exportation, which would mean that the goods for exportation could not be loaded in the vessel without obtaining permission of the proper officer of customs. It is this permission of the proper officer of customs which is referred to as Let Export Order (LEO) issued to the exporter and therefore the exporter is entitled to the benefit of that order. Conversely, if the exporter chooses to export the goods without obtaining LEO from the proper officer of customs, he is liable for the consequences. What emerges from the provisions of Section 51 of the Act is that any exportation without LEO is prohibited. It would thus appear that goods exported without LEO are liable to confiscation under Section 113 (g) of the Act. Whoever is found to have committed something paving the way for shipment of the goods without LEO or to have omitted to do anything to ensure compliance with the requirement of Section 51 of the Act must be held to have rendered the goods liable to confiscation. All the three appellants are coming within this domain and consequently they have a penal liability under Section 114 of the Act. Actual confiscation of the goods is not necessary for this penalty. A mere liability of the goods to confiscation is enough. All the three appellants satisfy this condition. None of the provisions cited by the learned Counsel for the exporter seems to suggest that the exporter can escape such penal liability. On the other hand, these provisions are clearly indicative of the liabilities/responsibilities of persons concerned with export of goods. Section 34 of the Act provides that export goods shall be loaded on a conveyance only on the supervision of the proper officer. In the present case, the loading of the goods on the vessel took place on a holiday when the proper officer was absent. Section 36 of the Act provides that no export goods shall be loaded on any conveyance on any Sunday or any holiday observed by the department except after giving the prescribed notice and on payment of the prescribed fees. In the present case, obviously the appellants acted in breach of this provision. Section 40 of the Act provides that the person in-charge of a conveyance shall not permit the loading of export goods at a customs station unless a shipping bill duly passed by the proper officer has been handed over to him by the exporter. This provision has a clear nexus to Section 51 of the Act. It makes a shipping line liable to wait for the clearance of the proper officer of customs. This clearance, technically referred to as Let Export Order, has to be handed over to the shipping line by none other than the exporter. Of course, alternatively, it could be handed over by CHA, who is an agent of the exporter. In the instant case, obviously, the exporter, the CHA and the shipping line committed breach of the prohibition laid down under Section 40 read with Section 51. Section 42 has cast a further burden on the shipping line by providing that they shall not cause or permit the conveyance to depart from the customs station until a written order to that effect has been given by the proper officer. This provision has also to be read with Section 51 of the Act. One document referred to by the learned Counsel for the CHA is a representation dated 20.3.2008 submitted to the Commissioner of Customs (Export), Nhava Sheva by the Bombay Custom House Agents Association. This representation, which was submitted to the Commissioner for removing certain procedural difficulties in relation to export of goods, states, inter alia, thus The Custom House Agent obtains the LEO from the designated officers and submits the same to shipping lines for loading the container on board the vessel. This and other averments contained in the above representation would only go to concede the inescapable responsibilities of CHAs in relation to export consignments. Therefore, the CHA before me is precluded from disowning such responsibilities.
6. The next question relates to quanta of penalty. It is a common ground of these appeals that the penalties imposed on the appellants are harsh. Penalties on the exporter and the CHA are Rs 2.60 lakhs each, which appears to have been determined at 10% of the FOB value of the goods. Under Section 114 (iii) of the Act, the quantum of penalty shall not exceed the value of the goods as declared by the exporter or the value that is determined under the Act, whichever is the greater. The penalty on the above parties, is only about 10% of the FOB value of the goods. The penalty on the shipping line is Rs 4.00 lakhs. By all means, the conduct of the shipping line is far more blameworthy and therefore, the higher penalty on them than what was imposed on the exporter and the CHA cannot be said to be unfair. However, a penalty of Rs 4.00 lakhs on the shipping line when compared to the penalty of Rs 2.60 lakhs imposed on the exporter appears to be a little harsh.
7. As rightly pointed out by the learned Counsel for the exporter, the redemption fine imposed on them in the absence of the goods is liable to be set aside in terms of the ruling of the Honble High Court in Raja Impex (P) Ltd (supra).
8. In the result, Appeal C/1057/08 of the exporter is partly allowed, the redemption fine being set aside. Appeal No C/809/08 filed by the shipping line is allowed only to the extent of reducing the quantum of penalty on them to Rs 3.00 lakhs. Appeal No C/650/08 filed by the CHA is dismissed.
(Dictated in Court.) (P.G. Chacko) Member (Judicial) rk 7