Custom, Excise & Service Tax Tribunal
Inox India Ltd vs Commissioner Of Customs (Export), ... on 4 December, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL Nos. C/297 & 298/09-Mum (Arising out of Order-in-Original No. 133/09 dated 3.3.2009 passed by Commissioner of Customs (Export), JNCH, Sheva) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) and Honble Mr. Anil Choudhary, 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?
====================================================== Inox India Ltd. Appellant The Universal Traffic Co. Vs. Commissioner of Customs (Export), Nhava Sheva Respondent Appearance: Shri S.N. Kantawala, Advocate, for appellant Shri Ahibaran, Additional Commissioner (AR), for respondent CORAM: Honble Mr. P.R. Chandrasekharan, Member (Technical) and Honble Mr. Anil Choudhary, Member (Judicial) Date of Hearing: 4.12.2012 Date of Decision: 6.12.2012 ORDER NO Per: P.R. Chandrasekharan:
The appeals are directed against Order-in-original No. 133/2009 passed by the Commissioner of Customs (Exports), JNCH, Nhava Sheva. As both the appeals arise from a common order, they are taken up together for consideration and disposal.
2. The appellants are M/s Inox India Ltd. (exporter in short) and M/s The Universal Traffic Co. M/s Inox India Ltd. sought to export one cryogenic tank for liquefied gases vide shipping bill No. 6505675 dated 21.7.2008 filed by their CHA M/s The Universal Traffic Co. The container carrying the goods were loaded on vessel Vira Bhum which sailed on 23.7.2008. However, the let export order for the said goods were obtained by the exporter only on 24.7.2008, that is, after the ship had set sail. Therefore a show cause notice dated 10.11.2008 was issued by the Customs authorities, inter alia, directing the exporter and the CHA to show cause as to why the goods valued at Rs.88,81,600/p should not be confiscated under section 113(g) of the Customs Act, 1962 and why penalty under section 114(iii) ibid should not be imposed on them. The case was adjudicated by the ld. Commissioner vide the impugned order wherein he confiscated the goods and imposed a redemption fine of Rs.15 lakhs in lieu of confiscation and imposed a penalty of Rs.3 lakhs on the CHA. Hence the appellants are before us.
3. The ld. Counsel for the appellants makes the following submissions:-
(1) In as much as the goods were not available for confiscation, the confiscation ordered is not sustainable in law and consequently, the question of imposing any fine in lieu of confiscation does not arise. He relies on the decision of Larger Bench of this Tribunal in the case of Shiv Kripa Pvt. Ltd. [2009 (235) ELT (Tri-LB)] and the decision of the Honble High Court of Punjab & Haryana in the case of Raja Impex (P) Ltd. [2008 (229) ELT 185 (P&H)] in support of this contention.
(2) As regards the imposition of penalty on the CHA, he submits that once the goods are entered for exportation in the port area, the CHA has no control over the goods. For the lapse on the part of the Shipping Line, they can not be penalized. They had also informed the freight broker through e-mail not to load the container as the customs out of charge was not received. Therefore, there was no willful default on the part of the CHA and hence no penalty is imposable on the CHA. He relies on the decision of this Tribunal in the case of Soham Logistics Pvt. Ltd. [2010 (261) ELT 1176] which was affirmed by the Honble High Court of Bombay vide order dated 1.9.2010 in Customs Appeal no. 69 of 2010. He also relies on the decision of this Tribunal in their own case vide order No. A/454 to 456/10 SMB/C-IV dated 12.8.2010 in a similar case.
In view of the above, the ld. Counsel prays for setting aside the impugned order.
4. The ld. AR appearing for the revenue reiterates the findings of the ld. Commissioner and relies on the decision in the case of Venus Enterprises [2006 (199) ELT 661] wherein it was held that fine and penalty are imposable even if goods are not available for confiscation.
5. We have carefully considered the submissions made by both the sides.
5.1 As regards the imposition of redemption fine in respect of goods which are not available for confiscation, a larger Bench of this Tribunal in the Shiva Kripa Ispat Pvt. Ltd. case (cited supra) held that fine is not imposable when the goods are not available for confiscation relying on the decision of the Honble Punjab & Haryana High Court decision in the Raja Impex case. In the said case the Honble High Court held that redemption fine can not be imposed if the goods are not available for confiscation unless the goods were allowed to be cleared subject to furnishing undertaking/bond etc. In the present case, the goods are not available for confiscation in as much as the vessel carrying the goods set sail on 23-7-2008 much before the date of the impugned order. Accordingly, we hold that imposition of redemption fine of Rs.15 lakhs in the impugned order is not sustainable in law and accordingly we set aside the same.
5.2 The next issue for consideration is whether the CHA is liable to penalty. Sections 50 & 51 of the Customs Act, 1962, prescribes the procedure for export of goods and they read as follows:-
SECTION 50. Entry of goods for exportation. (1) The exporter of any goods shall make entry thereof by presenting electronically to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form.
Provided that the Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically, allow an entry to be presented in any other manner.
(2) The exporter of any goods, while presenting a shipping bill or bill of export, shall make and subscribe to a declaration as to the truth of its contents.
SECTION 51. Clearance of goods for exportation. Where the proper officer is satisfied that any goods entered for export 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.
The exporter or the CHA on his behalf has to comply with the above statutory provisions.
5.3 The Customs Manual prescribes the detailed procedure to be followed which are briefly as under:-
customs clearance formalities for goods meant for export have to be fulfilled by presenting what are termed as shipping bills and other related documents to the export wing of the custom houses or EDI service Centres. The appraising staff in the Custom House/Air Cargo Complex checks the declarations to assess the duties/cess if leviable, propriety of export incentives where claimed under different schemes like duty drawback or duty free exemption schemes etc. Appropriate orders for examination before shipments are allowed are given on the Shipping Bill. The staff in the docks/cargo complexes/ICDs examines the goods meant for export on percentage basis, and allow shipment if there are no discrepancies/ mis-declarations etc., and no prohibitions/violations come to light. Appropriate penal action as per law is initiated where any fraudulent practices get detected during initial stage of scrutiny or at the time of examination etc. . These provisions similarly help customs to regulate the outflow of the goods out of the country and enable them to subject the goods to proper checks before allowing final exit out of the country by sea/air/land/rail routes. They also help detect any attempts of smuggling or commercial frauds by unscrupulous parties. 5.4 Para 40 of the Manual specifically provides that -
Once, the shipping bill is passed by the Export Department, the exporter or his agent present the goods to the shed appraiser (export) in docks for examination. The shed appraiser may mark the document to a Custom officer (usually an examiner) for examining the goods. The examination is carried out under the supervision of the shed appraiser (export). If the description and other particulars of the goods are found to be as declared, the shed appraiser gives a let export order, after which the exporter may contact the preventive superintendent for supervising the loading of goods on to the vessel. Thus from the statutory provisions and the supplemental instructions issued, it can be easily seen that the responsibility of the CHA does not end with filing of the shipping bill. He has to ensure the assessment of the shipping bill, examination of cargo and obtain the Let Export Order after which he has to contact the customs staff for loading of the goods. Thus unless and until the loading of the export goods on to the vessel is completed, the duty and responsibility cast on the CHA does not come to an end. In case the CHA fails to complete these statutory provisions, he would be liable for penal consequences.
5.5 As per the provisions of section 113(g) of the Customs Act, any goods loaded or attempted to be loaded on any conveyance, or water-borne, or attempted to be water-borne for being loaded on any vessel, the eventual destination of which is a place outside India, without the permission of the proper officer shall be liable to confiscation; Thus any goods which are loaded on to a vessel without the Let Export order issued by the proper of customs shall be liable to confiscation. In such an eventuality, under section 114, -
Any person who in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, shall be liable,-
(i) in the case of goods in respect of which any prohibition is in force, to a penalty not exceeding five times the value of the goods or one thousand rupees, whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods. to a penalty not exceeding five times the duty sought to be evaded on such goods or one thousand rupees, whichever is the greater;
(iii) in the case of any other goods, to a penalty not exceeding five times the amount of drawback claimed or one thousand rupees, whichever is the greater. Thus any act or omission to do any act, which renders the goods liable to confiscation attracts penalty. The said provision does not speak of the requirement of any mens rea on the part of the person committing the act or omission. Mere act or omission would suffice to attract the penalty. Thus applying these provisions to the facts at hand, the CHA failed to ensure that the goods were loaded on to the vessel only after let export order was obtained, thereby making the goods liable to confiscation under section 113(g). For the omission on the part of CHA, he is liable to penalty under section 114(iii).
5.6 The ld. Counsel for the CHA has relied on certain case laws in support of his contention that the CHA is not liable for penalty. In the Soham Logistics case, the containers were off-loaded late on 23.12.2006 but due to the holidays on 24th and 25th, they could obtain the customs clearance only on 26th. In the meanwhile, the vessel set sail on 25th. In those circumstances it was held that the CHA could not have remained present on the day of the holidays and therefore, the CHA had no control over the loading of the goods on to the vessel on that day. Similarly in the order No. A/454 to 456/10 SMB/C-IV dated 12.8.2010, the facts were that the CHA filed the shipping bill on 17.12.2007 and the LEO was issued on 27.12.2007. The vessel entered the port area on 26.12.2007 and was scheduled to sail on 27.12.2007. However, the vessel sailed on 26.12.2007 itself and the CHA did not have knowledge of loading of the container and sailing of the vessel. In those circumstances, it was held that the CHA was not liable to penalty. Those are not the facts obtaining in the present case. It is not the case of the appellant that he did not know when the vessel was set to sail. In fact normally, the arrival and departure of the vessel are made known in advance to all parties concerned by the shipping line. It is for the CHA to complete the formalities before the departure of the vessel. In the present case, the CHA informed the freighter broker about non-obtaining of the LEO a few hours after the vessel set sail. Therefore, the CHA can not pass on the blame on to the shipping line and the omission to obtain LEO before departure of the vessel was fairly and squarely on the CHA and for this omission he is liable to penalty under section 114 and we hold accordingly.
5.7 An identical issue came up for consideration of this Tribunal in the case of Nichrome India Ltd. [2009-TIOL-1902-Cestat-Mum] and this Tribunal held as follows:-
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. 5.8 The same issue came up for consideration before this Tribunal in the case of LCL Logistics (India) Pvt. Ltd. [2011(273) ELT 571] and it was held that when goods loaded and taken out of India without permission of the proper officer, then the goods are liable to confiscation and penalty is imposable on the CHA even when there was no mala fide intention on his part.
5.9 The Honble apex court in the case of Gujarat Travancore Agency Vs. CIT, Kerala [1989 AIR 1671] while considering certain provisions of the Income Tax Act, held as follows:-
3. The creation of an offence by Statute proceeds on the assumption that society suffers injury by the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence.
4. Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. A similar view was held by the Honble apex court in the case of SEBI vs. Shriram Mutual Fund [2006-TIOL-72-SC-SEBI] in the context of the SEBI Act as follows:-
In the provisions and scheme of penalty under Chapter VI A of the SEBI Act, there is no element of any criminal offence or punishment as contemplated under criminal proceedings. Therefore, there is no question of proof of intention or any mens rea by the appellants and it is not essential element for imposing penalty under SEBI Act and the Regulations. 5.10 There is nothing in the language of the provisions of section 114 of the Customs Act, 1962, to suggest that mens rea is essential for imposition of penalty . Mere act or omission to act would suffice for imposition of penalty if such act or omission violates statutory provisions. Proceedings under section 114 of the Customs Act are not criminal proceedings but quasi -judicial proceedings and hence mens rea is not required to impose penalty under the said section and we hold accordingly.
5.11 The next and last issue for consideration is whether the penalty of Rs.3 lakhs imposed on the CHA is harsh or not. In the present case it is seen from the records that the CHA had moved the container into the port area on 23.7.2008 at 1435 hrs. and the container was loaded on to the vessel at 1550 hrs. and the vessel set sail on 1645 hrs. The short time interval between the arrival of the goods in the port area and the sailing of the vessel could have led to the omission/default on the part of the CHA which could be a mitigating factor. Therefore, some leniency is called for. Accordingly we reduce the penalty on the CHA from Rs.3 lakhs to Rs.50,000/-(Rs. Fifty thousand only).
6. To sum up, we set aside the fine of Rs.15 lakhs imposed on the goods as unsustainable in law. We also reduce the penalty on the CHA from Rs.3 lakhs to Rs.50,000/-(Rs. Fifty thousand only). The appeals are disposed of in the above terms.
(Pronounced in Court on 6/12/2012) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) tvu 1 11