Decided on March 20,2015

Scope Amra Logistics (I) Pvt. Ltd. Appellant
C.C.E., C. And S.T., Aurangabad Respondents

Referred Judgements :-



RAMESH NAIR - (1.)THESE 4 appeals are directed against Order -in -Original No. 52/Custom/Commissioner/2014, dated 6 -8 -2014 passed by the Commissioner, Central Excise and Customs, Aurangabad.
(2.)The details of the confirmation of the order is given in the below chart: -
The fact of the case is that M/s. Akanksha Packs, Plot No. F -66, MIDC, Waluj, Aurangabad (manufacturer of corrugated boxes of plastic and paper) had obtained an order from Elite Trading Est. Dubai for export of corrugated boxes and also received an advance payment through SBI, Industrial Finance Branch, Ktanti Couk, Aurangabad by way of swift transfer (i.e., from Bank to Bank). Shri Anil Satyanarayan Loya, partner of M/s. Akanksha Packs in his statement clarified that Mr. Shantanu Pawar was the buyer, in this case, who had requested him that his cousin brother Shri Rohit Mahadik will take care of transportation of the container upto Nhava Sheva Port, Mumbai. For arranging the container, Shri Rohit Mahadik had contacted M/s. Scope Amra Logistics India Pvt. Ltd. and requested to book a 20 feet container for stuffing of export goods from ICD Waluj, Aurangabad. M/s. Scope Amra in turn had placed the booking request with the freight forwarder M/s. Marine Trans India Pvt. Ltd. who booked the said empty container from the shipping line viz. M/s. Freight Connections. Accordingly, Shri Rohit Mahadik arranged to send the container along with his person, Mr. Sandip and driver of the vehicle, who came directly to ICD Waluj. The goods viz. 10750 Nos. of corrugated boxes were cleared by the exporter on payment of duty for export. This consignment was taken to ICD Waluj from the factory premises and thereafter loaded, stuffed in the said container and sealed by the departmental officers and the shipping line seal and the consignment was handed over to the transporter for onward transportation to JNPT, Nhava Sheva Port. The shipping bill had been filed by CHA, M/s. R & Y Logistics Pvt. Ltd. declaring corrugated boxes as the goods/cargo. However, on specific information, the said container was brought from JNPT Terminal to Speedy CFS on 3 -10 -2012 and examination of the said container was done under panchanama drawn by the Customs officers of the SUB, JNCH, Nhava Sheva, Mumbai on 5 -10 -2012 in presence of the S/Shri Anil Satyanarayan Loya, Partner of M/s. Akanksha Packs and Shri Dadu Lawande, representative of the shipping line M/s. Freight Connection India Pvt. Ltd. and Shri Rajan Sawant, representative of the Speedy CFS. The examination of the container revealed that the front portion of the container was stuffed with 74 packages corrugated boxes but behind the corrugated boxes, logs of Red sanders (11505 Kg) were found. 11505 Kgs of Red sanders were seized under panchanama dated 5 -10 -2012 on a reasonable belief that the same were liable to confiscation under the Customs Act, 1962 as export of Red Sanders was prohibited. 74 packages of corrugated boxes were also liable for confiscation under the Customs Act, 1962 as these goods had been used to conceal Red Sanders. The representative sealed samples of the Red Sanders were sent for testing. The Regional Deputy Director, Wildlife Control Bureau, Western Region, Mumbai confirmed vide morphological examination report No. C -13011/3/2009/12/Vol. 5/890, dated 15 -10 -2012, that the wood piece is found to be of Red Sanders (pterocarpus santalinus). After issuance of the show cause notice F. No. Prev/VII/GrV/25/Red Sanders/2012, dated 2 -4 -2013, in adjudication the Ld. Commissioner imposed penalties on the present appellants under Section 114(i) of the Customs Act, 1962 on the ground that the appellants have not complied with the KYC norms and this acts of commission on the part of the appellants lead to the smuggling of prohibited goods, i.e., Wooden Logs/Red Sanders. Aggrieved by the adjudication order, the appellants are before me.

Shri C. Subba Reddy, Ld. Counsel for the appellants submits that the appellants are nowhere involved in the smuggling of Red Sanders. There is no evidence on record that the appellants are in connivance with the foreign buyer who attempted to smuggle the Red Sanders from India to Dubai. The containers were stuffed and sealed with the goods, i.e., Corrugated Boxes in the ICD, Waluj in the physical supervision of the Customs officers. Thereafter there was no occasion for the appellant to doubt anything contrary, therefore, the appellants were not aware of any wrong doing by the persons of the foreign buyer. Shri Reddy submits that the penalties on the appellants were imposed under Section 114(i), penalty under this section can only be imposed if the person 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. In the present case, the appellants' role is limited to providing container that too for the permissible export goods, i.e., Corrugated Boxes and not for Red Sanders, therefore, the appellants have neither omitted to do any act not abetted the doing any such act, hence cannot be made responsible as regard smuggling of Red Sander, therefore, they cannot be penalised under Section 114(i). In support of his defence, the ld. Counsel placed reliance on the following judgments:

(a) Skyline Shipping & Logistics v. CC, Chennai [2010 (262) E.L.T. 985 (Tri. -Chennai)]

(b) Maheshwari Rocks (I) Pvt. Ltd. v. CC, Chennai [2010 (262) E.L.T. 574 (Tri. -Chennai)]

He submits that facts of both the above cases are identical to the facts in the present case as both the cases are related to smuggling of Red Sanders under the identical modus operandi. He prays that the penalties imposed under Section 114(i) on the appellants may be dropped by allowing the appeals.

On the other hand, Shri M.S. Reddy, Ld. Deputy Commissioner (AR) appearing for the Revenue reiterates the findings of the impugned order. He further submits that the appellants admitted in their respective statements recorded by the Customs officers that, they were aware of the Public Notice No. 17/2012 and despite this, they have not complied the KYC norms which lead to attempt of smuggling of Red Sanders. Therefore, the Ld. Commissioner has rightly imposed the penalties under Section 114(i), which he prays to uphold.

(3.)I have carefully considered the submissions made by both the sides. In view of the facts of the present case, it is clear that the appellants, were not involved in the smuggling of Red Sanders for the reason that the containers were stuffed and sealed with Corrugated Boxes at ICD, Waluj under the physical supervision of the Customs officers, thereafter the custodian got the control of the container. The tampering of seal, change of the goods, i.e., loading concealment of prohibited goods, i.e., Red Sanders were taken place in the transit from ICD to the Nhava Sheva Port. This clearly shows that the present appellants whose role was to arrange and provide the empty container for export goods, cannot be implicated in the act of smuggling of Red Sanders. However, the appellants have knowingly about the Public Notice No. 17/2012 not complied with the KYC norms of the person Shri Rohit Mahadik who placed order for container. The said public notice clearly instructs the container lines, shipping line, freight forwarders, agents, sub -agents, etc., to follow the Know Your Customer (KYC) norms of the exporter/person seeking the container for stuffing of export cargo. The sole objective of the circular is to avoid smuggling of prohibited goods, especially Red Sanders. Therefore, by not following the KYC norms by the appellants, they made liable themselves for imposition of penalties. The Ld. Commissioner has imposed penalties on both, i.e., on companies as well as on the employees of both the appellant companies, which in my view is not correct. From the records, it is not established that the employees have deliberately for their vested interest committed an act to make the goods liable for confiscation. From the nature of the offence committed in the present case, when the penalty is imposed on the companies, penalties on the employees are not warranted. As regard penalties on the appellant companies, I find that in view of the role of the companies, the lapse is only confined to the non -compliance of KYC and not involvement in the smuggling of Red Sanders. In view of this facts, I am of the view that the quantum of penalty on the appellant companies are very higher side and the appellant companies deserve reduction in the penalty imposed under Section 114(i). As regard the judgments relied upon by the Ld. Counsel, I find that both the said judgments have not dealt with the Public Notice No. 17/2012, therefore, the ratio of the same are not applicable, hence distinguished.
3.1 In view of above discussions, the Appeal No. C/89914/14 filed by Shri K. Venugopal and Appeal No. C/89913/14 of Shri Manoj B. Kotiyan are allowed. In appeals of M/s. Marinetrans (I) Pvt. Ltd. and M/s. Scope Amra Logistics (I) Pvt. Ltd., the penalties are reduced from Rs. 15 lacs to Rs. 5 lacs in each appeal.

(Operative part pronounced in the Court on 20 -3 -2015)


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