Cus - Failure to ascertain credentials of exporter and failure to notice forged nature of documents do not evidence culpability in abetment of smuggling of red sanders: CESTAT
By TIOL News Service
MUMBAI, JAN 25, 2017 : THE appellants are before the CESTAT and seek quashing of penalties imposed u/s 114(i) of Customs Act, 1962 for alleged involvement in attempt to smuggle out 6.9 metric tons of 'red sanders' [which is prohibited for export from India in pursuance of Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)] in containers under the guise of export of 'lock washers'.
It is not in dispute that the appellant CHA did file the shipping bill pertaining to the export. It is also admitted that this consignment was brought to them by one Flavian Walter D'Souza, a logistics operator, who regularly referred his clients to them as he was not a licenced 'customs house agent'. The appellant, however, submits that they had no reason to suspect the malafides of the exporter as the documents indicated that the goods had been stuffed in the factory and sealed under the supervision of Central Excise officer. It is their contention that the individuals who had supplied the documents and admitted to cognizance of its fraudulent origin had not been made noticees in the proceedings under Customs Act, 1962 whereas they, who were not implicated in any of the statements as having been part of the conspiracy to smuggle, had been. A similar plea is raised by the two other individual appellants.
The Bench after considering the submissions observed -
+ There is no allegation that the consignment was substituted between the filing of the shipping bill and the entry into the export area. The role of a 'custom house agent' in relation to export commences with the filing of the shipping bill and is completed when the consignment is handed over to the agent of the carrier. In the absence of an allegation, or a finding, that the substitution occurred during this window, responsibility cannot be fastened on the agent.
+ The original authority has acknowledged that none of the perpetrators of the offence have implicated the agent in any act of omission or commission in connection with the contraband. It is also on record that those who provided the documents to the appellant have also not been issued with notice in connection with proceedings for confiscation and penalty. In these circumstances, a finding that section 114 (i) of Customs Act, 1962 can be invoked is without any foundation.
+ There can be no doubt that a 'customs house agent' can be penalised under section 114 of Customs Act, 1962 but that penalty must follow a finding that an act of omission or commission on the part of 'customs house agent' rendered the goods liable for confiscation.
+ If deviation from the code of conduct enumerated in the Regulations were to be dealt with as abetting of smuggling, such provisions in the Regulations are redundant and a mere reference to section 112 and section 114 of Customs would have sufficed instead of the elaborate procedure laid down in the Regulations.
+ That the two authorities did proceed to cite the alleged breaches of the Regulations as the sole basis for proceedings against the appellant is an act of quasi-judicial overreach. The Customs House Agents Regulations, 2004, and its successor instrument, empowers the Commissioner of Customs, and that authority alone, to proceed against a 'custom house agent' for breach of the Regulations. Neither the original authority nor the first appellate authority can claim that power. I find that the two lower authorities have relied merely on this alleged breach to invoke section 114. That is patently without authority of law and cannot be allowed to sustain.
+ The adjudicating authority has held Flavin Walter D'Souza and Sarosh Nagarwala to be connected with sub-letting of customs house agent licence, failure to ascertain credentials of exporter and failure to notice the forged nature of the documents. These do not, by any stretch, evidence culpability in abetment of smuggling of 'red sanders' and on which the notice as well as impugned order, is conspicuously silent.
The penalty imposed on appellants is set aside and the appeals are allowed.
(See 2017-TIOL-233-CESTAT-MUM)
