By TIOL News Service

MUMBAI, MAR 15, 2017: THE main appellant is a shipping company and the second appellant is the managing director.

Both have been penalized under Section 114(i) of the Customs Act, 1962, holding that they had abetted M/s. Shree Khatoo Exports Ltd . in defrauding the Government by issuing shipping bills for Africa but unloaded the consignments at Dubai, which enabled M/s. Shree Khatoo Exports Ltd. to claim ineligible drawback.

The findings recorded by the Adjudicating authority while imposing penalties is -

"M/s. Sitara Shipping Ltd. has charged the freight of Rs.6,31,328/- for transportation of the goods to different African Ports from M/s. Shree Khatoo Exports Ltd. All the containers have been de-stuffed at Dubai as per consignee's request. However, M/s. Sitara Shipping Ltd. has neither refunded the freight charges to the said party, i.e. M/s. Shree Khatoo Exports Ltd., nor forwarded the freight charges from Dubai to South Africa to its tie-up agent, i.e. Masteq Freight Services, Dubai. In spite of repeated summons they could not provide sufficient information on this count. From this, it shows that M/s. Sitara Shipping Ltd. is aware that the cargo was to be off-loaded at Dubai. For this, they had taken the freight charges upto South African Ports for the reason that their cargo will not be checked on part with the Dubai cargo by the Customs Authority, as the mentioned cargo declared in the Bill of Lading was for South Africa."

The CESTAT observed that these "findings" of the Adjudicating authority for imposition of penalties are based on "surmises" inasmuch as section 114(i) is not invokable since -

- There is nothing on record to show that appellants were aware of the misdemeanor that was being supposedly undertaken by M/s. Shree Khatoo Exports Ltd.

- Charging of freight to Africa and de-stuffing containers at Dubai, by itself does not attract the penal provisions, as it is on record, that containers were de-stuffed at Dubai on request of the consignee, as in our opinion, a shipping company has to adhere to instructions of the consignees as to the unloading of cargo .

- That non-forwarding of freight charges from Dubai to Africa, by the main appellant herein cannot be per se held against the appellants.

It was, therefore, concluded that the impugned order to the extent it is challenged in these appeals is not sustainable. The appeals were allowed with consequential relief.

(See 2017-TIOL-819-CESTAT-MUM)