Goods are liable to be confiscated if the vessel sailed before issuance of Let Export Order.

PJ/Case Laws/2012-13/1400

Case:- M/S PATKAR & SONS SHIPPING AGENCY PVT LTD, M/S HEL ENGINEERING PVT LTD V/S COMMISSIONER OF CUSTOMS (EXPORT), NHAVA SHEVA

Citation:- 2013-TIOL-91-CESTAT-MUM

Brief Facts: - The Appellants herein are M/s. Patkar & Sons Shipping Agency Pvt. Ltd., CHA and M/s. HLE Engineering Pvt. Ltd., the exporter. They filed a shipping bill no. 5972223 dated 24-01-08 for the export of goods such as rotary vacuum paddle dryer and heat exchanger. The vessel carrying the goods, MSC Brianna-Voyage No. 144R, sailed from Nhava Sheva on 27.01.2008 without obtaining the Let Export Order (LEO) from the customs authority. LEO was, in fact granted only on 28.01.2008. Accordingly, a notice was issued to the appellants for breach of provisions of the Customs Act, 1962, and the export goods valued at Rs. 85,65,200/- were held liable to confiscation under section 113(g) of the said Act and a penalty of Rs. 4,00,000/- and Rs. 3,50,000/- each were imposed on the appellants under Section 114(iii) ibid. By aggrieving, the appellants filed present appeal.

Appellant’s Contention: - The appellant contended that the cargo in this case was over dimensional and therefore, it had to be loaded earlier. The original schedule date for departure was 28.01.2008. In as much as the loading was completed early then the vessel set sail on 27.01.2008. Once the goods are handed over to the shipping agent, they have no control over the goods and it was the responsibility of the shipping line to ensure that they carry only those goods in respect of which LEO has been given. The order has been passed by the adjudicating authority without taking into account the submissions made by them and therefore, the order should be set aside and their appeal should be allowed.

Respondent’s Contention: - The respondent argued that as per the provisions of Sections 50 and 51 of the Customs Act, 1962, it is the responsibility of the exporter as well as his agent, the CHA, to ensure that the goods are exported after all export formalities such as assessment and examination of the goods are completed and Let Export Order is given by the proper officer of Customs. In the instant case, the custom authorities has not issued the Let Export Order and before issuing of the Let Export Order, the vessel sailed resulting in breach of the Sections 50 and 51 of the Customs Act. Section 113(g) of the Customs Act provides that 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 is liable to be confiscation. Once the goods are liable to be confiscation, then under the provision of Section 114(iii) of the Act any person who, in relation to any goods, does or omits to do any act which act or omission renders the goods liable to confiscation, is liable to penalty not exceeding the value of the goods as declared by the exporter or the value as determined under this Act whichever is greater. In the instant case, the value of the goods determined is Rs. 8565200/- (FOB). Therefore, the appellant is liable to pay penalty and the penalties of Rs. 4 lakhs and Rs. 3.5 lakhs imposed on the appellants cannot be said to be harsh.

Reasoning of Judgment: - The Hon’ble Tribunal held that Sections 50 and 51 of the Customs Act casts a responsibility on the exporter as well as his agent to ensure the goods are exported after completion of all customs formalities such as assessment, examination and issue of LEO. In the instant case the fact remains that the goods were loaded on to the vessel for export and the vessel set sail before the “Let Export Order” was given by the Customs. Therefore, it is clear breach of the provisions of the Customs Act. Consequently the goods are liable to confiscation under Section 113(g) of the Customs Act and the appellant is liable to penalty under Section 114(iii). There is no mens rea required for imposition of penalty under Section 114. Any action or omission on the part of any person which makes the goods liable to confiscation attracts penalty. Therefore, imposition of penalty on the exporter and the CHA for the omission on their in exporting the goods before grant of LEO was in accordance with law. This Tribunal in the case of Nichrome India Ltd. 2010 (251) ELT 147 = (2009-TIOL-665-CESTAT-MUM) and Zenith Rubber& Plastic Works 2009 (238) ELT 646 held that whosoever is found to have committed something paving the way of 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 for confiscation and consequently liable to the penal consequences. The only ground which can mitigate the action of the appellant is that the vessel set sail before its scheduled date of departure. Thus, the penalty is reduced from Rs. 3.5 lakhs to Rs. 1.4 lakhs on the exporter M/s. HLE Engineering Pvt. Ltd. And from Rs. 4 lakhs to Rs. 1.6 lakhs on the CHA, M/s. Patkar & Sons Shipping Agencies Pvt. Ltd. But for this modification, the order of the lower authority is upheld. Accordingly, stay applications are also disposed of.

Decision: - Stay application disposed of.

Comment:-The analogy drawn from this case is that if the vessel on which goods to be exported are loaded sails before issuance of Let Export Order by the customs authorities, the goods are liable for confiscation along with penalty as penalty in such case does not requires ‘mens rea’.

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PJ/Case Laws/2012-13/1400

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