Penalty for confiscation imposable even when the container sailed without let export order due to fault of shipping line.

PJ/Case Laws/2012-13/1491

Case: - DP LOGISTICS PVT. LTD. V/S COMMISSIONER OF CUSTOMS (EXPORT), MUMBAI-II

Citation: - 2013 (288) E.L.T. 107 (Tri. – Mumbai)

Brief Facts: - The appellants are M/s. G.S. Export, Navi Mumbai, the exporter and M/s. D.P. Logistics Pvt. Ltd., Mumbai, the CHA. The appellant filed a shipping bill No. 7980986, dated 23-9-2012 for the shipment of a container, consisting of coriander seeds valued at 8,21,540/-. The shipping bill was processed and 'Let Export Order' was given only on 26-12-2009 by the proper officer of the Customs. In the meanwhile, the vessel, M.V. Olympia sailed on 25-12-2009 even before the LEO was issued. Accordingly, a show cause notice was issued alleging violation of Section 40 and Section 51 of the Customs Act, 1962 and also liability to confiscation of the goods under Section 113(g) and to impose penalty under Section 114(iii) ibid. The case was adjudicated and penalty of 50,000/- was imposed on the exporter and a penalty of 80,000/- was imposed on the CHA under the provisions of Section 114(iii) of the Customs Act apart from a penalty of 2 lakhs on the shipping line. The appellants preferred appeals before the lower appellate authority who rejected the appeals.

Appellant’s Contention: - Learned counsel for the appellant submits that it was the mistake of the shipping line to have sailed with the container consignment for which LEO was not given and once the goods are handed over to the steamer agent, the appellants do not have any control and, therefore, they cannot be held responsible for the mistake committed by the shipping line. Accordingly, she pleads for waiver of pre-deposit of the penalties imposed.

Respondent’s Contention: - The learned Additional Commissioner (AR) appearing for the Revenue, on the other hand, strongly opposes the contentions and submits that the liability to penalty arises on the findings that the goods are liable to confiscation. Once the goods are held liable to confiscation, irrespective of the mens rea involved, the appellant are liable to penalty. As per the provisions of Sections and 51 of Customs Act, it is the responsibility of the exporter as well as the CHA to ensure that the goods are made available to the Customs for examination before export and thereafter, for loading of the goods in the presence of the Customs officer on the vessel. In as much as same has not been complied with, the goods has become liable to confiscation under Section 113(g) of the Customs Act and consequently, the appellant are liable to penalty under Section 114(iii) ibid.

Reasoning of Judgment: - After being carefully considered the submissions it is being found that there is no dispute regarding the fact that the vessel has sailed on 25-12-2009 whereas the LEO was given only on 26-12-2009. As per the provisions of Section 113(g) 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" of the Customs is liable to confiscation. In the instant case, the goods have been loaded and the vessel has sailed before the LEO was given by the Customs officer and, therefore, the goods are liable to confiscation. Once the goods are held to be liable to confiscation as per Section 113(g), 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 or aids such acts, shall be liable to penalty not exceeding the value of the goods declared by the exporter or the value as determined by the Customs Act, whichever is greater.
As per the C.B.E. & C. Customs Manual, the procedure for export is as follows:-
"On filing of the shipping bill the exporter has to present the goods for examination to the proper officer of Customs. The Customs officer after examining the goods with the description and other particulars of the goods are found to be as declared in the shipping bills may issue LEO after which the exporter may contact the Preventive Superintendent for supervising the loading of the goods for export in accordance with Section 51 of the said Act”

Thus the exporter's responsibility is complete only after LEO is given by the proper officer of the Customs. Therefore, the exporter or the CHA, who is his agent, cannot get over or shirk away from the responsibility cast on them under the provisions of the customs Act, 1962.
This Tribunal in the case of Nichorme India Ltd. v. Commissioner of Customs (Export), Nhava Sheva - 2009-TIOL-1902 = 2010 (251) E.L.T. 147 (Tri.- Ahmd.) held that if the exporter chooses to export goods without obtaining LEO from the proper officer of Customs, he is liable for the consequences. Whoever is found to have committed something paving the way for shipment of goods with LEO or to have omitted to do anything to ensure compliance with requirement of Section 51 of the Act must be held to have rendered the goods liable to confiscation. In the present case, both the exporter and the CHA failed in the responsibility to comply with the requirement of Section 51 of the Customs Act, 1961 and therefore, they are liable to penalty under Section 114(iii) of the Customs Act. Thus the appellant has not made out a case for complete waiver of the pre- deposit of the penalties adjudged against them.
Accordingly, it is directed to the appellant to make a pre-deposit of 25% each of the penalties adjudged against them within a period of eight weeks and report compliance on 23rd November, 2012. On such compliance, pre-deposit of the balance amount of penalty adjudged shall stand waived and recovery thereof stayed during the pendency of the appeals.

Decision: - Stay partly granted.

Comment: -The crux of this case is that penalty for confiscation of goods is very strict as it is imposable even if the goods were exported without let export order on account of mistake of the shipping line for sailing the ship without having let export order for the consignments it is carrying.

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PJ/Case Laws/2012-13/1491

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