Whether CHA liable for penalty even if he had no knowledge that prohibited rice was being exported by the exporter?

PJ/Case Law/2013-14/1844

Case:-ANCHOR LOGISTICS VERSUS COMMISSIONER OF CUSTOMS

Citation:-2013(290) E.L.T. 334 (Guj.)

Brief Facts:-Brief facts of the case are that the appellant M/s. Anchor Logistic are Customs House Agent (“CHA” for short). M/s. J.G. Agro Foods, Patiala are exporters of Indian Basmati Rice. The appellant had filed one shipping bill no. 6275647 dated 23-2-2009 for export of 135 MT of Indian Basmati Rice on behalf of M/s. J.G. Agro Foods, Patiala on the basis of the documents supplied by the said exporter and brought the goods for examination before appropriate authority, Customs House, MP & SEZ, Mundra. On 5-3-2009, the said goods were examined and “Let Export Order” was given on 5-3-2009. Thereafter, the cargo was carted to the main godown known as Customs Fleet Station(For short “CFS”), Mundra. Thereafter, the respective formalities were carried out by CFS staff. On 6-3-2009, the Customs Officers of Mundra (MP & SEZ) who were on preventive round found that five containers were stuffed with Non-Basmati rice in bags marked as Indian Basmati Rice. Since the export of Non-Basmati is prohibited by DGFT by Notification No. 93 (RE-207)/2004-09, dated 1-4-2008, therefore, 135 MT of Non-Basmati rice found in five containers valued at Rs. 71,87,400/- were placed under seizure on 6-3-2009 and given in safe custody. The statement of the partner of the appellant and proprietor of the exporter Shri Ankur Jindal and other persons were recorded under Section 108 of the Customs Act, 1962 (For short “Customs Act”), wherein Shri Ankur Jindal agreed that rice seized on 6-3-2009 is Non-Basmati rice which was sent by mistake as detailed in the statement of Shri Ankur Jindal, the authorised signatory of the exporter.

Appellant Contentions:-The appellant has urged that the appellant was a clearing house agent and he had no knowledge about the fact that Non-Basmati rice was being exported. He was under a bona fide belief that exporter was exporting Indian Basmati rice, therefore, he filed one shipping bill dated 23-2-2009 for exporting of 135 MT of Basmati rice. It is further urged that the appellant was also the clearing agent of M/s. Krish Agro Overseas who filed shipping bill for export of Indian Rice Shella Basmati. This rice was also seized on 6-3-2009. On examination, it was found that it was Non-Basmati rice instead of Basmati rice as declared in the shipping bill. The Tribunal in Appeal No. C/575, 580/2009 arising out of O-I-O No. KDL/COMMR/18/09-10, dated 24-9-2009 decided on 11-10-2010 held in Para 9 as under :

“As regards penalty imposed on M/s. Anchor Logistic, CHA, we note that there is no evidence on record to show that he was aware of the quality of the rice being Non-Basmati rice instead of Basmati rice. Shri Tarunbhai P. Joshi, Executive of CHA, in his statement, deposed that they were not aware of the quality of rice and the explanation regarding arrival of Non-Basmati rice cargo may be clarified by the exporter only. We also do not find any independent reason or any evidence discussed by the Commissioner so as to implicate the CHA. As such, by extending the benefit of doubt to him, we set aside the penalty of Rs. 5 lakhs imposed on M/s. Anchor Logistic.”

The seizure was made on the same day in the matter of Krishna Agro Overseas as well as J.G. Agro Food and both the goods were identical. The defence and explanation of the appellant in both the cases was identical. But in one case, the Tribunal has granted benefit whereas in the instant case, the Tribunal has affirmed the penalty.

Reasoning of Judgment:-We have gone through the orders passed by the Commissioner and the Tribunal. The exporter J.G. Foods in their statement have stated that under a mistake, Non-Basmati rice was packed by the labour and the same was packed and sent for export. The clearing house agent has stated that they had no knowledge of the fact that the goods being exported was Non-Basmati rice when they filed the shipping bill. The appellant being a clearing house agent have no mechanism to find out as to whether the goods are prohibited item or the item. The Tribunal has assumed that the appellant was in connivance with the exporter and CFS M/s. Al Cargo Global Logistic Ltd. The finding arrived at by the Tribunal with regard to connivance between the appellant and exporter is based on no evidence. As a matter of fact, the Commissioner as well as the Tribunal assumed the fact of connivance. The Tribunal has relied on Para 10.2 of the Trade Notice. This paragraph provides that stuffing of container shall be done in presence of Customs house officer and other representative. If the Customs House Officer was not present and the stuffing was carried out, then it was wrong committed on part of the respondent as no stuffing could be permitted in view of Paragraph 10.2 in absence of Customs Officer. Instead of fixing the responsibility on the Customs Officer, the Tribunal has shifted the liability on the clearing house agent, when a specific case of the clearing house agent was that he or his representatives were not present at the time of stuffing. Even assuming that the appellant or his representative was present at the time of stuffing of the goods, since the goods was packed in bags, there was no occasion for the appellant to know that the goods packed in the bags were Non-Basmati rice. No mens rea can be attributed to the appellant nor the appellant could be said to have abetted in exporting of prohibited rice. Further, on the same day, on 6-3-2009, the rice involved in this case as well as the rice sought to be exported by Krishna Agro Overseas were confiscated for exporting prohibited rice. In case of Krishna Agro Overseas, the Tribunal has recorded a finding in favour of the appellant and has held that the CHA had no knowledge about the goods. There was no reason why the same observation could not be relied by the appellant in support of his contention in the instant case that he had no knowledge that prohibited rice was being exported by the exporter. The Commissioner and CESTAT has not recorded any finding that the appellant had knowledge and information as Non-Basmati rice was being exported instead of Indian Basmati rice. Penalty cannot be imposed in absence of any act or omission which amounts to abetment. There was no evidence to prove abetment by the appellant. Only on the presumption made by the Commissioner and CESTAT, it cannot be held that there was any mens rea and therefore, in Tribunal’s opinion, no penalty could be levied against the appellant under Section 114(i) of the Customs Act. The order passed by the Commissioner as well as the CESTAT levying penalty of Rs. 2,50,000/- against the appellant cannot be maintained.

In the result, this appeal succeeds and is allowed. Penalty levied by the Commissioner of Customs and confirmed by the CESTAT against the appellant is set aside. The question is answered in the affirmative in favour of the assessee and against the department. The parties shall bear their own costs.

Decision:-Appeal is allowed.

Comment:- The essence of this case is that different stand cannot be taken with respect to same appellant in similar case. In the present case, penalty was levied on the CHA on being party to the improper export of non-basmati rice by mis-declaration with respect to two exporters. However, in case pertaining to one exporter, it was held that no penalty is leviable while for the other exporter, penalty on the same CHA was levied. It was contended by the CHA that he had no knowledge that prohibited rice was being exported by the exporter. It was held by the High Court that penalty cannot be imposed in absence of any act or omission which amounts to abetment, more so when penalty was set aside by the Tribunal in similar case with respect to same CHA.

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PJ/Case Law/2013-14/1844

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