Whether penalties imposable if the vessel sailed before the grant of ‘Let Export Order’?

PJ/Case Law/2013-14/1941

Case:- DELTA LOGISTICS Vs COMMISSIONER OF CUSTOMS (EXPORT), NHAVA SHEVA

Citation:- 2013 (296) E.L.T. 120 (Tri. - Mumbai)

Brief facts:- By the impugned order, a redemption fine of Rs. 7 lakhs under Section 113(g) of the Customs Act, 1962 has been imposed on the appellant, namely, U M Cables Ltd. (exporter) and penalties of Rs. 7 lakhs on the exporter, Rs. 1.75 lakhs on M/s. Delta Logistics (CHA) and Rs. 14 lakhs on M/s. Novel Line & Logistics Pvt. Ltd. (shipping line) has been imposed under Section 114(iii) of the Act.
The facts of the case were that the exporter filed one shipping bill on 15-4-2008 for export to Karachi and final destination Afghanistan. ‘Let Export Order’ for the above shipping bill was granted on 19-4-2008 by the proper officer of the Customs whereas the vessel sailed on 18-4-2008. Therefore, the penalties and redemption fine had been imposed as per the impugned order.

Appellant’s contentions:- The learned counsel for the exporter submitted that the goods were stuffed in the containers on 15-4-2008 under the supervision of Central Excise officer who recorded the same under his seal for export and the shipping bills, factory invoice and other documents were filed through their CHA before the Customs authorities on the same date. Due to technical reasons, the shipping bill was not processed and 18-4-2008 being Mahaveer Jayanthi (holiday), therefore, the ‘Let Export Order’ could not be issued on the said date. The shipping line without the knowledge of the exporter and the CHA loaded the containers into the vessels, which sailed on 18-4-2008, but on 19-4-2008 the ‘Let Export Order’ was obtained. As it was out of the control of the exporter, therefore, penalty could not be imposed. He further submitted that neither the goods were available nor they were exported under any bond, therefore redemption fine was also not leviable.
The learned counsel for the CHA submitted that the goods were factory stuffed and sealed by the Central Excise officer. Sealed containers reached the port where the CHA had no control. The CHA had processed the shipping bill and on 18-4-2008 being a holiday the CHA was not aware of the loading of the goods into the vessel which was sailed on 18-4-2008 itself. As the loading of containers into the vessel was out of the control of the CHA, as CHA was not permitted to visit the site, therefore, no penalty was leviable on the CHA. In support of his contention, he relied on the decisions in the cases of Commissioner of Customs (Export) v. Kusters Calico Machinery Ltd. reported in 2010 (257)E.L.T.368 (Bom.); N. Karim & Sons v. Commissioner of Customs (Export), Nhava Shevareported in 2010 (251)E.L.T.444 (Tri.-Mumbai) and Perma Container Line (I) Pvt. Ltd. v. Commissioner of Customs (Export) reported in 2009 (243)E.L.T.301 (Tri.-Mumbai)and, therefore, he prayed that stay be granted.

Respondent’s contentions:- The learned AR reiterated that the exporter filed one shipping bill on 15-4-2008 for export to Karachi and final destination Afghanistan. ‘Let Export Order’ for the above shipping bill was granted on 19-4-2008 by the proper officer of the Customs whereas the vessel sailed on 18-4-2008.

Reasons of judgment:- As contended by the learned counsel for the exporter that neither the goods were exported under any bond nor the goods were available for confiscation, redemption was not leviable. In the case of Shiv Kripa Ispat Pvt. Ltd. v. Commissioner of Central Excise & Customs, Nasik reported in 2009 (235)E.L.T.623 (Tri.-LB)the Larger Bench of this Tribunal had held that in case where the goods were neither exported under bond nor were physically available for confiscation, redemption fine was not imposable. Therefore, redemption fine was not imposable in this case. Further, as held by the Hon’ble High Court of Bombay in the case of Kusters Calico Machinery Ltd.(supra), in such situations penalty was not leviable on the exporter. Therefore, prima facie, the applicant-exporter had made out a case for complete waiver of pre-deposit. Accordingly, the Bench waived the requirement of pre-deposit of the redemption fine and penalty and stay demand thereof during the pendency of the appeal.
Further, as held by the Hon’ble High Court in the case of Kusters Calico Machinery Ltd. (supra) where the factual matrix was that the containers were loaded on the vessel which sailed on 30-1-2007 and the same being Moharram holiday for Customs, CHA or the exporter were not authorised to go to Customs area, the ‘Let Export Order’ was taken only on 31-1-2007; in that case the Hon’ble High Court held that in these circumstances, the exporter and CHA could hardly be said to have committed breach of Section 50(1) of the Customs Act, 1962, since it was beyond their control. Therefore, relying on the said decision, the Bench found that the applicant-CHA had made out a prima facie case for waiver of pre-deposit. Accordingly they did so and stay the demand of penalty on CHA during the pendency of the appeal.
As the shipping line had loaded the containers into the vessel without the ‘Let Export Order’ therefore, they had violated the provisions of Section 50(1) of the Customs Act, 1962. Accordingly, the Bench directed the shipping line, M/s. Novel Lines & Logistics Pvt. Ltd., to make a pre-deposit of 50% of the penalty imposed on them within eight weeks and report compliance on 22-2-2012. On such compliance, the pre-deposit of the balance amount of penalty shall stand stayed during the pendency of the appeal.

Decision:- Stay was partly granted.

Comment:- The analogy drawn from the case is that in case where the goods were neither exported under bond nor were physically available for confiscation, redemption fine was not imposable. Further, if due to technical reasons, the shipping bill was not processed and the date on which the vessel sailed was a holiday, therefore, the ‘Let Export Order’ could not be issued on the said date, then no penalty could be imposed on exporter and CHA since the goods were out of control for both of them.

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PJ/Case Law/2013-14/1941

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