Whether the loading of goods onto ship without issuance of let export order are liable of confiscation?

PJ/Case Laws/ 2012-13/ 1189

Case:-M/S SAURASHTRA CEMENT LTD, SHRI K J V SHARMA, SHRI GULAM MOHAMMED UMAR BHAYA, SHRI V R SHIAL, SHRI B H WAGH V/S CC, JAMNAGAR

Citation:-2012-TIOL-924-CESTAT-AHM

Issue:- Whether the loading of goods onto ship without issuance of let export order are liable of confiscation?

Brief Facts: - Appellant M/s. Saurashtra Cement Ltd. (SCL) is engaged in the manufacture of cement and cement clinker and filed a shipping bill on 21.9.10 for export of 600 MT of cement under DEPB for export to IRRA. The shipping bill was assessed on 22.9.10 and the loading was started under the supervisor of SCL and the other persons concerned. By the time 70 MT of cement had been loaded, the officers of Customs came and stopped the loading on the ground that let export order had not been given and therefore loading was improper. On this ground proceedings were proposed to be initiated. But the appellant company and others concerned waived issue of show cause notice and thereafter impugned order has been passed imposing penalty of Rs.35,000/- on SCL, Rs.20,000/- on Shri K.J.V. Sharma, General Manager of SCL, Rs.15,000/- on Shri B.H. Wagh, supervisor of SCL, penalty of Rs.20,000/- on Shri V.R. Shial, shipping agent of shipping line and Rs.10,000/- on the tindal of the vessel. Further the 70 MT of cement valued at Rs. 1, 64,500/- was confiscated and redemption fine of Rs.50,000/- has been imposed and the vessel has been confiscated and redemption fine of Rs.1,25,000/- has been imposed.

Reasoning of Judgment: - The CESTAT held that according to the definition of smuggling as per the provisions of Customs Act, once the goods are loaded without let export order in the ship or vessel, goods are considered as smuggled and are liable to confiscation. Once goods are held liable to confiscation, penalties on the persons concerned also become imposable and further the goods themselves also become liable to confiscation. As regards the vessel the provisions of Section 115(2) provide that vessel becomes liable to confiscation only if the vessel is used for smuggling of the goods with the knowledge of the owner and if the owner is able to show that he had no knowledge or intention to smuggle, a penalty on the owner and confiscation of the vessel is not called for. In this case no doubt around 10% of the goods was loaded in the vessel but even the Commissioner himself has accepted that what happened appears to be bonafide mistake and therefore he is taking a lenient view. Once it is accepted that what has happened is a bonafide mistake, it cannot be said that the vessel was used in smuggling with the knowledge of the owner. Under these circumstances, the vessel cannot be said to be liable to confiscation and therefore the confiscation of the vessel is not sustainable and accordingly set aside.

As regards the employees of the appellant it cannot be said that all of them were concerned with export of the goods excepting the supervisor who was in the port and who was an employee of the company representing the company. As an employee he was performing the duty and probably was extremely eager to ensure that the goods are loaded as early as possible and no mala fide intention has been attributed by the Commissioner. Therefore once the penalty is imposed on the company, it may not be appropriate to impose penalty on the employee also. Therefore the supervisor of the company Shri B.H. Wagh and the General Manager are not liable to penalty and accordingly the penalty imposed on them is set aside.

As regards the company, they have taken a view that no penalty is imposable on the supervisor and it was on behalf of the company that the goods were loaded on the vessel by following improper procedure and having rendered the goods liable to confiscation penalty is leviable.

As regards the tindal of the vessel, a tindal of the vessel is supposed to know the basic provisions of law and he cannot say he was ignorant and therefore allowed the loading of the goods without a let export order. This is a most important function of the master of the vessel and once he allows the goods to be loaded and renders them liable to confiscation he would also liable to penalty. Even though a view has been taken that the vessel is not liable to confiscation, the agent of the shipping line cannot be absolved of any omissions in this case. The agent of the shipping line is responsible for issue of bills of lading of the goods and it is his responsibility to ensure that the goods are loaded after proper procedures are followed. That being the position, the agent of the shipping line is liable to penalty.

They held that the Commissioner has been quite harsh in deciding the quantum of penalty. Once it is concluded that omission is procedural in nature, it should be nominal and only to ensure that such mistakes do not happen again. Therefore in this case penalty also has to be in nominal terms just to ensure that legal provisions are not ignored even by mistake. Accordingly the redemption fine on the cement is reduced from Rs.50,000/- to Rs.10,000/-. The penalty of Rs.35,000/- imposed on M/s SCL is reduced to Rs.10,000/-. Penalty on Shri V.R. Shial, the agent of the shipping line is reduced to Rs.5,000/-. Penalty on the tindal is reduced to Rs.5,000/-.

Decision: - Appeal disposed off.

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PJ/Case Laws/ 2012-13/ 1189

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