Swaroop Shipping Services vs Cc (Seaport-Exports) on 7 February, 2008

Customs, Excise and Gold Tribunal – Tamil Nadu
Swaroop Shipping Services vs Cc (Seaport-Exports) on 7 February, 2008
Equivalent citations: 2008 (128) ECC 265, 2008 (154) ECR 265 Tri Chennai, 2008 (227) ELT 555 Tri Chennai
Bench: P Chacko


P.G. Chacko, Member (J)

1. These appeals filed by M/s. Swaroop Shipping Services (Customs House Agent) and Shri S. Chinnikrishnan (partner of another firm viz. Shree Ganapathy Shipping Services) are respectively against penalties of Rs. 1 lakh and Rs. 50,000/- imposed on them under Section 114(i) of the Customs Act. These penalties are in connection with the absolute confiscation of 30.212 MTs of red sanders logs ordered under Section 113(d) of the Act. Shipping Bill No. 1915943 dt. 9.10.2004 had been filed in the name of M/s. Sri Lakshmi Mining Industries for export of goods declared as “Natural Granite Chips”, to Malaysia. It was signed by Shri R. Elangovan, Executive of the CHA. It was Shri S. Chinnikrishnan who got the Shipping Bills signed by the CHA, and attended to the Customs clearance of the export. The declared goods were stuffed in two containers at Numbal CFS and the containers were sealed by the Customs authorities. Acting upon intelligence regarding smuggling of red sanders out of India in the guise of export of ‘natural granite chips’, the Customs authorities opened the two containers after these were transported from the CFS to CCTL (Chennai port), and conducted detailed examination of the goods, whereupon it was found that both the containers contained red sanders logs weighing 30.212 MTs and one of the containers also contained 58 kgs. of groundnut pods. Subsequently, enquiries were made with the exporter, CHA, Shri S. Chinnikrishnan and others. From the results of these investigations, it appeared to the department that one Shri Indirakumar had masterminded the clandestine activity of replacing the declared goods with red sanders logs in the containers in transit from the CFS to CCTL and that the appellants had abetted the offence. The department, however, failed to trace Shri Indirakumar. Ultimately, a show-cause notice was issued for confiscating the goods under Section 113 of the Customs Act and for imposing penalties on the CHA, Shri S. Chinnikrishnan and Shri Indirakumar under Section 114 of the Act. No copy of this notice could be served on Shri Indirakumar otherwise than by affixture on the Customs House notice board. The appellants contested the notice. In adjudication of the dispute, the Commissioner of Customs ordered absolute confiscation of the red sanders under Section 113(d) of the Act and imposed penalties on the appellants as well as Shri Indirakumar under Section 114 of the Act.

2. After examining the records and hearing both sides, I note that the same offence was charged against both the appellants, i.e., abetment of Shri Indirakumar’s attempt to smuggle the prohibited commodity (red sanders) out of the country in the guise of export of ‘natural granite chips’. The declared item (granite chips) was stuffed in the two containers at the CFS and the containers were sealed by the proper officer of Customs. The declarations in the Shipping Bill were accepted and “let-export” order given, pursuant to which the consignment was taken to CCTL for shipment. A pertinent fact noted by the Commissioner is that the swapping of goods (red sanders for granite chips) in the containers had taken place in transit from the CFS to CCTL. The question to be considered in this case is whether the CHA and Shri Chinnikrishnan had anything to do with this clandestine activity.

3. Admittedly, the Shipping Bill also accompanied the goods in transit from the CFS to the container terminal and, at the terminal, a Preventive Officer of the Customs department would examine the containers and permit shipment. It has been argued by ld. consultant for the CHA that the CHA’s role came to an end when the Customs House at the CFS issued “let-export” order under Section 51 of the Customs Act. I have noted this order as endorsed on the Shipping Bill. However, there is nothing on record or in the provisions of law to indicate that, with the issuance of the above order under Section 51, the exporter’s function came to an end. In my view, the exporter’s function would come to an end with shipment only. His agent’s role is coextensive with his. If that be so, the role of a CHA for the exporter would also extend upto shipment of the goods. Therefore, it can be reasonably found that the swapping of goods took place somewhere and some time between the CFS and the container terminal while the export goods were still within the functional domain of the CHA. However, the CHA in the present case, admittedly, did not do anything other than signing blank formats to be used as annexures to the Shipping Bill. It was their practice to do so at the rate of Rs. 150/- per Shipping Bill. The evidence on record indicates that the CHA was not aware of the prospect of red sanders being smuggled out of the country in the guise of export of granite chips under the above Shipping Bill. Any mens rea has not been shown to have been present on the part of the CHA in relation to the confiscated goods. Hence it cannot be said that the CHA, by any commission or omission, rendered the goods liable to confiscation under Section 113 or that they abetted any such commission or omission of anybody else in relation to the goods. Consequently, the penalties imposed on them under Section 114 of the Customs Act cannot be sustained. This does not mean that no action would lie against the CHA. On the facts of this case, it is open to the department to bring them to book if it can be established that they acted in violation of the provisions of the Customs House Agents Licensing Regulations (CHALR), 2004. I am told that such proceedings are presently under way and that, in the Inquiry Report dated 31.1.2007 filed by the Inquiry Officer in relation to the CHA’s conduct in the above case, penal action has been proposed against them on the ground of violation of Regulation 13(a) of CHALR, 2004. The case of Shri Chinnikrishnan is no different from that of the CHA. There is no evidence on record to indicate that, by obtaining the CHA’s signature for the purpose of filing the subject Shipping Bill for export of granite chips, Shri Chinnikrishnan was doing something which rendered the red sanders liable to confiscation. As a matter of fact, it was Shri Indirakumar who, admittedly, was in-charge of transportation of the goods from the CFS to the container terminal. The Revenue has not established that Shri Chinnikrishnan was aware of the intentions of Shri Indirakumar. No mens rea has been found on the part of Shri Chinnikrishnan in relation to the swapping of materials in the containers. Consequently, there can be no penalty under Section 114 of the Act on Shri Chinnikrishnan either.

4. In the result, the impugned order is set aside as against these appellants and the appeals are allowed.

(Operative part of the order was pronounced in open court on 7.2.2008)

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