The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai Bench quashed the penalty as Customs Department failed to establish any connection of Air India to the seizure of ‘Star Tortoises’.
The appellant, M/s. Air India Ltd., was granted custodianship permission for the export of cargo. As a custodian, they are bound to comply with the provisions of Customs Act, 1962 and allied Rules and Regulations being issued from time to time. As per the Handling of Cargo in Customs Area Regulations, 2009 (HCCAR), the custodian is duty-bound to be diligent in discharging their duties under the prevailing Customs laws and HCCAR, 2009. During a surprise check conducted by officers of the department at the export shed on 01.08.2019, some shipping bills were picked up randomly and the movement of the goods was closely followed in respect of these shipping bills. It was observed that in the case of the Shipping Bill the ‘Let Export Order’ (LEO) was given by Customs at 17:27 hrs. However, the cargo was allowed for scanning by the appellants at 16:45 hrs itself as seen from the register maintained by them. Thus, the appellants had allowed the cargo to move into the sterile area without checking the status of Customs clearance i.e., without checking whether LEO was given or not. It is also noticed by the department that a similar process of flow of goods was made in respect of a few other shipping bills on 01.08.2019. There were some shortcomings in the function of the appellants as custodian, earlier in a few cases of smuggling which led to the seizure of ‘Star Tortoises’ on 07.11.2018 and seizure of ‘Red Sanders’ on 29.07.2019.
Again, the cargo service provider having custody of imported or exported goods in the Customs area has to provide security and there should be control to prohibit unauthorized access into the premises. It was observed by the officers during the visit that security personnel is not properly verifying the ID cards of the persons entering into the Customs area so as to prevent unauthorized persons from entering the premises. Further, the list of authorized persons, who have been issued ID cards has not been furnished to the Customs by the appellant. There were several instances where ‘Yellow ID cards’ issued by the Custodian have been forged and misused. Besides this, the list of persons, whose ID cards have been revoked, was not furnished to the Customs by the appellants. A show-cause notice was issued alleging violations of Rules 5 and 6 of HCCAR, 2009 regulations and proposing to revoke the appointment as custodian and proposing to impose a penalty. After due process of law, the original authority imposed a penalty of Rs.50,000/-on the appellant under Regulations 12(8) of HCCAR,2009. However, the appointment as custodian of cargo was not revoked. Aggrieved by the penalty imposed, the appellants are before the Tribunal.
Mr. Manoj Arora the Counsel for the appellants adverted to Paras 3 and 4 of the show-cause notice and submitted that the allegation in the show-cause notice that the appellants violated the Rules in earlier cases, which led to smuggling of Star Tortoises on 07.11.2018, is totally false and untrue. The appellants were never connected with any such smuggling case leading to the seizure of ‘Start Tortoises’. The appellants were indeed issued a show-cause notice with regard to the seizure of ‘Red Sanders’ on 29.07.2019. Though in the said mater penalty was imposed, the same was challenged before Commissioner (Appeals) and vide Order-in- Appeal No.288/2020, dated 07.12.2020, the Commissioner (Appeals) held that there is no contravention on the part of the appellants and the penalty imposed under section 117 of the Customs Act, 1962 was set aside, discharging the appellants of the allegation.
The coram of Judicial Member, Sulekha Beevi C.S. while deleting the penalty imposed upon the appellants held that allegations made against the appellants that shortcomings as a custodian lead to smuggling of ‘Star Tortoises’ on 07.11.2018 are without any basis. There is no evidence to show that the appellants have any connection to such seizure of ‘Star Tortoises’. A show-cause notice was issued to the appellants with regard to the seizure of ‘Red Sanders’ on 29.07.2019. The adjudication proceedings on such seizure have culminated in the imposition of penalty on the appellants.
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