Confiscation of Goods Attempted to be Improperly Exported u/s 113 FERA: CESTAT reduces Penalty to 5L [Read Order]

The Bangalore bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) reduced the penalty to 5 lakhs for the attempted improper export of confiscated goods under Section 113 of the foreign exchange Regulation Act, 1947. The bench considered other penalization faced by the appellant.

The appellants Mr. Surendran and Mr. Ashok Shukla in the present appeals do not dispute any of the facts that have been part of the impugned order except to state that there is no evidence to show that they were aware of the fact that the goods were of inferior quality and they had knowledge of the undue benefit that the exporter was availing by mis-declaring the goods and the value. They also stated that remittances were received without any proof of the same. The exporter had not disputed the alleged offense nor had contested the alleged offense of misdeclaration of goods and value. 

Mr. Surendran (Appellant 1) having arranged containers and advising them to ensure factory sealing so that it is not opened at ICD Bangalore; arranging a CHA and getting the blank shipping bills signed by the CHA admittedly for monetary consideration; getting a letter from the exporter not to export substandard goods and charging unusually high price for containers, all goes to prove the mala fide intention behind these exports.

Moreover, the same team has worked for similar exports at Hyderabad ICD, thus, without doubt all the circumstantial evidences clearly prove their involvement in misdeclaring goods and value for undue DEPB benefit.

Mr. Ashok Shukla (Appellant 2) also admitted having sublet his license for monetary consideration, signing of blank shipping bills and allowing his license to be used without knowing the exporter and what for it is being used goes to prove that he is not clean in his intentions. Both the appellants have also admittedly misrepresented to the customs about their employees and enabled them to get the ID cards from the customs by misrepresenting that they were the employees of the CHA. Therefore, the admitted facts do not provide any immunity to the appellants

The bench observed that the reliance placed on the decision of the High court in the case of Rajeev Khatri Vs. Commissioner of Customs was not applicable in the facts of the present case where none of the statements and the irregularities committed by them have not been retracted. “Abet” means instigating, conspiring, and intentionally aiding the acts of commission or omission that render the goods liable for confiscation. The facts discussed above clearly spell out the commissions and omissions of both the Appellants where the goods were made liable for confiscation.

Further, the notice clearly alleged the penalty to be levied under Section 114 of the Customs Act, 1962 and though, the Commissioner in the penultimate order had not specified Section 114, the impugned order it was clearly held that penalty was imposed under Section 114 for violation of the provisions under Section 113 and the Foreign Exchange Regulation Act, 1947.

However, the two member bench of the tribunal comprising D.M Misra (Judicial member) and R. Bhagya Devi (Technical member) taking into consideration the fact that all the DEPB licenses were cancelled and the DEPB credit of Rs.98,54,987/- was denied, and the exporter having penalised, it would be fair to reduce the penalty to Rs.5, 00,000/- on each of the Appellants.

Accordingly, the penalty stands reduced to Rs.5, 00,000/- on appellant 1 (Surendran) and Rs.5, 00,000/- (rupees five lakhs only) on appellant 2 (Ashok Shukla) Rs.5, 00,000/-. Accordingly, appeals were partially allowed.

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