The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) recently held that a penalty cannot be imposed if there is no customs violation. It observed that the export proceeded after customs clearance and the receival of foreign remittance. It quashed the penalty under Section 114 of the Customs Act, 1962.
The appellant, M/s Samudera Shipping Line (India) Pvt. Ltd acts as a streamer agent carrying out import and export activities of other clients. The revenue imposed a penalty of ₹2 lakhs under Section 114 of the Customs Act, on the ground that the appellant had not followed proper procedures and had exported goods for which the Let Export Order (LEO) had been cancelled.
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Aggrieved by this order, the appellant filed for an appeal before the Commissioner ( appeals ) to quash the penalty. However, the Commissioner ( Appeals ) dismissed the appeal. These orders made the appellant move the CESTAT, where the counsel appearing on behalf of the appellant submitted that the exporter had initially requested a cancellation of the first set of export documents to route the consignment through another shipping line. Afterwards, the exporter decided to continue using the same shipping line, which led to the preparation of a new set of documents.
The appellant argued that just before the shipment was to be loaded, the exporter’s Customs House Agent ( CHA ) informed them of their intention to cancel the export. Still, no formal communication was received regarding this cancellation. Further, upon verifying the customs website, the appellant found the status of the container ( TTNU8432288 ) marked as “Ready for Shipment.”
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The Counsel argued that it was based on this status that the appellant proceeded with the export, assuming that there was no restriction on loading the consignment. The counsel further pointed out that the export remittance was received by the exporter, and the shipment was successfully completed, proving that the consignment had been legally exported.
The Council, on behalf of the Revenue, defended the penalty, arguing that the LEO was cancelled by customs officials, and despite this, the appellant proceeded with the shipment. The Revenue maintained that the appellant’s actions violated customs procedures, making them liable for a penalty under Section 114 of the Customs Act.
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After hearing both sides, the tribunal held that the Order-in-Original clearly stated that export remittance was received against the said consignment. Similarly, it was noted that the customs website indicated the shipment as “Ready for Shipment,” leading the appellant to reasonably believe that the export was authorised.
The tribunal observed that the shipment was eventually exported with customs clearance, suggesting that at some point, customs authorities allowed the consignment to proceed. It was also noted that the revenue did not dispute the fact that the export actually took place and that the foreign exchange remittance was duly received.
The tribunal, which consisted of R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical member), quashed the penalty, stating that the appellant had not violated the Customs Act. The tribunal set aside the orders of adjudicating bodies, and as a result, the appeal was allowed.
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