Mens Rea not Ingredient of Section 114 Customs Act: CESTAT Imposes Penalty of Rs 50,000 on CHA on Aiding Export of Red Sanders Wood Pillars and Tops [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that mens rea is not an ingredient of Section 114 Customs Act and imposed a penalty of Rs 50,000 on Custom House Agent (CHA) on aiding export of Red Sanders wood pillars and tops.

On the basis of specific intelligence received, the Officers of the Custom House, detained the consignment and on detailed examination in the presence of State Government Forest Officer, which resulted in the seizure of the above goods since the pillar tops and wooden pillars were found to be made of Red Sanders wood. ‘Red Sanders’ is a notified item and its export is prohibited under the Customs Act, 1962 read with the Foreign Trade (Development and Regulation) Act, 1992, the Foreign Trade Policy 2009-14 and ITC (HS) Schedule 2.

Under the ITC (HS) notified by the Directorate General of Foreign Trade (DGFT) as per paragraph 2.1 of the Foreign Trade Policy for 2009- 14 formulated under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, export of Red Sanders wood in any form is prohibited.

In terms of Section 2 (33) of the Customs Act, 1962, ‘prohibited goods’ means any goods, the import or export of which is subject to any prohibition under this Act or under any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be exported have been complied with.

The Counsel for the appellant-CHA has contended that he has not abetted the export of Red Sanders wood in any way; that he has accepted the clearance work for the above said export shipment at the request of M/s. Desire Global Logistics who did not have C&F Licence and also that the exporter viz. M/s. Artisan’s Welfare Society was a registered society, which led him to believe that it was a genuine business without violating any Customs Rules and Regulations.

Thus, it was argued that the CHA has not done any act or omitted to do any act to abet illegal export of the said shipment in order to attract penalty under the provisions of Section 114(i) of the Customs Act, 1962; that no misdeclaration was made knowingly or intentionally and he has wilfully violated neither the provisions of the Customs Act nor the Customs House Agents Licensing Regulations.

A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and Sulekha Beevi CS, Judicial Member held that “Mere contravention of the provisions of the Customs Act and the regulations thereunder justifies the imposition of penalty under Section 114 of the Customs Act.”

“We hold that the appellant has acted or omitted to do an act, resulting in rendering the exported goods liable for confiscation, thus attracting the provisions of Section 114 (i) of the Customs Act, 1962. So, penalty is imposable for his acts of omission or commission, may be deliberate or negligent. His conduct aided and facilitated the illegal attempted export of Red Sanders wood pillars and tops. However, considering the totality of the circumstances obtaining in this case, the penalty upheld at Rs.1,00,000/- (Rupees One Lakh only) is reduced to Rs.50,000/- (Rupees Fifty Thousand only)” the Bench observed.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates