Custodian, Steamer Agent and Employees Liable for Illegal Removal of Seized Goods: CESTAT Confirms Penalties under Customs Act

The Customs, Excise and Service Tax AppellateTribunal ( CESTAT ) Bench at Chennai has upheld the penalties imposed on appellant, holding that they had knowingly abetted the illegal clearance of confiscated goods seized by the Directorate of Revenue Intelligence (DRI).

The Tribunal ruled that the custodian and steamer agent acted with mens rea and violated Section 45(2)(b) and Section 111(j) of the Customs Act, 1962.

The case stemmed from the clearance of thirty-two used printing mini-offset machines originally imported in the name of M/s. Gold Line Offset Printers and seized by the DRI under a mahazar dated 14.10.1999, on grounds of violation of the EXIM Policy. The goods were deposited at M/s. Indev CFS (later renamed M/s. Gateway Distriparks South Pvt. Ltd.), the appointed custodian.

Despite the seizure, the machines were later cleared from the CFS under Bill dated 31.07.2000 by M/s. Orrjay Process Pvt. Ltd. on the instructions of M/s. Babu Marketing Services, New York. The DRI later discovered this illegal clearance while attempting to dispose of the confiscated goods under an earlier order, which instructed absolute confiscation.

Subsequently, a show cause notice dated 02.08.2005 was issued to Gateway Distriparks, Volkart Fleming Shipping & Services Ltd., and two officials of OOCL India Pvt. Ltd., proposing confiscation of goods and imposition of penalties under Sections 111(d), 111(j), 111(o), and 112(a) of the Customs Act, 1962. The adjudicating authority imposed penalties on all four parties, which were later upheld by the Commissioner (Appeals). Aggrieved, the appellants approached the Tribunal.

Counsel B. Aditya Sundar contended that the appellants had acted strictly under the authorizations and approvals of Customs authorities, including the Joint and Assistant Commissioners of Customs. It was argued that the clearance occurred only after Customs permitted it, and that if any lapse occurred, it was on the part of Customs, not the appellants.

He further argued that there was no requirement under law for obtaining a “No Objection Certificate” (NOC) from DRI at that time and that the goods had already been duty-paid and released through proper customs procedure. The appellants also claimed that they could not be penalized for an act already covered by a prior confiscation order of 2001, making the second confiscation impermissible.

Anandalakshmi Ganeshram, Authorized Representative, argued that all appellants custodian, steamer agent, and their employees had prior knowledge of the DRI seizure and were expressly instructed in writing not to clear the goods without DRI’s permission.

She submitted that the appellants signed as witnesses to the DRI’s seizure mahazar and subsequently connived in changing the consignee name, which demonstrated active participation and abetment.

The Bench of Vasa Seshagiri Rao, Member (Technical), observed that Section 45(2)(b) of the Customs Act, 1962 clearly prohibits a custodian from permitting removal of goods from a customs area without written permission of the proper officer, which, in this case, was the DRI officer.

Further, the appellants’ actions amounted to clear violation of Sections 111(j) and 112(a), since they had knowingly facilitated the removal of goods under seizure and thereby rendered them liable to confiscation.

The Tribunal held that the appellants’ attempt to shift blame onto Customs officers was “a desperate attempt to avoid liability for their own misdeeds.” The contention that goods once confiscated could not be “re-confiscated” was rejected, and the argument that Section 112(a) applies only in cases of duty evasion was dismissed.

The Tribunal held that the appellants as custodian, steamer agent, and responsible employees had knowingly aided the unauthorized clearance of DRI-seized goods and thus were rightly penalized.

Accordingly, all four appeals were dismissed, and the Orders dated 16.05.2013 were upheld in full.

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