Judgment:
Mathew John, Technical Member, J.
1. These appeals arise from same set of facts and hence are being considered together in this proceeding. Three of the appeals are filed by individuals who were involved in export of a consignment of red sanders wood, an item prohibited for export out of India, from Tuticorin Port to Malaysia. Against these persons, the adjudicating authority had imposed penalty of Rs.10,00,000/- each in a common adjudication order. In appeal, the Commissioner (Appeals) has reduced these penalties to Rs. 3,00,000/- on Shri. Chandrasekhar and Rs. 3,00,000/- on Rama Theena Thayalan and Rs. 2,00,000/- on Shri G. Ravi by different Orders-in-Appeal. The individuals concerned have filed appeals challenging the penalties upheld by Commissioner (Appeal) and the Revenue has appealed for increasing the penalties imposed by the Commissioner (Appeals). Therefore, all these appeals are being considered together.
2. The facts involved in these cases are as follows. Shipping Bill No. 1955099 dated 09.07.08 was filed in the name of M/s. Kumari Coir Products, 1/1, Sree Ramapuram, Anna Nagar, Panagudy, Tirunelveli District, for export of cargo declared to be Coco Peat to M/s. Selangor Fertilizer, SDN, BHD, Kualalumpur, Malaysia. Shri. S. Chandrasekhar was the proprietor of M/s. Kumari Coir Products. Directorate of Revenue Intelligence received information about smuggling of red sanders wood, an item prohibited for export from India, in the said consignment. By the time they could locate the consignment, the container had already sailed to Malaysia on 14.07.2008. The subject container was immediately recalled and the container arrived at Tuticorin Port on 10.08.2008. In the meantime, Malaysian Customs had opened the subject container and on examination, it was found that the container was fully stuffed with red sanders wood. Malaysian Customs sent back the container to Tuticorin after putting a onetime seal No. 176853 and the same was endorsed vide their note dated 31.07.2008.
3. The Directorate of Revenue Intelligence, conducted further investigations, and it was found that one Shri George, S/o. Rathinasamy, residing at No. 6E, Selvitzer 1st Street, Tuticorin -628002, had played the main role in the illicit export of the said prohibited goods. He had contacted M/s. Kumari Coir Products had offered consideration to Shri. S. Chandrasekhar, the proprietor of the firm, to allow Shri. George to use the name and Import Export Code of M/s. Kumari Coir Products to export Coco Peat, and made all arrangements such as i) procurement of the declared cargo, ii) stuffing of the declared cargo under Central Excise Supervision, iii) using the IEC of M/s. Kumari Coir Products, iv) engaging the Custom House Agent for Customs clearance work and for booking the container v) transportation of the goods and made payments for all these works. It appeared that Shri Muthu, Manager-cum-Driver of the lorry TN 23 0420 had played a vital role in tampering the stuffed and sealed container on its way from the factory to Tuticorin port and replacing the cargo with red sander woods and transporting it to Tuticorin Port. Efforts to trace the whereabouts of these two persons failed, further investigation in respect of these two persons was not done. Under the adjudication order, penalty of Rs. 20 lakhs was imposed on Shri George and Rs. 10 lakhs was imposed on Shri Muthu. Further there a penalty of Rs. 10 lakhs was imposed on Sri. R. Srinivasan who obtained signatures from Shri. Ravi for filing the shipping bill. However, at present, these persons, namely, Shri. George, Shri. Muthu and Shri. R. Srinivasan appear to have not taken the matter in appeal to the Commissioner (Appeals) and their cases are not before the Tribunal.
4. The role of the appellant Shri S. Chandrasekaran, Proprietor of M/s. Kumari Coir Products, was that he allowed the name and IE Code number of his firm to be used by Shri George of Tuticorin, without verifying his credentials, which resulted in the illegal export of red sanders wood from Tuticorin to Malaysia. It is also admitted by Shri S. Chandrasekaran that he had taken consideration of Rs. 30,000/- for allowing Shri George to use name and IE Code of Kumari Coir Products. He had also stated that during first and second week of February, 2000, two more consignments of Coco Peat were exported by Shri George using the name and IE Code of Kumari Coir Products. He also admitted that the activities of transportation of the containers to Tuticorin and clearance of the goods for export by engaging a CHA were taken care of by Shri George only. There was a proposal in the show cause notice for imposition of penalty under Section 114 of the Customs Act and under Section 117 of the Customs Act, 1962, on Shri S. Chandrasekaran.
5. The next appellant is Shri Rama Theena Thayalan, Proprietor of M/s. Vector Freight Forwarders, Tuticorin, the CHA, whose name was used for filing the concerned shipping bill. Shri Rama Theena Thayal, had a standing arrangement of giving blank signed Annexure-A forms to be filed for export of goods to Shri. G. Ravi and he had taken Rs. 1,00,000/- as deposit from G. Ravi for this and had also got profit share of 70,000/- from Shri. Ravi. He stated that he had no knowledge of the shipping bills filed by G. Ravi for export of goods of M/s Kumari Coir Products. Shri Rama Theena Thayal, failed to exercise due diligence as prescribed in the Customs House Agents Licensing Regulations, 2004, and thus resulted in export of prohibited goods from the country by an unscrupulous person. So penalty under section 114(i) of Customs Act and 117 of Customs Act were proposed in the SCN against this appellant.
6. The next person concerned is Shri G. Ravi, Proprietor of M/s. Deepak Logistics, Tuticorin. Shri Ravi had obtained an H card (Identity cum Authorization card) issued under Regulation 19(6) of CHLAR 2004 claiming himself to be an employee of M/s. Victor Freight Forwarders, Tuticorin which was a licensed CHA firm with Shri Rama Theena Thayalan as proprietor. Shri Ravi had paid Rs. 1 lakh as deposit money to Shri Rama Theena Thayalan and was also paying Rs. 10000 per month since Oct 2007 for using the CHA license of Shri Rama Theena Theyalan. In fact, he was handling the entire matter of filing the shipping bill, getting the goods cleared etc. by using a blank Annexure-A forms signed by Shri Rama Theena Thayalan. Shri G Ravi filed Shipping Bills without verifying the credentials of M/s Kumari Coir Products and he did not get any authorization from the exporter for filing the shipping bill. In the Show Cause Notice penalty under section 114(i) of Customs Act and 117 of Customs Act was proposed against Shri G. Ravi.
7. Arguing for Shri. Chandrasekharan, the Ld. Advocate submits that Section 113 would apply only to goods which are attempted to be exported and would not apply to goods which were already exported. In this case, the goods were already exported and therefore section 113 would not apply. Consequently, 114 (i) also would not apply, which is the section under which the penalty has been imposed on the appellants. It was further argued that Shri George only had done the acts which resulted in smuggling of the red sanders wood and the revenue has not been able to demonstrate that Shri. Chandrasekharan was aware of the misdeeds of Shri. George. The Counsel submits that Shri. Chandrasekharan acted in a bonafide manner. Shri George contacted the appellant and made arrangements such as i) procurement of the declared cargo, ii) stuffing of the declared cargo under the Central Excises supervision iii) using the IEC of M/s. Kumar Coir Products, iv) engaging the custom house agent for customs clearance work and for booking the container, v) transportation of the goods and made payments for these works etc.
8. Arguing for Shri. Rama Theena Thayalan the Counsel submits that the appellant had acted in a bonafide manner by completing the formalities of filing shipping Bill and other related work for export of cargo. He had no knowledge about any prohibited cargo in the consignment. So penalty imposed on him is not justified. It was also argued that penal proceedings if any can be only under CHALR, 2004 for revocation of license which has been separately taken. It was argued that no penalty under section 114 of Customs Act is maintainable.
9. Arguing for the appellant Shri G. Ravi, the Ld. Counsel submits that he has been punished on the basis of the statement by Shri George, who was a co-accused. He further submits that the Revenue has not proved any role played by G .Ravi and he was acting in a bonafide manner while filing shipping bill as an employee of a CHA. It is submitted that without proving knowledge on the part of Shri. Ravi about the concealment of export cargo he cannot be held to be an abettor and penalty imposed on him. In this matter he relies on the decision of 1975 SC 175 in the case of Sri Ram Vs. State of Uttar Pradesh.
10. Opposing the submissions of the three persons Ld. A.R. for Revenue submits that Shri. Chandrasekharan allowed Shri. George to export goods using the name and Import Export code of M/s.Kumari Coir Products. He was basically dealing with coir products and had no experience in export of coco peat. He had not verified the antecedents of Shri. George. The whole transaction by its very nature shows that Shri. Chandrasekharan has wantonly allowed his name to be used for export of prohibited goods by a person who is not traceable and hence Shri. Chandrasekharan is responsible for allowing others to use his I.E. code for export of goods which was found to be prohibited goods. Renting of his name and IEC for use by unscrupulous elements like Shri George is an act of commission for which penalty can be imposed under section 114 of the Customs Act. The section does not have any condition that penalty is leviable only if he knew that prohibited goods were going to be smuggled using his name. He points out that this was not a case where his name and IE code was used without his knowledge. The claim is only that he did not know about the mischief played by Shri George in tampering with the container and replacing the goods with prohibited goods. So penalty is correctly imposable on Shri. Chandrasekharan and considering the value of Rs.43.04 lakhs of prohibited goods attempted to be exported the penalty of Rs.10,00,000/- imposed by adjudicating authority is reasonable and it should be restored.
11. In the case of Shri. Rama Theena Thayalan, it was pointed out that he was a Customs House Agent acting through a proxy. He signed blank papers and gave it to Shri. Ravi for doing illegal activities. As per Customs House Agents Licensing Regulation, 2004, he was under obligation to know the clients for whom he was acting. Since the appellant had wantonly ignored his duty there is an omission of duties cast on him under the Regulation which resulted in export of prohibited goods by an unscrupulous person namely George and hence he is liable for penalty under section 114 (i). Further considering the value of goods exported the penalty imposed by adjudicating authority was reasonable and the same should be re-stored.
12. In the case of G. Ravi the Ld. A. R. submits that he is another person who signed Annexure-A for shipping bills without taking authorization from the exporter namely M/s Kumari Coir products. He was misusing the H-Card obtained by him declaring himself as an employee of M/s. Victor Freight Forwarders, even while running his business in the name of M/s Deepak Logistics. Considering the value of goods the penalty imposed by adjudicating authority was reasonable and the same should be restored.
13. I have considered submissions on both sides. The argument that section 113 will apply to only goods attempted to be exported and will not apply to this case because the attempt was successful is a very illogical argument. A successful export takes place only after attempt to export and if the goods were liable to confiscation for attempt to export it can be confiscated even after successful attempt so long as the goods could be brought back which has happened in this case. At any rate the attempt was not fully successful because the goods were brought back.
14. In this case, the role of Shri Chandrasekharan is culpable. He has allowed his name and IE code to export goods by persons whose antecedents were not known to him. He was doing it for consideration. This resulted in export of prohibited item by Shri. George. Acting as a proxy for non-traceable persons and allowing the laws of the country to be flouted is not a matter to be encouraged. An argument that IE codes are assigned so that the code can be rented out for consideration is not an acceptable argument at all. By his own statement two consignments were exported in the past also. Such persons trying to enrich themselves by taking benefit of prohibitions on export, needs to be dealt with severely. The penalty upheld by the Commissioner (Appeal) is low considering the value of goods. So I increase the penalty to Rs. 5,00,000/- (Rupees Five lakhs only) by partially allowing the appeal filed by Revenue and rejecting the appeal filed by Shri. S. Chandrasekharan.
15. I find Shri. Rama Theena Thayalan is not a bonafide CHA at all. He was just collecting rental income out of his license. Risk to the countrys interest caused by his action was of no concern to him. There was statutory obligation on him to know the clients for whom he was acting and such obligation was not discharged. Since he was not taking even the minimum care to avoid this type of incident from happening there is an omission on his part which is punishable under section 114 (i) of the Customs Act, 1962. Such an approach needs to be dealt with severely and the penalty as reduced by the Commissioner (Appeal) is not commensurate with his omissions of duties cast on him by CHALR, 2004. I also do not agree with the argument that for not complying with provisions of CHALR, 2004 punishment can be only revocation of license. If the omissions of duties cast on him have rendered any goods liable to confiscation penalty under section 114 (i) is justified. In this case that has happened. So I increase the penalty to Rs. 5,00,000/- (Rupees Five lakhs only) by partially allowing the appeal filed by Revenue and rejecting the appeal files by Shri Rama Theena Thayalan.
16. I find that Shri Ravi is a person who signed Annexure-A form for export of goods by Shri. George using blank signed forms given by Shri Rama Theena Thayalan. Shri Ravi was aware of the unusual delay in arrival of the cargo after it left the factory premises of Kumari Coir Products and he did not exercise caution to ensure that the delay was on genuine grounds. From the facts of the case the obvious inference is that he was aware of the manipulation of the contents in the container. Shri Ravi has done acts of commission by submitting fraudulent Annexure-A forms which ultimately resulted in smuggling of the goods. The decision in the case of Shri Ram Vs. UP was in respect of a crime under Indian Penal Code where for proving of crime awareness and intent is a must. In the case of economic offences, non-compliance with statutory obligations resulting in loss to the Government itself is punishable. The wording of section 114 does not envisage mensrea as a necessary ingredient. So I am of the view that Shri Ravi is liable to penalty under section 114 (i) of Customs Act, 1962. The penalty as reduced by Commissioner (Appeal) is low for the offence committed. So I increase the penalty to Rs. 5,00,000/- (Rupees Five lakhs only) by partially allowing the appeal filed by Revenue and rejecting the appeal filed by Shri Ravi.
17. Thus the three appeals filed by the individuals are rejected. The three appeals filed by Revenue are partially allowed as indicated above.