M/S. Maheshwari Rocks (i) Pvt. Ltd. and Another Vs. Cc, Chennai - Court Judgment

SooperKanoon Citationsooperkanoon.com/941984
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Chennai
Decided OnOct-01-2009
Case NumberC/214 of 2008 & C/197 of 2008
Judge THE HONOURABLE MS. JYOTI BALASUNDARAM, VICE PRESIDENT & THE HONOURABLE DR. CHITTARANJAN SATAPATHY, TECHNICAL MEMBER
AppellantM/S. Maheshwari Rocks (i) Pvt. Ltd. and Another
RespondentCc, Chennai
Advocates:Shri B. Venugopal, Adv., Shri Hari Radhakrishnan, Adv., for the appellant, Shri T.H. Rao, SDR, for the respondent
Excerpt:
per: dr. chittaranjan satapathy, heard both sides. while dealing with the stay applications filed by thee appellants, the following order was passed: “a shipping bill was filed on 12.07.2006 in the name of m/s. maheshwari rocks india pvt. ltd., (mripl) bangalore for export of a consignment of polished granite tiles. when the consignment reached the chennai port, officers of dri inspected the container and the cargo. it was found that the one-time seal and the customs seal affixed on the container were intact. the rivets at the other end of the container doors had been deftly cut and the container stuffed with red sanders logs. further investigation revealed that two persons by name s/sh. muralikrishna and ramesh had befriended the exporter as representatives of the buyer in malaysia. they behaved with the authorities as if they represented the exporter. the goods were examined at the icd, bangalore in the presence of s/sh muralikrishna, ramesh and the representative of the cha and the container sealed. m/s. caravel shipping services pvt. ltd., (csspl), the steamer agents had arranged container and the vehicle to carry the consignment to chennai port. after due process of law, the commissioner confiscated 16.27 mts of the red sander logs valued at rs. 50 lakhs seized from the container under section 113 (d) of the customs act, 1962 (the act). he also imposed penalties on various persons found to have associated with the attempt to smuggle out red sanders. an amount of rs. 3 lakhs each was imposed on the exporter m/s. mripl and m/s. csspl both under section 114 of the act. the commissioner had found that m/s. mripl and m/s. csspl had, by their acts of commission and omission, rendered the red sanders logs under seizure liable for confiscation. moving the application for waiver of predeposit and stay of recovery of the impugned penalties, the counsel for the appellants submit that, once the export goods had been stuffed in the presence of customs officials and the container sealed with the customs seal and the steamer agent’s seal, both the appellants ceased to be responsible for its safe transport to the gateway port. the learned counsel representing the exporter invited our attention to circular no. 57/98-cus. dated 4.8.98 issued by the central board of excise and customs where it has been clearly stated that in case the goods are moving from an icd, the responsibility to account for the goods-in-transit is that of the custodian, namely the icd. the ld. counsel for the appellants took us throuogh the findings of the commissioner as regards the roles of the appellants in the offending transactions. the commissioner had not found any active or positive role on the part of the appellants in rendering the seized red sander logs liable for confiscation. therefore, they pray that the predeposit of penalties may be waived and their recovery. 2. ld. jdr reiterates the findings of the commissioner. 3. we have carefully considered the submissions by the learned counsel for the parties. we observe from the impugned order that the commissioner has found that the exporter had not behaved in a responsible and sensible manner. they had entrusted the export goods with two unknown persons s/sh. muralikrishna and ramesh to transport the same to the icd, bangalore. like-wise, the other appellant m/s. csspl had arranged the vehicle to carry; the impugned goods on the request of s/sh. muralikrishna and ramesh, who were neither the exporter nor the cha. according to him, the steamer agent should have verified the antecedents of the above two persons before handing over the vehicle to carry the goods. he also records in the order that at the time of examination of the goods at the icd, they were found as declared. 4. we observe that the commissioner has not found that both the appellants were aware of the design of s/sh. muralikrishna and ramesh to substitute the export goods tiles with contraband red sander logs. he has only found that the exporter did not behave sensibly and responsibly. the observation of the commissioner about the conduct of the steamer agent is also to the same effect. we find that these are not good enough reasons in arriving at a finding that the appellants had rendered the impugned goods liable for confiscation. the appellants have made prima facie case against the penalties imposed on them. in the circumstances, we order waiver of predeposit and stay of recovery of the impugned penalties till the disposal of the appeals.” we have not heard anything from the department’s side to change our prima facie view. shri t.h. rao, ld. sdr, appearing for the appellants reiterates the finding in the impugned order and emphasizes that as per the statements recorded, not only this consignment but nine other similar consignments have been exported adopting the similar modus operandi. he states that the exporter should have been careful in ensuring that the container is not tampered with and the goods are not substituted. 2. shri b. venugopal, ld. advocate, appearing for the appellant exporter states that the exporters are not involved in the smuggling of red sanders nor any evidence has been found to that effect. on the other hand, the adjudicating commissioner has given a clean chit it to the exporter but has penalized them on mere suspicion. he also refers to circular no. 57/98-cus dated 04.008.98 under which it is specified under para-6 that the custodian would be required to move the goods by road or rail upto the gateway port/airport. in view of this circular, the exporter’s liability is over once the goods have been examined by the customs in the icd and the seals are put on the container. the appellant exporter is therefore not liable for substitution of the cargo during movement from icd, bangalore to chennai port. 3. after hearing both sides, we find that the icd has not been issued with a show cause notice and it is not known why shri r. baskaran and shri murali got access to the cargo enroute to chennai when icd, bangalore as the custodian was supposed to be in charge of moving the cargo from icd to gateway port. in the absence of any positive findings, regarding the involvement of the appellant exporter, we confirm our prima facie view, grant the benefit of doubt to him and set aside the penalty imposed on him. appeal no. c/214/08 filed by the appellant exporter is allowed. 4. we have heard shri hari radhakrishnan, ld. adv., on behalf of the appellant m/s. caravel shipping services pvt. ltd. he states that the appellants did not arrange for the transport. they have only given the container on hire for the export of legitimate cargo and they are in no way concerned with the substitution of the cargo or tampering of the seals on the container. he also states that the container cannot be held to be liable for confiscation for concealment of the cargo in the circumstances of this case. 5. we find merit in the submissions made by the ld. advocate shri hari radhakrishnan. there is no evidence against the appellants regarding their involvement in the substitution of the cargo or tampering of the seal. in the circumstances, we confirm our prima facie view, set aside the confiscation of the container and the penalty imposed on m/s. caravel shipping services pvt. ltd.
Judgment:

Per: Dr. Chittaranjan Satapathy,

Heard both sides. While dealing with the stay applications filed by thee appellants, the following order was passed:

“A shipping bill was filed on 12.07.2006 in the name of M/s. Maheshwari Rocks India Pvt. Ltd., (MRIPL) Bangalore for export of a consignment of polished granite tiles. When the consignment reached the Chennai Port, officers of DRI inspected the container and the cargo. It was found that the one-time seal and the Customs seal affixed on the container were intact. The rivets at the other end of the container doors had been deftly cut and the container stuffed with red sanders logs. Further investigation revealed that two persons by name S/Sh. Muralikrishna and Ramesh had befriended the exporter as representatives of the buyer in Malaysia. They behaved with the authorities as if they represented the exporter. The goods were examined at the ICD, Bangalore in the presence of S/SH Muralikrishna, Ramesh and the representative of the CHA and the container sealed. M/s. Caravel Shipping Services Pvt. Ltd., (CSSPL), the steamer agents had arranged container and the vehicle to carry the consignment to Chennai Port. After due process of law, the Commissioner confiscated 16.27 MTs of the red sander logs valued at Rs. 50 lakhs seized from the container under Section 113 (d) of the Customs Act, 1962 (the Act). He also imposed penalties on various persons found to have associated with the attempt to smuggle out red sanders. An amount of Rs. 3 lakhs each was imposed on the exporter M/s. MRIPL and M/s. CSSPL both under Section 114 of the Act. The Commissioner had found that M/s. MRIPL and M/s. CSSPL had, by their acts of commission and omission, rendered the red sanders logs under seizure liable for confiscation. Moving the application for waiver of predeposit and stay of recovery of the impugned penalties, the counsel for the appellants submit that, once the export goods had been stuffed in the presence of Customs officials and the container sealed with the Customs seal and the steamer agent’s seal, both the appellants ceased to be responsible for its safe transport to the gateway port. The learned counsel representing the exporter invited our attention to Circular No. 57/98-Cus. Dated 4.8.98 issued by the Central Board of Excise and Customs where it has been clearly stated that in case the goods are moving from an ICD, the responsibility to account for the goods-in-transit is that of the custodian, namely the ICD. The Ld. Counsel for the appellants took us throuogh the findings of the Commissioner as regards the roles of the appellants in the offending transactions. The Commissioner had not found any active or positive role on the part of the appellants in rendering the seized red sander logs liable for confiscation. Therefore, they pray that the predeposit of penalties may be waived and their recovery.

2. Ld. JDR reiterates the findings of the Commissioner.

3. We have carefully considered the submissions by the learned counsel for the parties. We observe from the impugned order that the Commissioner has found that the exporter had not behaved in a responsible and sensible manner. They had entrusted the export goods with two unknown persons S/Sh. Muralikrishna and Ramesh to transport the same to the ICD, Bangalore. Like-wise, the other appellant M/s. CSSPL had arranged the vehicle to carry; the impugned goods on the request of S/Sh. Muralikrishna and Ramesh, who were neither the exporter nor the CHA. According to him, the steamer agent should have verified the antecedents of the above two persons before handing over the vehicle to carry the goods. He also records in the order that at the time of examination of the goods at the ICD, they were found as declared.

4. We observe that the Commissioner has not found that both the appellants were aware of the design of S/Sh. Muralikrishna and Ramesh to substitute the export goods tiles with contraband red sander logs. He has only found that the exporter did not behave sensibly and responsibly. The observation of the Commissioner about the conduct of the steamer agent is also to the same effect. We find that these are not good enough reasons in arriving at a finding that the appellants had rendered the impugned goods liable for confiscation. The appellants have made prima facie case against the penalties imposed on them. In the circumstances, we order waiver of predeposit and stay of recovery of the impugned penalties till the disposal of the appeals.”

We have not heard anything from the department’s side to change our prima facie view. Shri T.H. Rao, Ld. SDR, appearing for the appellants reiterates the finding in the impugned order and emphasizes that as per the statements recorded, not only this consignment but nine other similar consignments have been exported adopting the similar modus operandi. He states that the exporter should have been careful in ensuring that the container is not tampered with and the goods are not substituted.

2. Shri B. Venugopal, Ld. Advocate, appearing for the appellant exporter states that the exporters are not involved in the smuggling of red sanders nor any evidence has been found to that effect. On the other hand, the adjudicating Commissioner has given a clean chit it to the exporter but has penalized them on mere suspicion. He also refers to Circular No. 57/98-Cus dated 04.008.98 under which it is specified under para-6 that the custodian would be required to move the goods by road or rail upto the gateway port/airport. In view of this circular, the exporter’s liability is over once the goods have been examined by the customs in the ICD and the seals are put on the container. The appellant exporter is therefore not liable for substitution of the cargo during movement from ICD, Bangalore to Chennai port.

3. After hearing both sides, we find that the ICD has not been issued with a show cause notice and it is not known why Shri R. Baskaran and Shri Murali got access to the cargo enroute to Chennai when ICD, Bangalore as the custodian was supposed to be in charge of moving the cargo from ICD to gateway port. In the absence of any positive findings, regarding the involvement of the appellant exporter, we confirm our prima facie view, grant the benefit of doubt to him and set aside the penalty imposed on him. Appeal No. C/214/08 filed by the appellant exporter is allowed.

4. We have heard Shri Hari Radhakrishnan, Ld. Adv., on behalf of the appellant M/s. Caravel Shipping Services Pvt. Ltd. He states that the appellants did not arrange for the transport. They have only given the container on hire for the export of legitimate cargo and they are in no way concerned with the substitution of the cargo or tampering of the seals on the container. He also states that the container cannot be held to be liable for confiscation for concealment of the cargo in the circumstances of this case.

5. We find merit in the submissions made by the Ld. Advocate Shri Hari Radhakrishnan. There is no evidence against the appellants regarding their involvement in the substitution of the cargo or tampering of the seal. In the circumstances, we confirm our prima facie view, set aside the confiscation of the container and the penalty imposed on M/s. Caravel Shipping Services Pvt. Ltd.