Sethu Samudhra Shipping Services and Others Vs. Commissioner of Customs, Tuticorin - Court Judgment

The appellants herein, who are Custom House Agents, are aggrieved by the imposition of penalties of Rs.1 lakh each under the provisions of Section 114 (i) of the Customs Act for their involvement in the act of attempt to smuggle red sanders in the guise of rice, by D.Padmanabhan / for aiding smuggling activities. Red sanders were found loaded enroute in the container stuffed with rice for export at ICD Irugur by tampering with the rivet of the keel, in Tuticorin Port in the name of M/s.Good Mark Enterprises who have been held not to be exporters of the rice as their IE code was misused by Shri D.Padmanabhan, Inspector of Madurai Central Excise Commissionerate. The finding of the Commissioner against M/s. Sethu Samudhra Shipping Services is that they arranged and sent the container to Irugur, ICD, moved the container laden into port area and acted as per instructions of D.Padmanabhan. The other two appellants provided logistics support and filed export documents supplied by Padmanabhan without ascertaining the genuineness of the export/exporter, thus assisting and abetting the smuggle activities.

2. I have heard ld. Consultant appearing for M/s. Sethu Samudhra Shipping Services and ld. JDR for the Revenue and perused the records none appears for the other two appellants.

3. Shri Padmanabhan stated that one Shri Siddique, who was known to him, had introduced one Shri Senthilkumar as owner of M/s.Good Mark Enterprises, Chennai to him and requested him to assist in exporting rice; they showed him IE code of M/s.Good Mark Enterprises, Chennai which he cross-verified to be genuine; he contacted one Shri Ravi who was carrying out the business of CHA by obtaining signatures from a licensed CHA i.e. M/s.Shree Venkatesh Shipping Services P.Ltd., Tirupur; that he used to procure rice from a mill in Dindigul and send it to ICD, Irugur; that the rice would be received at ICD in the account of M/s.Raghavendra Shipping Services ; that Ravikumar, in charge of Raghavendra Shipping Services would look after the Customs related work for the export at ICD Tirupur; that Shri Siddique would furnish the address of the overseas buyer and Shri Ravi would look after the other formalities like preparing invoices and packing lists in the name of M/s.Good Mark Enterprises, Chennai; that the rice mill had sent 16 MTs of Ponni Rice to ICD, Irugur on 25.10.2006; that the rice dispatch was supervised by his cousins Shri Mohan and Shri Sundararaj; that he only booked the container by contacting Arasu of M/s.Sethu Samudhra Shipping Services for Malaysia; that after customs clearance at ICD, Irugur, it was brought by the trailer to the godown at Thomaiyarpuram on 26.10.06 and in the meantime, red sanders logs were brought from Chennai using onions as cover cargo to the godown by lorry, and that the container was opened without tampering with the seal and the declared cargo of rice was destuffed and replaced with red sanders logs and such substitution took place in the godown in the presence of Siddique and himself ; that Siddique had promised to pay him Rs.1,50,000/- for each consignment; that this was the second consignment of red sanders for which he had received money from Siddique.

4. Shri M.Arasu, partner of M/s.Sethu Samudhra Shipping Services has deposed that he knew Padmanabhan who enquired about freight charges to Malaysia and Singapore; that Padmanabhan requested him to supply a container for stuffing rice at Coimbatore ICD for export to Malaysia; that he booked the containers with Tuticorin company who, in turn, sent the containers to ICD, Irugur; that on 24.10.06, a container was sent to ICD Irugur for stuffing and on 27.10.06, Shri Padmanabhan specifically instructed him to move the container into the port without further delay; that on 28.10.06, he received a telephone call from Customs officials directing him to get Equipment Interchange Receipt (EIR) for moving the container to M/s.Raja CFS and while doing so, Padmanabhan told him that he should not move the container stating that he is taking some efforts to stop re-examination; that he informed Padmanabhan that he should obey the Customs directions; that the container was opened by the Customs officers at Raja CFS and found to contain red sanders instead of the declared cargo of rice; that he did not have any contact with the exporter and all business transactions were made through Padmanabhan.

5. Shri Loganathan, the other partner of M/s.Sethu Samudhra Shipping Services corroborated the above statement.

6. Shri Ramaraj, Manager of Shree Venkatesh Shipping Services stated that one Ravikumar of Raghavendra Shiping Services would perform the Customs formalities at Coimbatore on behalf of their company; that Ravikumar arranged the business of the nine shipments of rice and he (Ramaraj) did not have direct contact with the shipper; that Ravikumar had obtained authorization from M/s.Good Mark Enterprises authorizing Shree Venkatesh Shipping Services to do the customs clearance at Coimbatore ICD and that on 27.10.06 at the time of stuffing at ICD, Irugur, Ravikumar cleared only Ponni Rice and he did not know what happened enroute to Tuticorin Port.

7. Shri Ravikumar of M/s.Raghavendra Shipping Services has deposed that he had handled nine export consignments for M/s.Good Mark Enterprises through Shree Venkatesh Shiping Services; that in the nine containers, only rice was stuffed and sent for export and that the nine containers were sealed at Coimbatore ICD, by the Customs officers after thorough Customs examination; that the shipping bills for the nine exports were filed at the Coimbatore ICD on the basis of the information and documents supplied by Shri D.Padmanabhan; that he had known and seen Padmanabhan and had not seen Senthilkumar of Good Mark Enterprises.

8. Nothing comes out from the above statements about the involvement of any of the three appellants in the attempt to smuggle out red sanders. Nothing incriminating has been recorded from the appellants. It has been held that M/s.Sethu Samudhra Shipping Services did not take care to verify genuineness of export/exporters and therefore they have aided in smuggling of red sanders. The other two appellants have been held to have failed in discharging duties and realizing responsibilities as required under the Customs House Agents Licensing Regulations by filing export documents supplied by Padmanabhan and not by the actual exporter and therefore they did not take sufficient care in the export and thereby assisted in the smuggling of red sanders. Failure to discharge duties as required under the Customs House Agents Licensing Regulations may lead to action under those Regulations but certainly cannot lead to a conclusion that they aided and abetted Padmanabhan in the attempt to export red sanders. There is no evidence of any action (commission) or inaction (omission) on their part so as to render any goods liable to confiscation, in order to attract the provisions of Section 114 against them.

9. In the light of the above discussion, the penalties are set aside and the appeals are allowed.