Regional Manager, Central Warehousing Corporation Vs. Commissioner of Customs (Port-imports) Chennai - Court Judgment

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CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Chennai
Decided OnAug-22-2012
Case NumberApplication No.C/Misc/489 OF 12 (by dept) & Appeal No.C/40 OF 12 (by party)
Judge ASHOK JINDAL, JUDICIAL MEMBER
AppellantRegional Manager, Central Warehousing Corporation
RespondentCommissioner of Customs (Port-imports) Chennai
Advocates:For the Appearing Parties: C. Stephen, Manager, Parmod Kumar, SDR, Advocates.
Excerpt:
customs act, 1962 - section 117 - 1. vide stay order no.527/12 dt. 26.6.12, waiver of predeposit was granted to the appellant. against the said order, revenue filed an application for modification of stay order on the ground that, the finding of this tribunal in the stay order that the adjudicating commissioner has not specified the provisions of act which the appellant has contravened, is to be modified as the adjudicating commissioner in paragraph 13 of his order has clearly mentioned that the appellant has contravened para-16 of cbec circular no.128/95-cus. dt. 14.12.95. therefore, there is a mistake committed by this tribunal which is apparent on record. therefore, the stay order be modified. 2. heard the learned sdr and considered his submissions. 3. as per section 117 of the customs act, 1962, penalty can be imposed on any person who contravenes any provision of this act or abets any such contravention or who fails to comply with any provision of this act. but in the impugned order, the adjudicating commissioner has not mentioned which provision of the act has been contravened. he merely mentioned the contravention of a circular. in that view, i do not find any infirmity in the stay order passed by this tribunal and there is no mistake committed by this tribunal. therefore, the application for modification of stay order deserves no merit and hence same is dismissed. 4. the appellants have challenged the impugned order imposing penalty on them under section 117 of the customs act, 1962. the appellants are handling both import and export of the goods as custodian (cfs). it is the allegation against the appellant that in their cfs, they have sublet some of the area to some non-vessel operating cargo carriers. in the area, the container belonging to those carriers were open and goods were cleared to different importers. as they are charging different charges from the importers, therefore they have contravened the handling of cargo in customs area regulations, 2009 and also contravened the provisions of section 45 (2) (b) of the customs act, 1962. hence a show cause notice was issued for subletting space and function in the cfs without permission of the customs authorities and imposing penalty on the appellant under section 117 of the customs act, 1962. the adjudicating commissioner adjudicated the matter and has found as under :- “13. i therefore hold that the permission given to cwc (virugambakkam) to function as cfs has been misused and they have allowed the aforesaid nvoccs/cargo consolidators to collect storage charges from the importers/chas for whose benefit cfs type of institutions are envisaged, established and operated enhancing their transaction cost by forcing them to suffer hardships and leading them to complain to the customs department as mentioned above. i also hold that such an arrangement of providing exclusive area inside the cfs premises to aforesaid nvoccs/cargo consolidators without the permission of commissioner of customs and m/s.cwc virugambakkam have contravened the para 16 of cbec circular 128/95 cus dated14.12.95. i therefore hold that m/s.cwc (virugambakkam) is liable to penal action in terms of section 117 of the customs act, 1962.” thereafter, he passed the following order :- “(i)i direct m/s.cwc virugambakkam to terminate the agreement entered into by m/s.cwc virugambakkam with m/s. macnels container lines pvt. ltd and m/s.transfer handling and warehousing co. earmarking space in their container freight station to these named parties and to stop forthwith all the functions carried out by m/s.macnels container lines pvt. ltd. and m/s.transtar handling and warehousing co. within the c.f.s of m/s.cwc virugambakkam. ii)i impose a penalty of rs.50,000/- (rupees fifty thousand only) on cwc virugambakam under section 117 of the customs act, 1962.” aggrieved from the said order, the appellant is before me. 5. heard both sides. considered their submissions. the main allegation against the appellant is that they have violated the provisions of section 45 2(b) of the customs act, which is reproduced hereunder :- “section 45. restrictions on custody and removal of imported goods (1) (2) the person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force, - (b)shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer.” 6. it is the contention of the learned sdr that they have violated para-16 of the cbec circular no.128/95-cus. dt. 14.12.95. it is further submitted that the appellants have also violated the provisions of regulation 6 (l) (q), 6(2) and 6(3) of the handling of cargo in customs area regulations, 2009. therefore, the adjudicating authority has rightly imposed the penalty under section 117 of the customs act, 1962. 7. on a bare reading of the section 45 (2) (b), there is no restriction on the appellants not to sublet the premises. the only restriction is that the appellants shall not permit the goods to be removed from the customs area without the permission of the proper officer. there is no allegation against the appellants that they have removed the goods without the permission of the proper officer. therefore, they have not violated the provisions of section 45 (2) (b) as alleged in the impugned order. there is no finding on violation of the handling of cargo in customs area regulations, 2009. while passing the stay order, this tribunal has already examined the impugned order and, thereafter, this tribunal has arrived at a decision that the adjudicating commissioner has not specified the provisions of the act which the appellant has contravened. i do agree with this observation of the tribunal. therefore, when there is no specific contravention of the act which has been violated by the appellant, in that view, penalty under section 117 of the customs act is not sustainable. in view of these observations, penalty under section 117 of the customs act is set aside and the appeal is allowed. (dictated and pronounced in open court)
Judgment:

1. Vide Stay Order No.527/12 dt. 26.6.12, waiver of predeposit was granted to the appellant. Against the said order, Revenue filed an application for modification of stay order on the ground that, the finding of this Tribunal in the stay order that the adjudicating Commissioner has not specified the provisions of Act which the appellant has contravened, is to be modified as the adjudicating Commissioner in paragraph 13 of his order has clearly mentioned that the appellant has contravened para-16 of CBEC Circular No.128/95-Cus. dt. 14.12.95. Therefore, there is a mistake committed by this Tribunal which is apparent on record. Therefore, the stay order be modified.

2. Heard the learned SDR and considered his submissions.

3. As per Section 117 of the Customs Act, 1962, penalty can be imposed on any person who contravenes any provision of this Act or abets any such contravention or who fails to comply with any provision of this Act. But in the impugned order, the adjudicating Commissioner has not mentioned which provision of the Act has been contravened. He merely mentioned the contravention of a circular. In that view, I do not find any infirmity in the stay order passed by this Tribunal and there is no mistake committed by this Tribunal. Therefore, the application for modification of stay order deserves no merit and hence same is dismissed.

4. The appellants have challenged the impugned order imposing penalty on them under Section 117 of the Customs Act, 1962. The appellants are handling both import and export of the goods as custodian (CFS). It is the allegation against the appellant that in their CFS, they have sublet some of the area to some non-vessel operating cargo carriers. In the area, the container belonging to those carriers were open and goods were cleared to different importers. As they are charging different charges from the importers, therefore they have contravened the Handling of Cargo in Customs Area Regulations, 2009 and also contravened the provisions of Section 45 (2) (b) of the Customs Act, 1962. Hence a show cause notice was issued for subletting space and function in the CFS without permission of the Customs authorities and imposing penalty on the appellant under Section 117 of the Customs Act, 1962. The adjudicating Commissioner adjudicated the matter and has found as under :-

“13. I therefore hold that the permission given to CWC (Virugambakkam) to function as CFS has been misused and they have allowed the aforesaid NVOCCs/Cargo Consolidators to collect storage charges from the Importers/CHAs for whose benefit CFS type of institutions are envisaged, established and operated enhancing their transaction cost by forcing them to suffer hardships and leading them to complain to the customs Department as mentioned above. I also hold that such an arrangement of providing exclusive area inside the CFS premises to aforesaid NVOCCs/Cargo Consolidators without the permission of Commissioner of Customs and M/s.CWC Virugambakkam have contravened the para 16 of CBEC Circular 128/95 CUS dated14.12.95. I therefore hold that M/s.CWC (Virugambakkam) is liable to penal action in terms of Section 117 of the Customs Act, 1962.”

Thereafter, he passed the following order :-

“(i)I direct M/s.CWC Virugambakkam to terminate the agreement entered into by M/s.CWC Virugambakkam with M/s. Macnels Container lines Pvt. Ltd and M/s.Transfer handling and Warehousing Co. earmarking space in their Container Freight Station to these named parties and to stop forthwith all the functions carried out by M/s.Macnels Container lines Pvt. Ltd. and M/s.Transtar handling and Warehousing Co. within the C.F.S of M/s.CWC Virugambakkam.

ii)I impose a penalty of Rs.50,000/- (Rupees Fifty Thousand only) on CWC Virugambakam under Section 117 of the Customs Act, 1962.”

Aggrieved from the said order, the appellant is before me.

5. Heard both sides. Considered their submissions. The main allegation against the appellant is that they have violated the provisions of Section 45 2(b) of the Customs Act, which is reproduced hereunder :-

“Section 45. Restrictions on custody and removal of imported goods (1)

(2) The person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force, -

(b)shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer.”

6. It is the contention of the learned SDR that they have violated para-16 of the CBEC Circular No.128/95-Cus. dt. 14.12.95. It is further submitted that the appellants have also violated the provisions of Regulation 6 (l) (q), 6(2) and 6(3) of the Handling of Cargo in Customs Area Regulations, 2009. Therefore, the adjudicating authority has rightly imposed the penalty under Section 117 of the Customs Act, 1962.

7. On a bare reading of the Section 45 (2) (b), there is no restriction on the appellants not to sublet the premises. The only restriction is that the appellants shall not permit the goods to be removed from the Customs area without the permission of the proper officer. There is no allegation against the appellants that they have removed the goods without the permission of the proper officer. Therefore, they have not violated the provisions of Section 45 (2) (b) as alleged in the impugned order. There is no finding on violation of the Handling of Cargo in Customs Area Regulations, 2009. While passing the stay order, this Tribunal has already examined the impugned order and, thereafter, this Tribunal has arrived at a decision that the adjudicating Commissioner has not specified the provisions of the Act which the appellant has contravened. I do agree with this observation of the Tribunal. Therefore, when there is no specific contravention of the Act which has been violated by the appellant, in that view, penalty under Section 117 of the Customs Act is not sustainable. In view of these observations, penalty under Section 117 of the Customs Act is set aside and the appeal is allowed.

(Dictated and pronounced in open court)