Misdeclaration of goods and attempt to export such goods is punishable under Section 114 of the Customs Act: Madras HC

Misdeclaration of goods and attempt to export such goods is punishable under Section 114 of the Customs Act: Madras HC Raised Penalty is justified on Customs House Agent for misdeclaration of goods and attempt to export such goods: Madras HC Shri Rama Thenna Thayalan  V/S  The Customs Excise and Service Tax   C.M.A.(MD)Nos.916 and 917 of 2014 

Issue  

Civil Miscellaneous Appeals filed under Section 35G of the Central Excise Act, 1944, against the final order dated 24.01.2014, respectively, passed by the Customs Excise and Service Tax Appellate Tribunal, South Zonal Branch, Chennai.  

Facts  

• On 09.07.2008 the specific intelligence gathered by the Directorate of Revenue Intelligence [D.R.I.] that red sanders logs were smuggled out of India in a container bearing No.VMLU 3200873 covered under Shipping Bill No.1955099, along with Annexure - A signed by the appellant herein. 
• The said container was immediately recalled. However, the container, which had already sailed to Malaysia on 14.07.2008, was examined and found containing Red Sanders and therefore, sent back to Tuticorin. The same reached Tuticorin Port on 10.08.2008. 
• The enquiry conducted revealed the fact that shipping bill was prepared in Custom House by one R. Sivaraman of M/s. Vishal Enterprises, revealed that the Customs House Agents Licence of M/s. Vector Freight Forwarders was used by them for preparing the shipping bills and the container was stuffed with red sanders mis-declaring it as Coco Peat at the instance of one J. Francis Kumar, Marketing Executive of M/s. Sai Freight Private Limited, Tuticorin. 
• The further investigation revealed that the shipping bill prepared by him on obtaining the signature of Customs House Agent [CHA] through Shri G. Ravi of M/s. Vector Freight Forwarders (the appellant). 
• After enquiry, penalty of Rs.10,00,000/- was imposed on the appellant under Section 114(i) of the Customs Act, 1962, vide order dated 30.08.2010. Aggrieved by the order passed by the Additional Commissioner, Custom House, Tuticorin, the appellant herein preferred statutory appeal before the Commissioner, Customs and Central Excise wherein the penalty of Rs.10,00,000/- was reduced to Rs.3,00,000/-, by order dated 28.02.2011. 
• The appellant preferred further appeal before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Branch, Chennai [CESTAT] against the imposition of penalty under Section 114(i) of the Customs Act. Being aggrieved by the order the respondent also filed appeal. 
• These two appeals along with the appeals filed by the other persons were taken up for consideration by the CESTAT and an order was passed on 24.01.2014 holding that the penalty of Rs.3,00,000/- imposed on the appellant is very low and it is liable to enhanced to Rs.5,00,000/-. Thus, the appeal filed by the Revenue was partially allowed and the appeal filed by the appellant was rejected.  
• Being aggrieved by the said order, the present appeals are filed by the appellant. 

Findings  

The appellant had not discharged these obligations, which cast on him. It is a case where under the guise of Coco Peats, prohibited goods namely, Red Sanders weighing 10.760 MTs. has been transported. The DRI based on the intelligence gathered, had rescued the goods and found the Cargo was transported based on the Annexure – A containing the signature of the appellant Customs House Agent. Customs House Agent is governed by the Regulations framed by the Government in exercise of the powers conferred under the Customs Act, 1962. Therefore, misdeclaration of goods and attempt to export such goods is punishable under Section 114 of the Customs Act. A Customs House Agent, who is a party to the mis-declaration, is liable to pay penalty not exceeding three times of the value of the goods mis-declared. The first respondent Tribunal is empowered to enhance the penalty imposed, if the penalty imposed is not adequate. Further, the provisions under the Regulations to punish the Customs House Agent for violation and contravention of the Regulations is in addition to the penal provisions prescribed under the parent act, namely, the Customs Act. It is incorrect to say that the Customs House Agent is liable only under the Regulations for any violation and contravention. The licence issued to the Customs House Agent under conditions not to commit any grave offence. If action under the Regulations not sufficient for the grave offence, the Customs House Agent is liable also to be proceeded under the Customs Act. There is no legal impediment to proceed against the Customs House Agent under the Customs Act besides action under the Regulations. 

Judgement  

Therefore, this Court held that there can be no excessive exercise of power in imposing penalty of Rs.5,00,000/-. Hence, this Court holds that the appeals challenging the order of CESTAT deserves to be dismissed.  To Read Judgment Download PDF Given Below :