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July 31, 2021

For mere small difference in time No Penalty shall be imposed without evidence

by Mahesh Mara in GST, Legal Court Judgement

For mere small difference in time No Penalty shall be imposed without evidence

Fact and Issue of the case

Brief facts are that M/s. Air India Ltd., was granted custodianship permission for export of cargo. As a custodian, they are bound to comply with the provisions of Customs Act, 1962 and allied Rules and Regulations being issued from time to time. As per the handling of Cargo in Customs Area Regulations, 2009 [hereinafter referred to as ‘HCCAR, 2009’], the custodian is duty bound to be diligent in discharging their duties under the prevailing Customs laws and HCCAR, 2009. During surprise check conducted by officers of the department at the export shed on 01.08.2019, some shipping bills were picked up randomly and the movement of the goods was closely followed in respect of these shipping bills. It was observed that in case of Shipping Bill No.5981482, dated 01.08.2019, the ‘Let Export Order’ [LEO] was given by Customs at 17:27 hrs. However, cargo was allowed for scanning by the appellants at 16:45 hrs itself as seen from the register maintained by them. Thus, the appellants had allowed the cargo to move into the sterile area without checking the status of Customs clearance i.e., without checking whether LEO was given or not. It is also noticed by the department that similar process of flow of goods was made in respect of few other shipping bills on 01.08.2019. There were some shortcomings in the function of the appellants as custodian, earlier in few cases of smuggling which led to seizure of ‘Star Tortoises’ on 07.11.2018 and seizure of ‘Red Sanders’ on 29.07.2019.

Again, the cargo service provider having custody of imported or exported goods in Customs area, has to provide security and there should be control to prohibit unauthorised access into the premises. It was observed by the officers during the visit that security personnel are not properly verifying the ID cards of the persons entering into the Customs area so as to prevent unauthorised persons from entering into the premises. Further, the list of authorised persons, who have been issued ID cards have not been furnished to the Customs by the appellant. There were several instances where ‘Yellow ID cards’ issued by the Custodian have been forged and misused. Besides this, the list of persons, whose ID cards have been revoked, was not furnished to the Customs by the appellants. Show-cause notice was issued alleging violations of Rules 5 and 6 of HCCAR, 2009 regulations and proposing to revoke the appointment as custodian and proposing to impose penalty. After due process of law, the original authority imposed penalty of Rs.50,000/-on the appellant under Regulations 12(8) of HCCAR,2009. However, the appointment as custodian of cargo was not revoked. Aggrieved by the penalty imposed, the appellants are now before the Tribunal.

Observation of the Tribunal

On perusal of records and hearing the submissions made by both sides, it is seen that allegations made against the appellants that shortcomings as a custodian lead to smuggling of ‘Star Tortoises’ on 07.11.2018 is without any basis. There is no evidence to show that the appellants have in any connection to such seizure of ‘Star Tortoises’. A show-cause notice was issued to the appellants with regard to seizure of ‘Red Sanders’ on 29.07.2019. The adjudication proceedings on such seizure have culminated in imposition of penalty on the appellants. The said order of the adjudicating authority was challenged by the appellants before Commissioner (Appeals), who vide order dated 07.12.2020 set aside the penalty observing that there were no shortcomings on the part of the appellants.

The allegations in show-cause notice now narrows down to the Shipping Bill No.5981482, dated 01.08.2019, wherein the LEO was given by Customs at 17:27 hrs. It is the case of the department that the appellants allowed the cargo for scanning at 16:45 hrs much before sanction of LEO. On perusal of the X-Ray Register, it is seen that though the cargo had reached for scanning at 16:45 hrs, the same was detained without conducting the X-Ray scan. It was again scanned only at 17:27 hrs, after the sanction of LEO. The department does not allege that the appellant has done the same with any wrongful intention. There is no allegation with regard to the goods exported under the shipping bill. Therefore, the small time difference which is a shortcoming indeed made by the Government of India carrier, in my view, is a condonable lapse. During visit, the officers subjected various shipping bills for scrutiny, the time difference has been noticed only with regard to this one shipping bill.

The second allegation is that appellants have violated Regulation 5(n), by allowing unauthorised persons to enter into the area. Though, it is stated in the show-cause notice that the appellants have allowed unauthorised persons to access the premises, there is no evidence to support the same. The details of such unauthorised persons seen in the premises are not furnished by department. The allegation without support of any evidence cannot sustain.

From the discussions made above, Tribunal is of the view that the penalty imposed upon the appellants cannot sustain and is not warranted. The impugned order is set aside. The appeal is allowed with consequential reliefs, if any.


The Tribunal ruled in favour of the applicant and allowed the appeal

Read the full order from below


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