CESTAT Chennai: Penalty under Section 114(i) set aside for lending IE code in attempted export case

The Appellate Tribunal CESTAT CHENNAI set aside the penalty imposition of Rs. Four lakhs each under Section 114(i) of the Act on Shri M. Natarajan and another individual for lending an IE code that resulted in the attempted export of prohibited goods. The Tribunal found no evidence of involvement in activities rendering the goods liable to confiscation or abetting such actions. It was concluded that the lending of the IE code was not knowingly done for smuggling, leading to the inapplicability of Section 114 and the successful appeal of the appellants.

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Issues involved: Challenge of penalty imposition u/s 114(i) of the Act for lending IE code leading to attempted export of prohibited goods.

Summary:
The Appellate Tribunal CESTAT CHENNAI heard the challenge against the penalty imposition of Rs. Four lakhs each u/s 114(i) of the Act on Shri M. Natarajan, Partner of M/s. Sri Olima International, Tuticorin, for lending his IE code to Shri C.T.R. Ramasamy of M/s. M.R. Trading Company, resulting in the attempted export of 'Red Sander logs' instead of 'Aluminium Sulphate'. The Tribunal found no evidence to show that the appellants engaged in any act rendering the goods liable to confiscation u/s 113 or abetted such actions. It was determined that the lending of the IE code was not done with the knowledge of its misuse for smuggling red sanders, and the manufacturer of aluminium sulphate was also unaware of the misuse. Consequently, the provisions of Section 114 of the Customs Act were deemed inapplicable, leading to the setting aside of the penalty imposition and allowing the appeals of the two appellants.

(Order dictated and pronounced in the open Court)

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