2013 (6) TMI 589 - HC - Customs

Court overturns penalty on clearing house agent under Customs Act section 114(i); emphasizes lack of knowledge and inconsistent treatment.

ANCHOR LOGISTICS Versus COMMISSIONER OF CUSTOMS

ANCHOR LOGISTICS Versus COMMISSIONER OF CUSTOMS - 2013 (290) E.L.T. 334 (Guj.) Issues:1. Whether the Tribunal committed an error in confirming the penalty under section 114(i) of the Customs Act without considering certain facts.2. Whether the appellant, a clearing house agent, can be held liable for the export of prohibited Non-Basmati rice without knowledge.3. Discrepancies in judgments between different cases involving similar circumstances.Issue 1:The case involved the confirmation of a penalty under section 114(i) of the Customs Act by the Tribunal without considering that a 'Let Export Order' had been issued by the department after examining the goods. The appellant argued that the penalty was unjust as they had no knowledge of the Non-Basmati rice being exported.Issue 2:The appellant, a clearing house agent, contended that they were unaware of the goods being Non-Basmati rice instead of Basmati rice as declared. The Tribunal in a related case had set aside a penalty on similar grounds, citing lack of evidence of the agent's awareness. The appellant's defense was that they acted in good faith and could not be held liable for the exporter's mistake.Issue 3:Discrepancies arose as the Tribunal granted benefit in a similar case involving identical circumstances but affirmed the penalty in this case. The appellant argued that no evidence supported the assumption of connivance between them and the exporter or CFS, and that the responsibility was wrongly shifted to them. The appellant's lack of knowledge and absence of mens rea in exporting prohibited rice were emphasized, with the judgment highlighting inconsistencies in treating similar cases differently.In a detailed analysis, the judgment scrutinized the appellant's role as a clearing house agent, emphasizing their lack of knowledge regarding the nature of the exported goods. The Tribunal's decision to impose a penalty was overturned based on the absence of evidence proving the appellant's awareness or abetment in exporting Non-Basmati rice. The judgment underscored the importance of mens rea in imposing penalties under the Customs Act and criticized the presumption-based approach taken by the Commissioner and CESTAT. The discrepancies in judgments between cases with parallel circumstances were highlighted, with the court ultimately setting aside the penalty against the appellant, ruling in their favor, and ordering each party to bear their own costs.