CESTAT Chennai: Penalties for Smuggling Upheld

The Appellate Tribunal CESTAT CHENNAI found M/s. Chandra Container Freight Station & Terminal Operators Pvt. Ltd. and Shri M.B. Satyam, Asst. General Manager of CFS, liable for penalties due to smuggling of restricted goods. The Tribunal directed them to deposit specified amounts within six weeks, with the balance of penalties to be waived upon compliance. Recovery was stayed pending appeals.

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Issues involved:
Penalty waiver applications for CFS and its Asst. General Manager due to smuggling of restricted goods declared as something else.

Analysis:
The judgment by Appellate Tribunal CESTAT CHENNAI involved two penalty waiver applications arising from a common order. The applicants, M/s. Chandra Container Freight Station & Terminal Operators Pvt. Ltd. (CFS) and Shri M.B. Satyam, Asst. General Manager of CFS, sought the waiver of penalties of Rs.25 lakhs and Rs.10 lakhs, respectively, imposed on them. The Customs authorities had discovered 423.7 MTs of Muriate of Potash - Potassium Chloride, a restricted item for export, being smuggled out of India under the guise of "industrial salt" and seized the goods at the CFS premises.

The advocate for the applicants argued that the CFS had no knowledge of the smuggled goods and that the Asst. General Manager received the goods in good faith with accompanying documents such as lorry receipts and invoices. He mentioned that the shipping bill was the only missing document, which was promised to be submitted later. The Asst. General Manager, in his statement, acknowledged this situation. On the contrary, the Revenue's representative contended that the goods were stored at the CFS without shipping bills between July 20th to 24th, 2009, emphasizing the continuous receipt of goods without proper documentation. The exporter attempting to export the goods was untraceable.

The Tribunal noted that the CFS received the goods without the required shipping bills, with clear admission from the CFS and its employee. Referring to Section 114(i) of the Customs Act, 1962, which pertains to penalties for attempting to illegally export goods, the Tribunal found the goods liable for confiscation due to the violation of rules. Consequently, the Tribunal directed M/s. Chandra CFS and Terminal Operators Pvt. Ltd. and Shri M.B. Satyam, AGM, to deposit Rs.5,00,000 and Rs.2,00,000, respectively, within six weeks. Upon compliance, the balance of the penalties would be waived, and recovery stayed pending the appeals. The judgment was dictated and pronounced in open court by the Tribunal.

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