2017 (3) TMI 1068 - AT - Customs

Tribunal overturns penalties in red sanders smuggling case, citing practical difficulties

The Tribunal set aside the penalties imposed on M/s CONCOR and its employees in a case involving the confiscation of red sanders logs smuggled out of ... Waiver of penalty - Smuggling - export of contraband item - red sanders - absolute confiscation - Held that: - during the course of investigation undertaken by the Customs authorities, nothing has been revealed on record to indicate any part played by the employees of CONCOR in the alleged smuggling of contraband - it has been established that the documents indicating the let export order based on which the container was railed out were fraudulent and fabricated. Consequently, the custodian i.e. CONCOR as well as its employees cannot be faulted for allowing such let export of the container - penalties set aside - appeal disposed off - decided partly in favor of appellant. Issues:1. Confiscation of red sanders logs.2. Imposition of penalties on individuals and M/s CONCOR.3. Alleged involvement of CONCOR in smuggling contraband.4. Verification of Let Export Orders.5. Negligence and liability of CONCOR officials.6. Fabricated documents and fraudulent activities.7. Practical difficulties in verifying documents.8. Decision on penalties and confiscation.Analysis:1. The appeals were against the Order-in-Original confiscating red sanders logs smuggled out of India. The container, detained at Nhava Sheva, was found stuffed with logs, leading to the issuance of a Show Cause Notice and subsequent confiscation under the Customs Act, 1962.2. Penalties were imposed on individuals and M/s CONCOR. The penalties ranged from Rs. 5,000 to Rs. 10,000 on various employees. Appeals were filed against these penalties.3. The main contention was the alleged involvement of CONCOR in smuggling contraband. CONCOR claimed to have exercised due care and control as a custodian, emphasizing that they were unaware of the fabricated documents used in the smuggling operation.4. The issue of verification of Let Export Orders arose. It was revealed that the container was railed out based on fabricated documents showing Let Export Orders that were never issued by Customs.5. The negligence and liability of CONCOR officials were debated. While Customs authorities argued that negligence led to the smuggling, CONCOR maintained that the sheer volume of containers made it impractical to verify each Let Export Order manually.6. The investigation uncovered the use of fabricated documents and fraudulent activities. The Commissioner held that penalties were justified due to negligence in railing out the container based on false documents.7. Practical difficulties in verifying documents were acknowledged. CONCOR argued that the large number of containers booked daily made manual verification challenging, especially when dealing with fraudulent documents.8. The final decision set aside the penalties imposed on CONCOR and its employees. The Tribunal concluded that they could not be faulted for the fraudulent activities and fabricated documents, absolving them of liability in this particular case. The rest of the impugned order remained unchanged.