2018 (4) TMI 210 - HC - Customs

CEO's complicity in attempted illegal export of Red Sander Wood Logs upheld.

The court upheld the penalty imposed on the appellant by CESTAT, Chennai, under Section 114 of the Customs Act, 1962, for his involvement in the attempted ... Penalty - illegal export - Whether the appellant can be visited with penalty under section 114 of the Customs Act, 1962, on the stated cause (in the show cause notice) that the illegal export was attempted in the name of M/s. Archana Exports of which the appellant was the CEO? Held that: - as per Section 114 of the Customs Act, 1962, that any person who, in relation to any goods, does not or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, shall be liable to a penalty as detailed therein. It is found that the intelligence had been gathered by the authorities concerned that by mis-declaration, the prohibited goods are being attempted to be exported through Chennai to Malayasia and it was found that they contained the prohibited goods i.e., red sander woods logs instead of the declared goods and thereby, it is found that the Section 113(i) of the Customs Act, 1962 come into operation - the appellant, being the chief executive officer of the company, who had arranged the export and enroute, the prohibited goods are found to be loaded in the place of the declared cargo and attempted to be exported abroad by way of mis-declaration and when it is further noted that the appellant is unable to give the correct particulars of the middle men, who had approached and interacted within as regards the export in question, it is seen that as rightly determined by the authorities concerned, the appellant cannot be declared to be an innocent person, particularly when it is noted that he had acted with the middle men without verifying their credentials etc. The appellant is liable to penal action under section 114 of the Customs Act 1962 - appeal dismissed - decided against appellant. Issues Involved:1. Whether the appellant can be visited with penalty under Section 114 of the Customs Act, 1962, on the stated cause that the illegal export was attempted in the name of M/s. Archana Exports of which the appellant was the CEO.2. Whether it was open to the respondents to invent new grounds when passing order in adjudication and appeal, given that the investigation did not result in finding any involvement of the appellant.Issue-wise Detailed Analysis:1. Penalty under Section 114 of the Customs Act, 1962:The appellant, as the Chief Executive Officer of M/s. Archana Exports, filed a Shipping Bill for the export of 20 MT of Granite Cobble Stones to Malaysia. However, upon inspection, the container was found to contain Red Sander Wood Logs, a prohibited item under the Foreign Trade Policy (2004-2009). The Customs authorities determined that the appellant was complicit in the attempted illegal export. The appellant argued that the replacement of the declared cargo with Red Sander Wood Logs occurred en route and was perpetrated by others. However, the authorities noted that the appellant failed to verify the identities of the middlemen and did not ensure the safe transit of the goods. The court held that the appellant, being the CEO, should have taken all necessary precautions to prevent such illegal activities and was thus liable for penalty under Section 114 of the Customs Act, 1962.2. New Grounds in Adjudication and Appeal:The appellant contended that no overt act was attributed to him in the show cause notice regarding the de-stuffing and re-stuffing of the cargo. However, the court observed that the appellant's interactions with third parties without proper verification and his failure to provide correct details of the middlemen indicated his complicity. The court found that the appellant's actions and omissions rendered the goods liable for confiscation under Section 113 of the Customs Act, 1962, and thus attracted penalty under Section 114. The court also noted that the appellant's voluntary statements and the evidence collected during the investigation supported the findings of the Customs authorities.Conclusion:The court dismissed the civil miscellaneous appeal, upholding the penalty imposed on the appellant by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai. The court concurred with the findings that the appellant was liable for penal action under Section 114 of the Customs Act, 1962, for his role in the attempted illegal export of Red Sander Wood Logs. The substantial questions of law formulated in the appeal were answered against the appellant, and the appeal was dismissed with costs.