2019 (7) TMI 1059 - AT - Customs

Significant Penalty Reduction for Shipping Company in Smuggling Case

The Tribunal reduced penalties imposed on a shipping company, M/s Perma Shipping Line (I) Pvt. Ltd., for its role in a smuggling case involving Red ... Smuggling - illegal export of Red Sanders - absolute confiscation - imposition of penalties - HELD THAT:- In the present case, while imposing penalty on the Appellants more or less similar role of the Appellants has been recorded by the adjudicating authority in the impugned order. In these circumstances following the aforesaid observation of the Tribunal and considering that the present Appellants are situated at the same plane, the penalty on M/s Perma Shipping Line India Pvt Ltd is reduced from ₹ 130.00 lakh to 1.00 lakh and penalty on the director of the company is set aside. Appeal disposed off. Issues:1. Smuggling of Red Sanders under the guise of machinery parts.2. Confiscation of Red Sanders and penalties imposed on involved parties.3. Role and liability of shipping companies in smuggling cases.4. Application of Section 114A of the Customs Act for penalties.5. Comparison with a similar case involving a freight forwarder.Analysis:1. The case involved the smuggling attempt of Red Sanders disguised as machinery parts under a shipping bill filed by M/s. Marvelous Engineers Pvt Ltd. The Customs department initiated an investigation leading to the confiscation of 7.7 metric tonnes of Red Sanders valued at &8377; 62.00 lakhs. Penalties were proposed and imposed on various individuals, including the present Appellant, by the Commissioner of Customs (Export), Nhava Sheva, resulting in the filing of appeals against the order-in-original.2. The Appellant, M/s Perma Shipping Line (I) Pvt. Ltd., argued that they only provided containers on lease to other companies involved in the smuggling attempt and were not actively participating in the illegal export of Red Sanders. They contended that the penalty imposed on them under Section 114A of the Customs Act was unwarranted and disproportionate. Referring to a previous judgment involving a freight forwarder, they sought a reduction in the penalty based on the principle of proportionality.3. The Tribunal analyzed a similar case involving a freight forwarder, M/s. Sungrace Logistics Pvt. Ltd., and its Director, where penalties were reduced due to their negligence and lack of vigilance in verifying the authenticity of export transactions. The Tribunal acknowledged the omission on their part but noted the absence of active involvement in the smuggling activity. Consequently, the penalties were reduced significantly, considering the gravity of the offense committed and the circumstances of the case.4. In the present case, the Tribunal found similarities in the roles of the Appellants and the freight forwarder in the previous case. Following the principle of proportionality and considering the lack of deliberate involvement in the smuggling activity, the penalty on M/s Perma Shipping Line (I) Pvt. Ltd. was reduced from &8377; 130.00 lakhs to &8377; 1.00 lakh. The penalty on the director of the company was set aside, aligning with the previous judgment's approach towards penalties in smuggling cases involving shipping companies.5. The Tribunal's decision emphasized the need for penalties to be commensurate with the gravity of the offense committed, taking into account the level of involvement and negligence of the parties. By reducing the penalties based on the principle of proportionality and lack of active participation in the smuggling activity, the Tribunal ensured a fair and balanced approach in penalizing entities involved in illegal export attempts.