2023 (11) TMI 622 - AT - Customs

Penalty under Section 114(i) set aside for merchant exporter in Red Sanders smuggling case due to insufficient evidence

CESTAT Ahmedabad set aside penalty u/s 114(i) of Customs Act, 1962 imposed on merchant exporter for alleged smuggling of Red Sanders. Container declared ... Levy of penalty u/s 114 (i) of the Customs Act, 1962 on Merchant Exporter - smuggling of Red Sanders - mis-declaration of exported goods viz. food articles such as wafers, cumins seeds, far far, roasted matti, mamra etc. stuffed in container, which after sailing having recalled by the officers of DRI, contained 387 logs of Red Sanders - prohibited goods or not - HELD THAT:- It is a matter of record that One-time bottle seals of the central excise were affixed after stuffing of container at the ware house/factory of the appellant which has been found untampered upon examination and recovery of wooden logs prima facie appearing to be red sanders. On this backdrop, an apparent case of mis-declaration of exported goods by the appellant is appearing on record. In this regard, it is noticed that jurisdictional central excise officers namely Shri Devendra Singh – Inspector and Smt. DaminiLakhia have signed examination report of the goods stuffed in which para 13 states net weight of the stuffed container as 16610 Kgs and gross weight 16820 kgs; the report also states Bottle seal bearing No. TAS278658 and central excise seal bearing No. 0031757; the officer of Customs namely Chavda A. R. has signed the shipping bills and permitted exports after verification of the shipping bills which also states the aforesaid details. The above-named officers of department were responsible for supervising the stuffing of goods and affixing the seal and verification of the cargo as per the shipping bill, however, they have not been made party to show cause notice nor they have been examined by the adjudicating authority in terms of section 138B of the Act. Similar observation of tempering of seal and substitution of cargo enroute are noticed in the case of NILESH KATIRA AND M/S. MARATHON CORPORATION VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, NAGPUR [2022 (3) TMI 238 - CESTAT MUMBAI] and in the case of MAHESHWARI ROCKS (I) PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [2009 (10) TMI 803 - CESTAT CHENNAI]. It is observed that miscreants looking for bonafide exporters for booking a container to load the red sanders from a regular exporter of low value food items to ensure smooth clearance is not unknown. The documentary evidences viz. stuffing of cargo in form of Annexure/examination report verified and signed by the central excise officers and verification of the shipping bill by the officer of Custom would prevail over the aforesaid oral statements. Consequently, no case of mis-declaration can be said to have been established on the part of appellant. Red Sanders have been found from the same container bearing no. GATU 8007720 and seal bearing no. TAS278658 and Excise Seal No. 0031757 found to be intact, is evidence of occurrence of illegal attempt to export red sanders, however, person who carried out the said act is not identified; particularly, in view of fact that penalty has also been imposed on person called Shailesh from Chennai who is stamped as kingpin in export of red sanders, however, investigation could not trace him. It is also observed that no evidence put forth as regards antecedents of the exporter of irregular exports in the past, nor there is any evidence of appellant’s role in procurement of red sanders; as such there is no evidence of appellant’s connection with such activities - Since the role of the appellant in the illegal attempt to export red sanders is not established with cogent evidence, penalty upon appellant, imposed under section 114(i), is liable to be set aside. Penalty set aside - appeal allowed. Issues Involved:1. Mis-declaration of exported goods.2. Legitimacy of statements recorded under Section 108 of the Customs Act.3. Validity of forest officers' opinion on the seized logs.4. Investigation into the substitution of cargo en route.5. Imposition of penalty under Section 114(i) of the Customs Act.Summary:Issue 1: Mis-declaration of Exported GoodsThe appellant exported goods declared as food items but the container was found to contain 387 logs of red sanders, a prohibited item. The container's one-time bottle seal was found intact upon examination, indicating possible mis-declaration. The central excise and customs officers who verified the stuffing and shipping bills were not made parties to the show cause notice, raising questions about the authenticity of the verification process.Issue 2: Legitimacy of Statements Recorded Under Section 108 of the Customs ActThe appellant's statements admitting to the stuffing of red sanders were retracted, claiming they were obtained under duress and not voluntary. The statements were not examined under Section 138B of the Act, making them irrelevant and unreliable. The Tribunal referenced several judgments to support the inadmissibility of such statements.Issue 3: Validity of Forest Officers' Opinion on the Seized LogsThe forest officers' opinion that the logs were red sanders was challenged due to discrepancies in the sample handling process. The appellant argued that the samples examined were not the same as those seized, casting doubt on the identification of the logs as red sanders.Issue 4: Investigation into the Substitution of Cargo En RouteThe possibility of cargo substitution en route was not investigated. Previous tribunal decisions highlighted instances where cargo was substituted and double bottle seals were used. The Tribunal noted that such possibilities could not be ruled out, especially given the vehicle breakdown en route, which could have facilitated substitution without the exporter's knowledge.Issue 5: Imposition of Penalty Under Section 114(i) of the Customs ActThe Tribunal found that the role of the appellant in the illegal export attempt was not established with cogent evidence. The penalty imposed on the appellant under Section 114(i) was set aside due to the lack of conclusive evidence linking the appellant to the smuggling activities. The Tribunal emphasized the need for concrete evidence to support such penalties.Conclusion:The appeal was allowed, and the penalty imposed on the appellant was set aside. The Tribunal highlighted the importance of thorough investigation and reliable evidence in cases of alleged mis-declaration and smuggling.