2024 (11) TMI 1521 - AT - Customs

Penalties under s.114(i) and (iii) set aside for couriers relying on consignor 'said to contain' declarations and Reg.6(2)(b).

Sachin Awari, Fedex Express Transportation and Supply Chain Services (India) Private Limited, Sushil Baraskar Versus Principal Commissioner of Customs, Mumbai.

CESTAT NEW DELHI held that penalties under s.114(i) and (iii) of the Customs Act imposed on the courier appellants were not sustainable and allowed the ... Imposition of penalty on the appellants u/s 114 (i) and (iii) of the Customs Act, 1962 - antiques prohibited for export under Antiquities and Art Treasures Act, 1972 - shipping bill was filed by the appellant M/s Fedex Express Transportation and Supply Chain Services (India) Private Limited, in a casual manner without insisting for proper scrutiny/justification, for ensuring that the export goods are not prohibited / restricted for export - HELD THAT:- It is a fact on record, that the appellants-courier receive the shipments for export on ‘said to contain’ basis. Further, they had categorically specify as a part of the conditions of carriage of the goods from the consignor, that the items which are prohibited shall not be carried and in respect of goods which require any special license or permit, the shipper/exporter should indicate the same and it would be their responsibility for proper compliance with such requirements. Further, Regulation 6(2)(b) ibid specifically provide that no person shall open any package which have been received for export in customs area without obtaining permission of the Customs officer. Under these circumstances, it is found that there was no possibility for the appellants to have acted in any manner so as to export any prohibited goods. The facts of the case also provide in detail the sequence of events leading to consignor booking the consignment with the appellant-courier. From the factual matrix of the case, there are no evidence or document to show that the appellants are involved in such illegal export. Further, the authorities below have also failed to place on record any such evidence to show that the appellants have committed an act or omitted to do any act, which would render them liable to penalty under Section 114 ibid. Therefore, the impugned order imposing penalties on the appellants does not stand the scrutiny of law. It is found that in similar set of facts, arising in the case of Bombino Express Private Limited Vs. Commissioner of Customs, Airport, Mumbai [2017 (3) TMI 447 - CESTAT MUMBAI], the Coordinate Bench of the Tribunal in Final Order No. A/85862/2017-WZB/SMB dated 14.10.2016, have held that it is normal practice to rely upon document furnished by the consignors and the ingredients for imposition of penalty are absent. It is found that the disputed issue in the present case have been already dealt in by the Tribunal in the case of TNT India Pvt. Ltd. Vs. Commissioner of Customs, New Delhi [2017 (10) TMI 1427 - CESTAT NEW DELHI]. In this case, the tribunal have held that the courier company has a very limited role, as they rely on declaration of consignor for preparation of shipping bill and the department had not proved any prior knowledge to invoke penal provision on the appellants. There are no merits in the impugned order dated 31.03.2022 passed by the learned Commissioner (Appeals), to the extent it had imposed penalties on the appellants - appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether imposition of penalty under Section 114(i) and (iii) of the Customs Act, 1962 on an authorised courier is sustainable where the courier processed export consignments on the basis of consignor declarations and did not open packages without prior permission of the proper officer. 2. Whether the ingredients for invocation of Section 114 - (a) that the goods are liable to confiscation and (b) that the person charged did or omitted an act which would render the goods liable to confiscation - are established against an authorised courier who receives shipments on 'said to contain' basis and whose regulatory duties are circumscribed by the Courier Regulations. 3. The legal effect of Regulation 6 (and related provisions) of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 on the duty and liability of an authorised courier in relation to inspection, opening of packages and reliance on consignor declarations. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Sustainment of penalty under Section 114 against an authorised courier Legal framework: Section 114 prescribes penalties for acts or omissions rendering goods liable to confiscation, with different scales in clauses (i)-(iii). Regulation 6 of the Courier Regulations prescribes procedures for filing courier export manifest, restrictions on dealing with packages after presentation and mandates that packages not be opened except with permission of the proper officer; Regulation 4(2) (as relied upon) requires a declaration from sender/consignor regarding contents and value. Precedent treatment: The Tribunal followed prior coordinate decisions holding that couriers have a limited role and routinely rely on consignor documents; in similar fact patterns, penalties under Section 114 were found unsustainable where department failed to show prior knowledge or active complicity by the courier. Interpretation and reasoning: The Regulations create a restricted operational role for couriers: they must present goods for inspection and may not open packages without officer permission. The courier's contractual conditions placed responsibility on consignor to disclose prohibited items and obtain necessary permits. Absent evidence that the courier had knowledge of prohibited nature of goods, or that it acted beyond the limited statutory role (for example, by opening packages without permission or falsifying documents), the necessary mens rea/actus reus component for Section 114 is lacking. The Tribunal examined the factual matrix - consignor's declaration, carriage on 'said to contain' basis, no evidence of courier opening packages or collusion - and concluded there was no act/omission by the courier rendering goods liable to confiscation. Ratio vs. Obiter: Ratio - Penalty under Section 114 cannot be imposed on an authorised courier merely because prohibited goods were exported where the courier acted within the procedural confines of the Regulations, relied on consignor declarations, and there is no evidence of prior knowledge or wrongful conduct. Obiter - observations on commercial practice and contractual clauses placing burden on consignors, as explanatory support for the ratio. Conclusion: Penalty under Section 114(i) and (iii) is not sustainable against the authorised courier on the facts where no evidence of prior knowledge, improper opening of packages, or active participation in illegal export was shown. Issue 2 - Whether ingredients for invoking Section 114 are established Legal framework: Twofold requirement to invoke Section 114 - (i) goods must be such that they are liable to confiscation under Section 113 (e.g., prohibited exports like antiquities), and (ii) the person charged must have done or omitted an act which would render the goods liable to confiscation. Precedent treatment: Tribunal decisions cited recognize that the first ingredient (liability of goods to confiscation) may be satisfied by ASI/authority certifying antiquity; however, the second ingredient requires proof of culpable act/omission by the accused, which cannot be presumed solely from the fact of export. Interpretation and reasoning: While ASI certification may establish that certain exported items are antiquities (thus liable to confiscation), the mere presence of confiscable goods in a courier's consignment does not automatically establish the courier's culpability. The statutory and regulatory architecture envisages reliance on consignor's declaration and places procedural bars on courier inspection. Therefore, to impose penalty the department must produce evidence that the courier breached its duties (e.g., opened package without permission, knowingly misdeclared, colluded with shipper, failed to obtain required NOC where regulation imposes such duty). The record lacked any such evidence; adjudicatory findings of casual filing or failure to insist on scrutiny were not supported by proof of actionable omissions under the Act or Regulations. Ratio vs. Obiter: Ratio - Both ingredients must be proven: confiscability of goods alone is insufficient; there must be proof of culpable act/omission by the person sought to be penalised. Obiter - discussion of operational practices of couriers and contractual clauses specifying consignor responsibility. Conclusion: Ingredients for invocation of Section 114 against the courier were not established on the record; penalty therefore could not be sustained. Issue 3 - Effect of Regulation 6 and related courier provisions on courier liability Legal framework: Regulation 6(2)(b) prohibits opening any package meant for export in the customs area except with the permission of the proper officer; Regulation 6(3)-(5) and related provisions set out electronic filing and presentation requirements and enable detention/sale only under specified conditions. Precedent treatment: Tribunal decisions interpret these Regulations as limiting the courier's role to filing and presentation and permitting reliance on consignor declarations; such precedents have held that statutory/regulatory duties do not extend to making couriers guarantors of consignor truthfulness absent evidence of knowledge or active breach. Interpretation and reasoning: The Regulations affirm a procedural framework where the courier acts as carrier/filing agent and not as a customs investigator. The prohibition on opening packages without officer permission reinforces the idea that couriers cannot be held responsible for concealed prohibited items unless they transgress the regulatory limitations or possess prior knowledge. The Tribunal therefore found that regulatory provisions militated against imposition of penalty based solely on exported prohibited goods when the courier followed mandated procedure and relied on consignor declarations. Ratio vs. Obiter: Ratio - Regulation 6 and related provisions constrain courier duties such that liability under Section 114 requires additional proof of breach or knowledge; obiter - commentary on practical implications for courier operations and expectation of consignor responsibility. Conclusion: Regulation 6 and related courier provisions support the conclusion that an authorised courier, acting within the prescribed limited role and without evidence of knowledge or prohibited conduct, cannot be penalised under Section 114 merely because consignments contained confiscable articles. Ancillary points, cross-references and final dispositive conclusion Cross-reference: Issues 1-3 are interrelated - Regulation 6's delineation of courier duties (Issue 3) informs the assessment of whether the second ingredient of Section 114 (Issue 2) is met, which in turn determines sustainment of penalty (Issue 1). Disposition: On the facts - consignor declarations, 'said to contain' handling, statutory prohibition on opening packages without officer permission, absence of evidence of prior knowledge or wrongful acts by the courier - the Tribunal set aside the portion of the impugned order imposing penalties and allowed the appeals insofar as penalties were concerned.