CESTAT reduces penalty to Rs.1,00,000 for middleman's role in prohibited red sanders export under Section 114(i)

CESTAT Kolkata reduced penalty imposed on appellant under Section 114(i) of Customs Act, 1962 for complicity in attempted export of red sanders, a prohibited good. Tribunal found appellant maintained close business relationship with mastermind, facilitated export clearance, and acted as middleman between operators and exporters for monetary consideration. Despite appellant's claim of being commission agent, evidence showed direct involvement in procuring consignment and handing documents to customs broker. Tribunal upheld penalty but reduced amount to Rs.1,00,000 considering appellant's proportionate role. Appeal allowed in part.

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Issues Involved:
1. Legitimacy of the appellant's role as a commission agent.
2. Appellant's complicity in the attempted export of prohibited goods.
3. Proportionality of the penalty imposed under Section 114(i) of the Customs Act, 1962.

Detailed Analysis:

1. Legitimacy of the Appellant's Role as a Commission Agent:
The appellant claimed to work as a Commission Agent for Customs House Agents (CHA)/Customs Brokers (CB), procuring import-export business for these firms. The appellant argued that his involvement was limited to procuring the order on a commission basis, without any role in the actual export process. However, the adjudication order and subsequent investigation revealed that the appellant had a close business relationship with the mastermind of the smuggling operation, Sujan Sharma. The appellant's testimony indicated that he had facilitated the clearance of the contraband goods by using his credentials and had been in direct contact with Sujan Sharma and other associates. This evidence contradicted the appellant's claim of merely being a commission agent.

2. Appellant's Complicity in the Attempted Export of Prohibited Goods:
The investigation revealed that the appellant was involved in the attempted export of 6560 kgs of red sander wood logs, an endangered species prohibited for export. The appellant had procured the consignment documents and handed them over to the Customs Broker for clearance. The show cause notice highlighted the appellant's role in facilitating the smooth clearance of the contraband goods, his direct contact with Sujan Sharma, and his involvement in processing documents for customs clearance. The adjudicating authority found that the appellant had knowingly associated with the key conspirator and played a significant role in the smuggling activities for monetary consideration. The appellant's admissions and corroborative evidence, such as call data records, established his complicity in the attempted export.

3. Proportionality of the Penalty Imposed Under Section 114(i) of the Customs Act, 1962:
Section 114(i) of the Customs Act, 1962, imposes a penalty on any person who attempts to export goods improperly. The adjudicating authority initially imposed a penalty of Rs.50,00,000 on the appellant. However, the Appellate Tribunal found that while the appellant was rightly subjected to penal proceedings, the penalty imposed was disproportionate to his role and involvement. The Tribunal noted that the appellant's actions, although significant, did not warrant such a high penalty. Consequently, the penalty was reduced to Rs.1,00,000 to meet the ends of justice.

Conclusion:
The Appellate Tribunal upheld the penalty imposed on the appellant under Section 114(i) of the Customs Act, 1962, but reduced the quantum to Rs.1,00,000. The Tribunal found substantial evidence of the appellant's complicity in the attempted export of prohibited goods and rejected the appellant's claim of merely being a commission agent. The judgment emphasizes the importance of proportionality in imposing penalties for customs violations.

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