2025 (10) TMI 1202 - AT - Customs

Four agents held liable for facilitating illegal removal; mens rea found; goods confiscated under s.111(j) and penalties under s.112(a)

CESTAT held the four appellants liable and rejected all appeals, finding mens rea in their conduct. The custodian/agents admitted receipt, computerized ... Imposition of penalties u/s 112(a) of Customs Act, 1962 on the four appellants - mens rea on the part of all the four appellants or not - removal/clearance of seized imported goods - appellants as the Custodian of the cargo or the Steamer agents or their employees were having the prior knowledge that the goods were offending in nature or not - acts of Appellants are only “Contributory” to the acts of Customs or otherwise - HELD THAT:- It is pertinent to note that the Manager (Operations) of M/s. Indev CFS has admitted to have received the seized goods, entered the same in the computer system of M/s. Indev CFS and also instructed his staff, in writing, not to release the container. This proves that the appellants were well aware that in terms of Section 45(2) (b) of the Customs Act, 1962, seized goods handed over to the Custodian should not be removed from the customs area or otherwise deal without the permission of the proper officer for release of the seized goods, viz. the officer of DRI in this case. Therefore, the LAA is correct in holding that mens rea on the part of all the four appellants. Regarding the submission of the appellants that the goods once confiscated absolutely cannot be re-confiscated for the same alleged violation of EXIM Policy, it is observed that same argument was made in the case of M/s. ORRJay Process [2017 (7) TMI 670 - CESTAT CHENNAI], which has been relied upon by the Revenue on the grounds that the appellant of the above judgement is the person who cleared the impugned goods. There the confiscation was upheld by this Tribunal - The appellants have failed to notice that Section 111(j) of Customs Act, 1962 has been invoked in this case only on account of the offence committed by the appellants, viz. illegal removal of the impugned goods. The argument of the appellant that Section 112(a) of Customs Act, 1962 cannot be invoked against them is contrary to law, as Section 112(a) of Customs Act, 1962 can be invoked not only for evasion of duty but also for doing or omitting to do any other act which act or omission would render imported goods liable to confiscation under section 111 of Customs Act, 1962 or for abetting the doing or omission of such an act. In the case of the appellants, they have rendered the impugned goods liable for confiscation under Section 111(j) of the Customs Act, 1962 as the second consignee could not have illegally removed the goods from M/s Indev CFS without connivance of all the four appellants at various stages starting from amendment of the import manifest to delivery of the impugned goods to the second consignee - The quantum of penalties imposed on the appellants is appropriate as the role played by the appellant firms in illegal removal of the impugned goods is no less than that of the second consignee, viz. M/s. Orrjay Process. All the four appeals are rejected. ISSUES PRESENTED AND CONSIDERED 1. Whether custodians of cargo, steamer agents and their employees who permitted removal/clearance of seized imported goods can be held liable for confiscation under Section 111(j), 111(d) and 111(o) of the Customs Act, 1962 and penalised under Section 112(a) when the goods were in custody after DRI seizure and released without permission of the seizing authority. 2. Whether mens rea (knowledge/connivance) can be attributed to custodians/steamer agents where contemporaneous records (mahazar signatures, internal instructions not to release, manifest amendments, delivery to second consignee) show awareness of seizure and subsequent facilitation of clearance. 3. Whether an earlier order of absolute confiscation under Section 111(d) precludes subsequent adjudication/confiscation under Section 111(j) and imposition of penalty under Section 112(a) on different persons for acts (illegal removal) occurring after the earlier order. 4. Whether Section 112(a) is invocable only for duty evasion or also for acts/omissions or abetment rendering goods liable to confiscation under Section 111. 5. Whether the adjudication initiated in 2005 (and concluded in 2012) was time-barred or otherwise vitiated by delay. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Liability of custodians/steamer agents under Sections 111(j), 111(d), 111(o) and penalty under Section 112(a) Legal framework: Section 111(j) makes liable to confiscation any dutiable or prohibited goods removed or attempted to be removed from a customs area or warehouse without permission of the proper officer. Section 111(d) deals with goods imported in contravention of EXIM Policy; Section 111(o) covers other offences making imported goods liable to confiscation. Section 112(a) penalises those who do or omit acts which render imported goods liable to confiscation or abet such acts. Precedent treatment: The Court relied on earlier Tribunal orders addressing systematic schemes to circumvent EXIM policy and upholding confiscation and penalties where facilitation and connivance are proved. Those decisions were applied to the facts here (followed). Interpretation and reasoning: The Court accepted the adjudicating authority's finding that seized goods were in custodian's charge and release without proper officer's permission violated Section 45(2)(b). The sequence-DRI mahazar, internal custodian instruction not to release, manifest amendment, and ultimate delivery to second consignee-was found to demonstrate active facilitation. Given that removal occurred without the seizing authority's permission, the goods became liable to confiscation under Section 111(j). Where such removal was knowingly facilitated, Section 112(a) applies to custodians/steamer agents who abetted or committed acts rendering goods liable to confiscation. Ratio vs. Obiter: Ratio - custodians and steamer agents who knowingly permit removal of seized goods without the proper officer's permission can be liable to confiscation under Section 111(j) and punished under Section 112(a). Observational/factual points about operational norms (e.g., past practices of pass-out orders) are obiter to the extent they do not alter statutory obligation. Conclusion: Liability of the appellants under Sections 111(j)/111(d)/111(o) and penalty under Section 112(a) was correctly imposed given the proven facilitation of illegal removal without proper officer's permission. Issue 2 - Attribution of mens rea (knowledge and connivance) Legal framework: Criminal/penal liability under Section 112(a) requires act/omission or abetment that renders goods liable for confiscation; mens rea (knowledge/connivance) is a relevant element where deliberate facilitation is alleged. Precedent treatment: Prior Tribunal findings upholding penalties where orchestrated plans and repeated misuse were shown were relied upon (followed to support inference of intent where conduct is contumacious and deceitful). Interpretation and reasoning: The Court placed significance on contemporaneous documentary and testimonial evidence: mahazar signatures by steamer agent/employees, written internal instructions not to release, computer entries acknowledging receipt, manifest amendment and delivery to second consignee. This chain established prior knowledge and active participation. The Court rejected the appellants' contention that release was pursuant to Customs approvals, noting absence of authority to remove seized goods without the seizing authority's permission and absence of legal or regulatory proof that an NOC from DRI was not required. Ratio vs. Obiter: Ratio - where custodians/agents sign mahazars and are instructed not to release but nevertheless participate in manifest amendments and delivery, mens rea/connivance may be inferred and penal liability sustained. Observations about systemic norms (e.g., past practice of pass-out orders) are obiter unless lawfully established. Conclusion: Mens rea and connivance were properly inferred from the admitted facts; appellants' explanations were rejected. Issue 3 - Effect of earlier absolute confiscation on subsequent proceedings Legal framework: Confiscation under Section 111(d) for violation of EXIM Policy pertains to the goods; Section 111(j) addresses removal without permission. Different provisions can apply to different acts/periods related to the same goods. Precedent treatment: The Tribunal's earlier decisions upholding confiscation for EXIM policy violations and separately addressing illegal removal were cited and applied. The Court distinguished the earlier absolute confiscation (under Section 111(d)) from later confiscation/penalty proceedings based on illegal removal (Section 111(j)). Interpretation and reasoning: The Court reasoned that the earlier order of absolute confiscation under Section 111(d) related to the original importer's EXIM policy violation, whereas subsequent proceedings addressed the separate offence of illegal removal by custodians/agents, invoking Section 111(j). Because the latter is premised on an independent act (removal without proper officer's permission) committed after seizure, re-confiscation/penalties for that act are not barred by the earlier absolute confiscation targeting the importer. Ratio vs. Obiter: Ratio - an earlier absolute confiscation under one subsection does not preclude fresh adjudication under another subsection when materially distinct offences (e.g., illegal removal) by different actors are involved. Conclusion: Subsequent confiscation/penalty proceedings against the appellants for illegal removal were not precluded by the earlier absolute confiscation order directed at the original importer. Issue 4 - Scope of Section 112(a): beyond duty evasion Legal framework: Section 112(a) penalises persons who do or omit acts rendering imported goods liable to confiscation or abet such acts; it is not confined to evasion of duty alone. Precedent treatment: The Court applied established statutory interpretation that Section 112(a) extends beyond duty evasion to other acts causing confiscation liability (followed). Interpretation and reasoning: The appellants' argument that Section 112(a) applies only where duty is evaded was rejected. Since the appellants' acts rendered the goods liable to confiscation under Section 111(j) (illegal removal), Section 112(a) is properly attracted whether or not duty was evaded. Ratio vs. Obiter: Ratio - Section 112(a) is applicable where acts/omissions or abetment render goods liable to confiscation under Section 111, irrespective of whether duty evasion occurred. Conclusion: Invocation of Section 112(a) against the appellants was legally correct. Issue 5 - Delay and time-bar in adjudication Legal framework: Time-bar or laches can vitiate proceedings in appropriate circumstances, but delay must be attributed to prosecuting authority or shown to have caused prejudice. Precedent treatment: The Court considered the adjudicating authority's explanation of administrative/time adjustment factors and found no meritorious ground to vitiate proceedings on account of delay. Interpretation and reasoning: The Court noted chronology: O-in-O by Chief Commissioner (2001), DRI communication (2001), disposal unit fax (2002) and show cause notice (2005) leading to adjudication (2012). The Court accepted administrative explanations for timing and found no legal bar or prejudice sufficient to set aside the adjudication. Ratio vs. Obiter: Ratio - unexplained or prejudicial delay may vitiate proceedings; however, administrative delays explained and not demonstrably prejudicial do not bar adjudication. Observations on administrative practice are obiter unless supported by statutory limitation. Conclusion: The delay in adjudication did not render the proceedings time-barred or invalid. Overall Conclusion The Court upheld confiscation under Section 111(j)/111(d)/111(o) as applicable to the illegal removal and EXIM-policy violations and sustained penalties under Section 112(a) against the custodians/steamer agents and employees, finding prior knowledge, connivance and active facilitation; all appeals were rejected.