Case Law Details
Hari Prabhu Vs Commissioner of Customs (CESTAT Chennai)
Brief facts, which are relevant for my consideration, as could be gathered from hearing both sides and from perusal of the Demand-cum-Show Cause Notice dated 21.08.2020, inter alia, are that M/s. Universal Exim, Old No. 204/New No. 231, Ground Floor, Thambu Chetty Street, Mannady, Chennai – 600 001 (IEC No. 0415019303) had imported goods declared as “Stationery Goods” vide Bill-of-Lading dated 02.01.2018; that the said consignment was imported in container bearing number TCNU8248262 at M/s. A.S. Shipping Agencies Private Limited, Container Freight Station, No. 9, Vellalar Street, Vellapanchavadi Numbal Village, Chennai – 600 077; that as on the date of the Demand-cum-Show Cause Notice, the importer had not filed Bill-of-Entry for clearance of the said cargo; that based on specific intelligence, the consignment was taken up for examination wherein it was observed that apart from stationery goods, the consignment also contained cosmetic items of various brands like MAC, HUDA BEAUTY, KYLIE, LAKME, MAYBELLINE, LOREAL, MATRIX, etc., as detailed in the table in ‘Annexure-1’ therein; that the consignment consisted of 108 cartons of stationery goods, 445 cartons of cosmetic items of various brands like LAKME, MAYBELLINE, LOREAL, MATRIX, etc., that were registered with the Customs for the purpose of Intellectual Property Rights (IPR) and 303 cartons of non-IPR infringing cosmetic items bearing various brand names like Chanlanya, Glammiere, Huda Beauty, Kylie, Kryolan, etc.; that the Revenue suspected that there was infringement of Intellectual Property Rights of some of the above brands; that the importer had mis-declared the description of the subject goods as “Stationery Goods” by unauthorizedly importing 445 cartons of cosmetic items, as indicated above, in violation of the Trademark Act, 1999, which prompted the authorities to believe that the above goods appeared to be prohibited under Section 11 of the Customs Act, 1962 read with the Intellectual Property (Imported Goods) Enforcement Rules, 2007 and that consequently, the said goods were liable for confiscation under Sections 111(l) and 111(m) ibid.
4. The Officers of the SIIB, during investigation, summoned various persons and recorded statements under Section 108 ibid. and thereafter, penalties were proposed on various persons including penalties under Section 112(b) and Section 114AA ibid. on the appellant before this forum. The appellant appears to have filed a detailed reply, consequent to which Order-in-Original No. 76671/2020 dated 28.10.2020 came to be passed, whereby the appellant has been fastened only with the proposed penalty under Section 112(b) ibid. of Rs.5,00,000/- (Rupees Five Lakhs only).
In this case findings of the Adjudicating Authority, clearly exonerates this appellant from the penal action under Section 114AA of the Customs Act, 1962, for the reason that there was no material on record to prove that the appellant had submitted the fake gate pass. The above, clubbed with the earlier portion of the order of the Adjudicating Authority that there was no evidence other than the statement of one Shri R. Suresh to suggest the involvement of this appellant in the illegal removal of the subject container, clearly indicates that the appellant has been targeted for no reason whatsoever in this case.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The only short point to be decided in this appeal is: whether the authorities below were justified in levying / confirming penalty on the appellant under Section 112(b) of the Customs Act, 1962?
2. Heard Shri N. Viswanathan, Learned Advocate for the appellant and Shri S. Balakumar, Learned Assistant Commissioner for the Revenue.
3. Brief facts, which are relevant for my consideration, as could be gathered from hearing both sides and from perusal of the Demand-cum-Show Cause Notice dated 21.08.2020, inter alia, are that M/s. Universal Exim, Old No. 204/New No. 231, Ground Floor, Thambu Chetty Street, Mannady, Chennai – 600 001 (IEC No. 0415019303) had imported goods declared as “Stationery Goods” vide Bill-of-Lading dated 02.01.2018; that the said consignment was imported in container bearing number TCNU8248262 at M/s. A.S. Shipping Agencies Private Limited, Container Freight Station, No. 9, Vellalar Street, Vellapanchavadi Numbal Village, Chennai – 600 077; that as on the date of the Demand-cum-Show Cause Notice, the importer had not filed Bill-of-Entry for clearance of the said cargo; that based on specific intelligence, the consignment was taken up for examination wherein it was observed that apart from stationery goods, the consignment also contained cosmetic items of various brands like MAC, HUDA BEAUTY, KYLIE, LAKME, MAYBELLINE, LOREAL, MATRIX, etc., as detailed in the table in ‘Annexure-1’ therein; that the consignment consisted of 108 cartons of stationery goods, 445 cartons of cosmetic items of various brands like LAKME, MAYBELLINE, LOREAL, MATRIX, etc., that were registered with the Customs for the purpose of Intellectual Property Rights (IPR) and 303 cartons of non-IPR infringing cosmetic items bearing various brand names like Chanlanya, Glammiere, Huda Beauty, Kylie, Kryolan, etc.; that the Revenue suspected that there was infringement of Intellectual Property Rights of some of the above brands; that the importer had mis-declared the description of the subject goods as “Stationery Goods” by unauthorizedly importing 445 cartons of cosmetic items, as indicated above, in violation of the Trademark Act, 1999, which prompted the authorities to believe that the above goods appeared to be prohibited under Section 11 of the Customs Act, 1962 read with the Intellectual Property (Imported Goods) Enforcement Rules, 2007 and that consequently, the said goods were liable for confiscation under Sections 111(l) and 111(m) ibid.
4. The Officers of the SIIB, during investigation, summoned various persons and recorded statements under Section 108 ibid. and thereafter, penalties were proposed on various persons including penalties under Section 112(b) and Section 114AA ibid. on the appellant before this forum. The appellant appears to have filed a detailed reply, consequent to which Order-in-Original No. 76671/2020 dated 28.10.2020 came to be passed, whereby the appellant has been fastened only with the proposed penalty under Section 112(b) ibid. of Rs.5,00,000/- (Rupees Five Lakhs only). It is interesting to note the observations of the Adjudicating Authority at paragraph 69 of the Order-in-Original, after considering the statements as well as records, which reads as under:-
II…
69. In view of the above, I find that though the involvement of Shri Hari Prabhu is not proved with solid evidences but from the statement dated 29.10.2018 of Shri R. Suresh, partner of M/s. Sapthagiri Logistics and from the police investigation, I find that Shri M. Hari Prabhu has involvement in the illegal removal of subject container from M/s. A.S. Shipping Agencies Pvt. Ltd. Therefore, Shri M. Hari Prabhu has rendered himself liable to a penalty under Sec. 112(b) of Customs Act, 1962. However, there is no material on record to prove that Shri Hari Prabhu has submitted the said fake gatepass. Hence, penalty under Sec. 114AA of Customs Act, 1962 is not invocable…”
5. The appellant preferred an appeal against the above imposition of penalty under Section 112(b) ibid., which came to be rejected vide impugned Order-in-Appeal Seaport C.Cus. II No. 120/2022 dated 07.03.2022 by the First Appellate Authority and hence, this appeal by the appellant.
6. The crux of the case of the Revenue, as could be understood from the impugned Order-in-Appeal, are that:-
“2. Brief facts of the case are given below:-
2.1 ….
.
.
.
… In August 2018, it came to the notice of SIIB that the goods covered under the abovementioned bill of entry imported by the importer vide container No. TCNU 8248262 has been illegally removed from CFS by producing fake gate pass to the custodian.”
(emphasis in bold added by me, for clarity)
7.1 The findings of the Adjudicating Authority, as extracted above (paragraph 69 of the Order-in-Original), clearly exonerates this appellant from the penal action under Section 114AA of the Customs Act, 1962, for the reason that there was no material on record to prove that the appellant had submitted the fake gate pass. The above, clubbed with the earlier portion of the order of the Adjudicating Authority that there was no evidence other than the statement of one Shri R. Suresh to suggest the involvement of this appellant in the illegal removal of the subject container, clearly indicates that the appellant has been targeted for no reason whatsoever in this case.
7.2 Further, there is no material brought on record as to the role of this appellant, i.e., act or omission, that has led to the confiscation of the prohibited goods and it is a matter of record that no goods were confiscated at all in this case on hand. It is also a matter of record that the subject container was very much in the custody of the SIIB Officers since no Bill-of-Entry was ever filed and hence, the alleged removal from the CFS could only attract act of ‘theft’ under the Indian Penal Code, for which a separate police complaint was lodged and the Revenue has not placed before me the current status of the said complaint. The Revenue has also not placed anything on record as to against whom such complaint has been lodged and if this appellant is one of the accused.
7.3 The Revenue appears to have relied on the statement of Shri R. Suresh, Partner of M/s. Saptagiri Logistics, at whose godown it is alleged that the Container No. TCNU 8248262 reached on 20.08.2018, which was referred by his friend Shri Chandrasekhar for the job of shifting the cargo contained in this trailer to other vehicles and hence, both Shri R. Suresh and Shri Chandrasekhar would be the necessary parties who could have revealed the truth. There is nothing on record other than Shri Chandrasekhar informing Shri R. Suresh that the above job was given to him by the appellant before this forum. Surprisingly, this Chandrasekhar, who is alleged to have been assigned the job, is not a party/co-noticee. It is also a matter of record that in his voluntary statement, said Chandrasekhar has denied having known this appellant. Hence, as far as this appellant is concerned, the statement of Shri Chandrasekhar or even that of Shri R. Suresh is clearly insignificant, also for the reason given by the Adjudicating Authority at paragraph 69 of the Order-in-Original and hence, the penalty levied on this appellant is arbitrary and unsustainable.
8. In view of the above, fastening the penalty under Section 112(b) ibid. against this appellant is only a fallacy, which cannot be sustained at any stretch of imagination. Consequently, the impugned order is required to be set aside, which I do hereby and allow the appeal.
(Order pronounced in the open court on 26.10.2022)
