Evergreen Shippng Agency India Pvt Ltd. Vs Commissioner of Customs (Export) (CESTAT Delhi)
Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Delhi, has set aside penalties totaling Rs. 20 lakhs imposed on Evergreen Shipping Agency India Private Limited, a shipping line, by the Commissioner of Customs. The Tribunal’s ruling underscores that for penalties to be imposed under Sections 114(iii) and 114AA of the Customs Act, 1962, the element of “knowledge and intention” on the part of the penalized entity must be clearly established.
The dispute centered on an alleged fraudulent diversion of export consignments, initially destined for Panama under the government’s Focus Market Scheme (FMS), but ultimately discharged in Jebel Ali, United Arab Emirates. The FMS is designed to support exporters by offsetting higher freight costs to remote markets, thereby encouraging competitive pricing.
Background of the Case
The appellant, M/s Evergreen Shipping Agency, is a shipping line involved in sea freight. The case originated from the export activities of M/s Colour Cottex Pvt Ltd., a manufacturer and exporter of Ready Made Garments. Colour Cottex had entered into contracts to supply garments to buyers in the U.A.E., with goods being exported to Panama, an FMS-designated country. According to Colour Cottex, shipping was handled by Concorde Shipping & Logistics India, as per buyer instructions, with export documents prepared for Panama.
