Introduction: In a recent case, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Kolkata addressed a penalty imposed on M/s. National Agency Customs House Agent. The penalty, amounting to Rs. 50,00,000, was levied under Section 114(1) of the Customs Act, 1962. The case revolved around the export of Red Sanders Wood, which was mis-declared as Royal Chimney. This article provides a detailed analysis of the case, including its background, key arguments, and the tribunal’s decision.
1. Background of the Case The case began with intelligence reports regarding the export of Red Sanders Wood, which was falsely declared as Royal Chimney. The Directorate of Revenue Intelligence (DRI) detained two containers under export, leading to the discovery of Red Sanders Wood concealed as different-sized and -diameter Red Coloured Logs. These logs, weighing 5050 kg, were initially documented as Royal Chimney and transported under ARE-1 No. 12/AEGW/2012-13.
2. Involvement of Middlemen The exporting firm’s director, Abhishek Jhunjhunwala, revealed that they had never met the overseas buyer personally. Instead, they were in contact with a middleman named Sanjay Singh, who organized various aspects of the export, including services provided by the Steamer Agent, Freight Forwarder, and Customs House Agent (CHA). Even the modality of payment and the transfer of the original Bill of Lading (B/L) were coordinated through Sanjay Singh.
3. The Role of National Agency (CHA) National Agency, a Customs House Agent (CHA), claimed that they received the clearing job from Dharmendra Rai, an employee of AGS World Transport (I) Pvt. Ltd., a Freight Forwarder. They stated that they had obtained the export documents for filing the shipping bill from the exporter and were in contact with the exporter and Sanjay Singh, the middleman. National Agency admitted to initially filing a shipping bill for 1050 boxes of Glass Chimneys but later amending it to 700 boxes based on the exporter’s instructions.
4. The Complexities of the Case The case involved multiple middlemen, changes in shipping bills, and communication via emails and telephone calls. There were discrepancies in the shipment’s timeline, raising questions about the diligence of the CHA and others involved in the export process.
5. Tribunal’s Decision CESTAT Kolkata considered the case in detail. While there was no clear evidence of express and active collusion by National Agency, the tribunal noted various acts of omissions and commissions by the CHA. In light of these findings, the tribunal reduced the penalty imposed on National Agency to Rs. 50,000 under Section 114(1) of the Customs Act, 1962.
6. Conclusion: The case of M/s. National Agency Customs House Agent vs. Commissioner of Customs (Port) before CESTAT Kolkata underscores the complexities and responsibilities involved in customs clearance processes. While there was no direct collusion proven, the tribunal recognized the CHA’s negligence and carelessness, leading to the reduction of the penalty. This case serves as a reminder of the importance of due diligence and compliance in international trade and customs procedures.
This detailed analysis of the CESTAT Kolkata’s decision in the case of M/s. National Agency vs. Commissioner of Customs (Port) explores the background, complexities, and outcome of the penalty imposed on a Customs House Agent in an export case involving Red Sanders Wood. It highlights the significance of diligence and adherence to customs regulations in international trade.
FULL TEXT OF THE CESTAT KOLKATA ORDER
1. The present appeal is filed by M/s. National Agency Customs House Agent, assailing the Order in Original No. KOL/CUS/PORT/29/2014 dated 31.03.2014 imposing a penal-ty of Rs. 50,00,000/- (Fifty lakh) on the appellants under Section 114(1) of the Customs Act 19621.
2. Based on intelligence regarding export of Red Sanders Wood mis-declared as Royal Chimney by one M/s Ashoke Enamel and Glass Works Pvt. Ltd. Kolkata the DRI detained two containers under export, vide shipping bill No. 1760925 dated 14.09.2012. The said containers upon examination in the presence of representatives of the exporters/CHA/Freight forwarder and others were found to contain Red Coloured Logs of different sizes and diameters. These were found to be in actuality “Red Sanders Wood” weighing 5050 kg. The said containers were transported under ARE-1 No. 12/AEGW/2012-13 dated 14.09.2012 issued by Superintendent of Central Excise Range J, Howrah North Division II, Kolkata – II and declared as Royal Chimney. At the time of examination, the Customs seals were found to be entact. The Director of the exporting firm, Abhishek Jhunjhunwala in-formed the authorities that they had never personally met the overseas buyer and were in contact through a middleman Sanjay Singh and that services of Steamer Agent, Freight Forwarder CHA, trans-porter etc. were all organized and engaged by Sanjay Singh. Even the modality of payment and handing over of the original B/L were organized through Sanjay Singh. Even the container as well as the bottle seal was also organized by Sanjay Singh. The Director of the exporting firm admits that while the goods moved out of their works under ARE-1 on 14.09.2012, they were in receipt of an e-mail dated 15.09.2012 from Sanjay Singh to hold back the shipment and accordingly he advised the concerned on 15.09.2012 to hold the cargo and to act according to further instructions from Sanjay Singh.
3. The proprietor of National Agency Subir Kumar Roychowdhury however has stated that they had received the clearing job from one Dharmendra Rai, an employee of AGS World Transport (I) Pvt. Ltd., Freight Forwarder and that he had got the export documents for filing of the shipping bill from the exporter. That they were in contact with the exporter, by way of a telephonic call besides Sanjay Singh, whose telephone number was provided to them by Dharmendra Rai, employee of the freight forwarder. Sanjay Singh also introduced them to one S. Mukherjee said to be the employee of the exporting firm who in turn handed over the required documents for purpose of export and the Authorization Letter in their name. The appellant claims that they had never met Sanjay Singh, nor knew of his address/antecedents. The proprietor of the CHA firm, also stated that though initially they had filed the shipping bill for 1050 boxes at the rate of 24 pieces per box of Glass Chimneys but later on as advised by the exporter that only 700 boxes could be loaded, the invoice and packing list were changed and a fresh shipping bill was filed. They admit that they were not aware of the name, address, phone number, driving license number of the driver of the truck concerned and as also they were neither present at the time of the stuffing of the container nor of any particulars of the truck used for carting of the said container.
4. The learned Counsel for the appellant pleads that as a CHA they have been carrying on the business relating to import and export at any Customs Station and were led into the clearance of the said consignment of Royal Chimneys with enquiries and discussions emanating with the freight forwarder and that they obtained the requisite documents for export from one Lattu Babu an employee of Ashoke Enamel and Glass Works Pvt. Ltd. It is their case, that being satisfied with the antecedents of the said company, they in due discharge of their obligation under Regulation 13 of Customs House Agent Licensing Regulations, 20042, had advised the exporter to comply with the provision of the Customs Act, 1962. Thereafter they prepared the Shipping Bill pertaining to 1050 boxes of Glass Chimney, in the name of the said exporter and the shipping bill number was generated in the EDI system on 13.09.2012. However, on 14.09.2012 Lattu Babu supplied another set of documents and instructed their Supervisor over the telephone to prepare the shipping bill for 700 boxes of Glass Chimney instead of 1050 boxes whereupon a fresh Shipping Bill was generated with a new shipping bill number. Subsequently, they received an e-mail from the container agent Orient Overseas Container Line (again said to be engaged by the exporter) for the carting order for entry of the container/cargo in the docks. This was valid up to 19.09.2012, however, it is their contention that on 15.09.2012, an email was received from said Sanjay Singh, to put the cargo on hold and await further instructions. Later on 18.09.2012 through an employee of AGS World Wide Transport Pvt. Ltd. – Dhar-mendrs Rai, they were informed of the arrival of the cargo at the docks gate, requesting them to make necessary arrangements for the entry of the said vehicle in the docks.
5. As for the handing over of the blank signed and sealed requisition permit form to the driver, it was done through Sajal Sardar the employee of the CHA who met the driver of the vehicle driver after contacting him over the mobile number and handed the said blank documents only after checking the vehicle number, container number and seal number put on the container from the ARE-1. It was also ascertained by the said Sajal Sardar that the cargo containing the said consignment was dispatched from the factory premises of the exporter on 14.09.2012 only. There thus re-mains unexplained time lag in the shipment of the cargo, in its arrival at the port premises, which should have caused concern to the CHA.
6. Thereafter, the driver of the vehicle submitted the said form duly filled in alongwith all other papers like driving licence etc., other statutory documents pertaining to the vehicle with the permit section of the port authorities, for verification and issuance of DDM permit. The port authorities post verification of all statutory documents and being satisfied for it being in order issued the DDM permission/permit. Unless proper verification of the statutory documents pertaining to the vehicle, the driver and other details thereof are made, the port authorities do not issue the DDM permit, nor allow the driver or the vehicle driven by him to enter into the dock.
7. Further, it is not only the appellant, but it has also been admitted by their key personnel like Uttam Roy (Supervisor of National Agency), that he did not know of any responsible person of the exporting firm and that their CHA firm was never engaged by the said exporter earlier. However, they did not take any steps to verify the genuineness of the exporting firm by visiting the office premises or even talking to any responsible person.
8. Further, being a CHA it is all the more prime responsibility of the appel-lant that they ensure that the said middlemen had introduced them to the rightful person and not mere-ly shoot in dark for certain business interests. The appellant cannot however escape of their re-sponsibility and the special burden cast on them as a CHA, besides being certainly guilty of carelessness, negligence and omissions and commissions that have facilitated the entry of the offending goods (red sander wood logs) into the port area, for purpose of export to a third country.
9. In view of the aforesaid, and our findings supra. We are of the view that the appellant has rendered himself liable to penal consequences. As the Show Cause Notice fails to bring to fore any express and active collusion in the attempted exports of Red Sander Wood logs on the part of the appellants and but for our findings supra, noting the various acts of omissions and commissions on the part of the appellants, we are of the view that imposition of a penalty of Rs. 50,000/- under Section 114(i) of the Customs Act, 1962 would meet the ends of justice.
10. The appeal filed is disposed off in the aforesaid terms.
(Pronounced in the open court on 01.09.2023…..)
1. The Act.
2. The Regulations