Bombay High Court
Container Corporation Of India Ltd vs Commissioner Of Customs, Nhava Sheva on 6 December, 2023
Author: G.S. Kulkarni
Bench: G. S. Kulkarni
2023:BHC-OS:14269-DB
cuappl 33496-23@ ial 33531-23.doc
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CUSTOMS APPEAL (L.) NO. 33496 OF 2023
WITH
INTERIM APPLICATION (L.) NO. 33531 OF 2023
Container Corporation of India Ltd. ..Appellant/Applicant
Vs.
Commissioner of Customs, Nhava Sheva ..Respondent
__________
Mr. Sriram Sridharan with Ms. Riya Sinha for Appellant/Applicant.
Mr. Subir Kumar with Ms. Kavita Shukla and Ms. Janhavi Hirlekar for
Respondent.
__________
CORAM : G. S. KULKARNI &
JITENDRA JAIN, JJ.
RESERVED ON : DECEMBER 05, 2023
PRONOUNCED ON : DECEMBER 06, 2023
JUDGMENT (Per G.S. Kulkarni, J.):
1. This appeal under Section 130 of the Customs Act, 1962 (for short,
"Customs Act") is directed against the order dated 11 September, 2023
passed on the appellant's appeal filed before the Customs, Excise &
Service Tax Appellate Authority, Mumbai (for short "the tribunal"), which
has been rejected by the impugned order.
2. The appellant have raised the following questions of law:
"(a) Given that the goods were pilfered, whether, in the facts and
circumstances of the case, Regulation 5(6) of the Handling of Cargo
in Customs Area Regulations, 2009, entitles the Respondent to
recover the value of the lost goods from the Appellant?
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(b) Whether, in the facts and circumstances of the case, penalty
can be imposed on the Appellant under Regulation 12(8) of the
Handling of Cargo in Customs Area Regulations, 2009?
(c) Whether, in the facts and circumstances of the case, penalty
can be imposed on the Appellant under Section 117 of the Customs
Act, 1962?
(d) Whether, in the facts and circumstances of the case, the
impugned order was correct in imposing penalty on the Appellant
under Regulation 12(8) of the HCCAR and Section 117 of the
Customs Act, 1962, simultaneously for the same contravention?"
3. The facts relevant for the adjudication of this appeal are as follows:-
The appellant is a Public Sector Undertaking, having Container
Freight Stations (for short "CFS") at different locations in India. It is
stated to have presence at all the major ports. The present proceedings
concern the appellant's CFS at Dronagiri Rail Terminal, which is close to
the Jawaharlal Nehru Port Trust (for short, "JNPT").
4. It is not in dispute that the appellant's CFS is governed by the
provisions of the Handling of Cargo in Customs Areas Regulations, 2009
(for short, "2009 Regulations"). Under these regulations, the appellant is
recognized as a "Customs Cargo Service Provider" (for short, "CCSP") for
which a licence was issued to the appellant, which was renewed from time
to time. The latest approval of the licence period was notified by Public
Notice No. 134 of 2020 dated 14 October, 2020, for a period of five years
with effect from 15 March, 2020.
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5. Having noted the statutory recognition of the appellant's CFS, we
now proceed to refer to the facts, in relation to which an order on the show
cause notice came to be passed against the appellant by the Commissioner
of Customs, leading to appellant's appeal before the tribunal and the
consequent order passed by the tribunal on the appellant's appeal.
6. A Shipping Bill No. 5807023 dated 05 June, 2013 was filed by an
exporter namely M/s. Krish Exports, Mumbai before the Commissioner of
Customs, JNPT for export of "household articles of stainless steel, SS
Utensils" to Hong Kong, in a factory stuffed container GESU-3997518.
Such container was given "Let Export Order" (LEO) from the appellant's
CFS.
7. A Special Intelligence and Investigation Branch (SIIB) of the
Customs received specific information in regard to smuggling of "Red
Sanders wood logs" stuffed into Container No. GESU-3997518. The said
container was put on hold. Thereafter, the container was opened and a
panchanama was drawn on 14 June, 2013 at the appellant's CFS. It was
revealed that as against the declared goods of 7454 kgs. of stainless steel
household articles mentioned in the said shipping bill, the goods present
in the container were 12695 kgs of 'Red Sanders', which were prohibited
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goods, as the export of Red Sanders was prohibited. Such prohibited
goods attempted to be illegally exported, were seized under the provisions
of the Customs Act and were stored in a sealed container, kept in the
custody of the appellant's CFS under a panchanama dated 14 June, 2013.
8. On 14 August, 2014, a surprise visit was conducted by the customs
officials, at the premises of the appellant, when it was noticed that an
empty container having unique No. XINU 1349960 was placed near
another container, having customs seized goods, bearing an identical/same
unique No. XINU 1349960. It was, thus, found that two containers with
similar unique container number were found to be kept adjacent to each
other in the area for storage of customs seized containers. On a detailed
examination, it was found that the empty container was marked with the
said container number on all four sides of its body. However, on the top
of the empty container and on the CSC plate, which was affixed at the
time of its manufacture, the actual was No. XINU 1106045. It was thus
noticed that the modus operandi was of removing seized 'red sanders' kept
in safe custody in the appellant's CFS, by substituting the container having
seized goods, with another empty container pasted with same unique
container number, similar to the seized goods. The custom officials also
undertook a complete physical inventory of containers and having seized
the goods, that were put on hold by Customs. It was found that the
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container in question containing red sanders No. GESU-3997518 as
handed over to the appellant's CFS for safe custody, vide a panchanama
dated 14 June, 2013 was tampered/ pilfered and the entire red sanders of
12695 Kgs. was found stolen by such modus operandi.
9. In the above circumstances, the department initiated proceedings
inter alia against the appellant as also the exporters. The appellant was
issued a show cause notice dated 16 March, 2020 under Regulation 12(1)
of the 2009 Regulations, setting out in extenso the facts as inter alia noted
by us. On the basis of the investigation and materials which were available
with the department, the show cause notice alleged that a fraudulent
activity was allowed to take place, for clandestine removal of seized red
sanders and that the original seized container along with red sanders was
moved out.
10. The show cause notice issued to the appellant alleged that as per
sub-regulation 6(f), 6(i) and 6(q) of the 2009 Regulations, safe custody
and movement of containers to and from the CFS with proper
authorization was the prime responsibility of the CFS. It was alleged that
there was an apparent violation of sub-regulation 6(1)(a) and (b), as there
appeared to be complete lack of internal control, security system, proper
accounting of containers and supervision on the part of the CFS. It was
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next alleged that there was not only non-compliance of the regulations,
but also there was a violation of Section 45(2) and Section 141 of the
Customs Act. The show cause notice recorded that the value of pilfered
red sanders was determined to be Rs.3500/- per Kg with total value of
goods being ascertained to be Rs.4,44,32,500/-, which was required to be
indemnified by the appellant as per the provisions of Regulations 5(6) of
the 2009 Regulations, which although was demanded by several letters
and reminders of the Department, was not paid. In these circumstances,
the appellant was called upon to show cause as to why the following action
shall not be taken against the appellant in so far as its Dronagiri Rail
Terminal was concerned:-
"11. In view of the above, by their acts of omission and
commission, CFS M/s DRT-CONCOR appears to have violated
provisions of Section 45(2) & Section 141 of the Customs Act,
1962 read with Regulations 6(1) (a), (b), (f), (i) & (q) of the
HCCAR, 2009 and CBEC Notification No. 13/2009 dated
23.04.2009 and thus appeared to have made themselves liable for
penal action under the provisions of Handling of cargo in Customs
Area Regulations, 2009 and Customs Act, 1962.
12. Now, therefore, under regulation 12 of HCCAR, 2009, the
CCSP i.e. CFS M/s. DRT-CONCOR, Dronagiri Rail terminal,
Sector-2, Plot No.33, 34 & 35, Navi Mumbai- 400707 are hereby
called upon to Show Cause to the Commissioner of Customs
(General), Nhava-Sheva through the Assistant Commissioner of
Customs, CCSP Cell, Jawaharlal Nehru Customs House, Nhava
Sheva, Maharashtra, within 30 days of receipt of this Notice as to
why;
(i) The appointment of M/s. DRT-CONCOR CFS as CCSP shall
not be suspended/revoked under regulation 11 of the HCCA
Regulations, 2009 after following the procedure under regulation 12
ibid.
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(ii) The total value of pilfered goods amounting to Rs.
4,44,32,500/- (Rupees Four Crores Forty Four Lakhs Thirty Two
Thousands and Five Hundred only) should not be held as liability
arising under regulation 5(6) of HCCAR, 2009 and why the same
should not be recovered.
(iii) Penalty under Section 158(2)(ii) and Section 117 of the
Customs Act, 1962 should not be imposed upon them.
(iv) Penalty under Regulation 12(8) of the Handling of Cargo in
Customs Areas Regulations, 2009 should not be imposed on them."
(emphasis supplied)
11. By an Order-in-Original dated 18 April, 2023 passed by the
Commissioner of Customs, the show cause notice came to be confirmed in
the following terms:-
" ORDER
40. I, therefore, pass the following Order:
(i) I order to suspend the approval granted vide Public Notice
No.134/2020 dated 14.10.2020 for operation as Customs Cargo
Service Providers (CCSP) to M/s. Container Corporation of India
Limited (CFS CONCOR DRT) under Regulations 11 (1) of the
Handling of Cargo in Customs Area Regulations 2009 with effect
from 01.05.2023 to 15.05.2023 with following conditions:
(a) Existing consignments in the CCSP meant for export may be
allowed.
(b) Import Cargo-live consignments pending for clearance in
the CCSP may be allowed to be cleared.
(c) Import Cargo-for which action under Section 48 initiated
and Auction Notice has been issued, may be allowed.
(ii) I hold that the CFS M/s Container Corporation of India
L imited (CFS CONCOR DRT) is liable to pay an amount of Rs.
4,44,32,500/-(Rupees Four Crores Forty Four Lakhs Thirty Two
Thousands and Five Hundred only) as value of pilferage goods (Red
Sanders logs weighing 12695 kgs in Container no.
GESU3997518) as per Regulation 5 (6) of the Handling of Cargo
in Customs Area Regulations, 2009.
(iii) I impose Penalty of Rs. 50,000/- (Rs. Fifty Thousand only)
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on CFS M/s. Container Corporation of India Limited (CFS
CONCOR DRT) under Regulation 12 (8) of HCCAR 2009.
(iv). I impose Penalty of Rs. 4,00,000/- (Rs. Four Lakhs only) on
CFS M/s Container Corporation of India Limited (CFS CONCOR
DRT) under Section 117 of the Customs Act, 1962.
41. This order is issued without prejudice to any other action
that may be initiated against the noticee or any other person under
the provisions of the Customs Act, 1962 or any other law for the
time being in force in the Republic of India."
(emphasis supplied)
12. The appellant assailed the aforesaid order-in-original before the
tribunal by filing an appeal, which has been dismissed by the tribunal by
the impugned order. It is on such backdrop, the appellant is before us.
Submissions
13. Mr. Sriram Sridharan, learned counsel for the appellant has limited
submissions in assailing the impugned order. He submits that in passing
the impugned orders, there is an apparent overlooking of the purport of
the provisions of Regulation 5(6) of the 2009 Regulations, in as much as,
the provisions of such regulation cannot fasten any liability on the
CFS/appellant, to indemnify the value of the stolen goods. According to
Mr. Sridharan, the liability to indemnify can only be a liability arising on
account of damages caused or suffered on imported or exported goods due
to accident, damage, deterioration, destruction or any other similar
unnatural cause during their receipt, storage, delivery, dispatch or
otherwise handling. It is his submission that a situation where an illegality
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has taken place namely of the goods being pilfered or stolen in the course
of storage would not fall under the provisions of Regulation 5 sub-
regulation (6) of the 2009 Regulations. It is hence submitted that there
was no question of the Commissioner of Customs seeking an
indemnification from the appellant when the appellant's
obligation/function was limited, which was merely storage of the seized
containers. It is hence his submission that the impugned order on such
ground needs to be set aside.
14. Mr. Sridharan's next submission is in regard to the penalty as
imposed on the appellant. It is submitted that the provisions of
Regulation 12(8) were certainly not attracted, as no fault could be
attributed to any actions of the appellant. It is also his submission that
there cannot be a simultaneous penalty under Section 117 of the Customs
Act, as also penalty under Regulation 12(8) of the 2009 Regulations. It is
his contention that thus, the order imposing penalty on the appellant is
also an illegality as reflected from the impugned orders.
15. On the other hand, Mr. Subir Kumar, learned counsel for the
respondent has supported the impugned order. He submits that the facts
of the case are gross in as much as the modus operandi in removal of the
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goods was a serious action on the part of CFS and contrary to the
regulations. It is submitted that the provisions of the Regulations and the
provisions of the Customs Act as referred above stood ex-facie breached by
the appellant's CFS and thus, the show cause notice was appropriately
confirmed by the order-in-original by directing the appellant, to
indemnify the Commissioner by making payment of the amount in
question. He submits that this is a case wherein there was an apparent
breach by the appellant of the provisions of the 2009 Regulations and the
provisions of the Customs Act, hence the indemnification and the penalty
as imposed by the order-in-original and as confirmed by the tribunal, need
no interference. He would hence submit that the appeal deserves to be
dismissed.
Discussion
16. Having heard learned counsel for the parties and having perused
the record, it clearly appears that the following facts are not in dispute.
The Red Sanders were sought to be smuggled under the garb of stainless
steel utensils. Such goods were apprehended by the Customs officials, and
after a valid panchnama being drawn, they were kept in a "sealed
Container" on the premises of the appellant's-CFS. There is also no
dispute in regard to the valuation of the stolen Red Sanders, which were
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valued at Rs.4,44,32,500/-.
17. It is thus quite clear that Red Sanders stored in the container, which
was in the legal custody of the Customs, stored at the appellant's CFS,
were subjected to pilferage/theft at the appellant's premises and
attributable to the appellant's CFS. It is in these circumstances, a show
cause notice came to be issued to the appellant by the Commissioner inter
alia invoking the provisions of Regulation 11, Regulation 5(6) and
Regulation 12(8) read with provisions of Section 158(2)(ii) and Section
117 of the Customs Act. The Order-in-Original confirmed the show cause
notice in imposing liability on the appellant of an amount of
Rs.4,44,32,500/-, being the value of the pilfered goods/Red Sanders-logs,
weighing 12695 kgs. required to be indemnified by the appellant as per
the provisions of Regulation 5(6) of the 2009 Regulations. A penalty of
Rs.50,000/- under Regulation 12(8), and a penalty of Rs.4,00,000/- under
section 117 of the Customs Act was also imposed. The said Order-in-
Original has been confirmed by the Tribunal in appeal.
18. On such backdrop, to appreciate the contentions as urged on behalf
of the appellant on the applicability of Regulation 5(6) of the 2009
Regulations, insofar it requires the appellant to indemnify the
Commissioner of Customs for the loss of goods, as also, qua the provisions
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of Regulation 12(8) insofar as the penalty of Rs.50,000/- is imposed on
the appellant, we note the said regulations, which reads thus:
"Regulation 5. Conditions to be fulfilled by Customs Cargo Service provider -
The Customs Cargo Service provider for custody of imported goods or export
goods and for handling of such goods in a customs area shall fulfill the
following conditions, namely:-
(1) Provide the following to the satisfaction of the [Principal
Commissioner of Customs or Commissioner of Customs, as the case may
be) namely:
(i) Infrastructure, equipment and adequate manpower for loading,
unloading, stacking, handling, stuffing and de-stuffing of containers,
storage, dispatch and delivery of containers and cargo etc.,
including:-
(a) standard pavement for heavy duty equipment for use in
the operational and stacking area;
(b) free of cost or rent fully furnished office accommodation
for Customs, Customs Electronic Data Interchange (EDI) Service
Centre, with required amenities and facilities and residential
accommodation and transportation facilities for customs staff;
(c) premises for user agencies with basic amenities and
facilities;
(d) storage facility, separately for imported, export and
transshipment goods;
(e) gate complex with separate entry and exit;
(f) adequate parking space for vehicles;
(g) boundary wall;
(h) internal service roads;
(i) electronic weigh-bridge and other weighing and
measuring devices;
(j) computerized system for location and accountal of
goods, and processing of documents;
(k) adequate air-conditioned space and power back up,
hardware, networking and other equipment for secure
connectivity with the Customs Automated system; and for
exchange of information between Customs Community partners;
(l) facilities for auction, including by e-auction, for disposal
of uncleared, unclaimed or abandoned cargo;
(m) facilities for installation of scanning equipment;
(n) security and access control to prohibit unauthorized
access into the premises, and
(o) such other facilities as the Commissioner of Customs
may specify having regard to the custody and handling of
imported or export goods in a customs area;
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(ii) safe, secure and spacious premises for loading, unloading,
handling and storing of the cargo for the projected capacity and for
the examination and other operations as may be required in
compliance with any law for the time being in force;
(iii) insurance for an amount equal to the average value of goods
likely to be stored in the customs area based on the projected
capacity, and for an amount as the Commissioner of Customs may
specify having regard to the goods which have already been insured
by the importers or exporters.
(2) Undertake to bear the cost of the Customs officers posted, at
such customs area, on cost recovery basis, by the Commissioner and shall
make payments at such rates and in the manner prescribed, unless
specifically exempted by an order of the Government of India in the
Ministry of Finance;
(3) Execute a bond equal to the average amount of duty involved on
the imported goods and ten per cent of value of export goods likely to be
stored in the customs area during a period of thirty days and furnish a bank
guarantee or cash deposit equivalent to ten per cent of such duty:
Provided that the condition of furnishing of Bank guarantee or cash
deposit shall not be applicable to ports notified under the Major Ports Act,
1962 (38 of 1963) or to the Central Government or State Governments or
their undertakings or to the Customs Cargo Service provider authorised
under Authorised Economic Operator Programme.
(4) Execute a separate bond for an amount equal to ten percent of
value of export goods with a bank guarantee for an amount equal to ten
percent of the value of the bond, towards the export goods transported
from the customs area to any other customs area for export or
transshipment, as the case may be;
(5) Undertake to comply with the provisions and abide by all the
provisions of the Act and the rules, regulations, notifications and orders
issued thereunder.
(6) Undertake to indemnify the Commissioner of Customs from
any liability arising on account of damages caused or loss suffered on
imported or export goods, due to accident, damage, deterioration,
destruction or any other unnatural cause during their receipt, storage,
delivery, dispatch or otherwise handling."
Regulation 12 - Procedure for suspension or revocation of approval and
imposition of penalty-
(1) .....
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(2) .....
(3) .....
(4) ....
(5) ....
(6) ....
(7) ....
(8) If any Customs Cargo Service provider contravenes any of the
provisions of these regulations, or abets such contravention or who fails to
comply with any provision of the regulation with which it was his duty to
comply, then, he shall be liable to a penalty which may extend to fifty thousand
rupees."
(emphasis supplied)
19. The primary contention as urged by Mr. Sridharan referring to the
wordings of Regulation 5(6) under which recovery of the value of goods
from the appellant is sought for, is to the effect that there is total
misapplication of said Rule, which according to him is not attracted in the
present circumstances. We are not persuaded to accept Mr. Sridharan's
contention for more than one reason. We may observe that Regulation 5
provides for "Conditions to be fulfilled by Customs Cargo Service
Provider". It provides that Customs Cargo Service Provider (appellant in
the present case), for custody of imported goods or export goods and for
handling of such goods in a customs area, is under a mandate to fulfill the
conditions as set out in such Regulation. The opening words of Regulation
5 itself makes the provision mandatory when it uses the word " shall fulfill
the following conditions". It is manifest that sub-regulations (2), (5) and
(6) of Regulation 5 are in the nature of undertakings. Regulation 5(6)
clearly provides that the CFS is required to indemnify the Principal
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Commissioner of Customs or Commissioner of Customs, as the case may
be, from any liability arising on account of damages caused or loss suffered
on imported or export goods, due to accident, damage, deterioration,
destruction or any other unnatural cause during the receipt of the goods,
storage, delivery, dispatch or otherwise handling. Thus, Regulation 5(6) is
quite widely worded, so as to take into account different situations, so as to
cover not only the liability arising on account of damages, but also, loss
suffered on imported or export goods, which may be on account of factors
like accident, damage, deterioration, destruction or any other unnatural
cause. The phrase "any other unnatural cause" would mean any cause
other than the natural cause. Theft and/or pilferage of goods which are in
the custody and seal of the Customs certainly is an unnatural cause, which
has taken place during the storage of the goods as in the present case.
Regulation 5(6) not only covers "storage" but also any unnatural event in
regard to the goods during the 'receipt', 'delivery', 'dispatch' or otherwise
handling of the goods. Such is the wide canvass of the Regulation 5(6) of
the 2009 Regulation.
20. Thus, the purport and interpretation of Regulation 5(6) as
canvassed on behalf of the appellant is not correct and acceptable. It is also
not possible to accept an interpretation which goes contrary to the plain
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language of the regulation. In fact such interpretation of Regulation 5(6)
as urged on behalf of the appellant, in our opinion, would lead not only to
an absurdity but would cause a serious prejudice to the interest of the
revenue, which is sought to be protected under the varied circumstances
the regulation would ordain. This, not only as seen in the explicit
wordings of the said Regulation, but also implicit, in the consequences the
such regulation would take within its ambit, in the event there is loss of
goods and any liability arising therefrom. Further, it cannot be overlooked
that the compliance of such regulation is in the form of a statutory
undertaking by the CFS. If the obligation and the indemnity stipulated by
Regulation 5(6) is absent, it would lead to serious consequences, in the
CFS having no accountability in handling the nature of the cargo. In the
absence of such rule, in fact, it would amount to conferring a licence on
CFS without an accountability interalia on the storage and handling of
valuable goods, which is sought to be remedied by the said regulation.
21. Now applying Regulation 5(6) to the facts of the present case, it is
not in dispute that there is an "undertaking" on the part of the CFS to
indemnify the Principal Commissioner of Customs or Commissioner of
Customs, as the case may be, inter alia in regard to the loss suffered, and in
the present case on export goods, by an unnatural cause, during storage of
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goods. Once the appellant was bound by such undertaking as
contemplated by Regulation 5(6) and having consciously accepted the fact
that the goods worth Rs.4,44,32,500/- have been stolen/pilfered, then
certainly statutory obligation under Regulation 5(6) kicks in, so as to make
the appellant liable to indemnify the said loss of goods which had occurred
due to theft of the goods.
22. Thus, in the facts of the present case, certainly it is crystal clear that
the Commissioner had become entitled to such amount of loss as suffered.
It also cannot be said that the Commissioner was not entitled for recovery
of loss from the appellant for the reason that the exporter was facing
criminal proceedings. The goods were prohibited goods not capable of
being exported. They were of high value. It thus cannot be said that there
was no loss suffered on account of theft of the said goods. Even otherwise,
there needs to be a holistic reading of Regulation 5(6) taking into
consideration the scheme of the 2009 Regulations read with substantive
provisions of the Customs Act, namely, the provisions of Section 141
which become relevant in the present context. Section 141 reads thus:
"141. Conveyances and goods in a customs area subject to control
of officers of customs
(1) All conveyances and goods in a customs area shall, for the
purpose of enforcing the provisions of this Act, be subject to the
control of officers of customs.
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(2) The imported or export goods may be received, stored,
delivered, dispatched or otherwise handled in a customs area in
such manner as may be prescribed and the responsibilities of
persons engaged in the aforesaid activities shall be such as may be
prescribed."
(emphasis supplied)
23. Section 141(2), therefore applies to the imported or export goods
which may be received, stored, delivered, dispatched or otherwise handled
in a customs area only in a manner "as may be prescribed", so as to provide
that the responsibilities of persons engaged in the said activities shall be
such as may be prescribed. As per the provisions of Section 2(32) of the
Customs Act "prescribed" is defined to mean prescribed by regulations
made under the Act, hence, all activities of the appellant were required to
be undertaken as per the Regulations as framed under the Customs Act
and in the present case 2009 Regulations. Thus, insofar as the appellant's
contention on the misapplication of Regulation 5(6) is concerned, the
contentions are untenable and are required to be rejected.
24. We may observe that the provisions of Regulation 6(1)(a), (b), (f),
(i) and (q) were also invoked by the department, which provide for
"Responsibilities of Customs Cargo Service Provider". It is clear that the
appellant had breached its responsibility in discharging its duties insofar as
the custody of goods in question was concerned and which were
stolen/pilfered from CFS of the appellant. The said Regulation reads thus:
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6. Responsibilities of Customs Cargo Service provider:
(1) The Customs Cargo Service provider shall -
(a) keep a record of imported goods, goods brought for export or
transshipment, as the case may be, and produce the same to the
Inspector of Customs or Preventive Officer or Examining Officer as
and when required;
(b) keep a record of each activity or action taken in relation to the
movement or handling of imported or export goods and goods brought
for transhipment;
(c) ....
(d) ....
(e) ....
(f) not permit goods to be removed from the customs area, or
otherwise dealt with, except under and in accordance with the
permission in writing of the Superintendent of Customs or Appraiser;
(g) ....
(h) ....
(i) be responsible for the safety and security of imported and
export goods under its custody;
(j) ....
(k) ....
(l) ....
(m) ....
(n) ....
(o) ....
(p) ....
(q) abide by all the provisions of the Act and the rules, regulations,
notifications and orders issued thereunder.
(2) ....
(3) .... "
(emphasis supplied)
25. We are, hence, of the clear opinion that there was no error much less
any illegality in the Commissioner directing the appellant to indemnify
the Commissioner for the loss of the goods.
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26. Now coming to the next contention as urged by Mr. Sridharan that
there could not have been a double penalty imposed on the appellant,
inasmuch as, the penalty of Rs.4,00,000/- was imposed under the
provisions of Section 117 of the Customs Act, as also a penalty of
Rs.50,000/- has been imposed under Regulation 12(8) of the 2009
Regulation. To appreciate Mr. Sriram Sridharan's contention, having
already noted the provisions of Regulation 12(8), we would also note the
provisions of Section 117, which reads thus:
"117. Penalties for contravention etc. not expressly mentioned
Any person who contravenes any provision of this Act or abets
any such contravention or who fails to comply with any provision of
this Act with which it was his duty to comply, where no express
penalty is elsewhere provided for such contravention or failure, shall
be liable to penalty not exceeding four lakh rupees."
27. On a plain reading of Section 117 of the Customs Act, it is quite
clear that the provision pertains to penalties for contravention of the
provisions of the Act or in the event of abetment of any such
contravention and /or failure to comply with the provisions of the Act,
with which the person was under a duty to comply and where no express
penalty elsewhere is provided for such contravention or failure, it is only in
that event, Section 117 can be invoked. Thus, Section 117 of the Customs
Act is an independent provision inter alia dealing with the contravention
of the provisions of the Act.
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28. In the facts and circumstances of the present case, the
Commissioner was justified in imposing a penalty for contravention of the
provisions of Customs Act by the appellant in relation to the goods in
question. Also the appellant has not raised a dispute, as the contention of
the appellant is that there cannot be a simultaneous penalty under Section
117 of the Customs Act and Regulation 12(8) of the 2009 Regulations.
Thus, no fault can be found on the penalty of Rs.4,00,000/- as imposed
under Section 117.
29. Insofar as the imposition of penalty under Regulation 12(8) is
concerned, Regulation 12(8) of the 2009 Regulation mandates that if the
Custom Cargo Service Provider (appellant in the present case) contravenes
any of the provisions of the said Regulations or abets such contravention
or fails to comply with any provisions of the regulation with which it was
his duty to comply, then he shall be liable to a penalty which may extend
to fifty thousand rupees. In the present case, there is a clear contravention
of Regulation 5 and Regulation 6, as noted above, hence, the penalty
under Regulation 12(8) cannot be faulted.
30. In the light of the above discussion, the appeal is without merit, it is
accordingly dismissed. No costs.
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31. Interim Application would also not survive, it is accordingly
disposed of.
[JITENDRA JAIN, J.] [G. S. KULKARNI, J.]
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Signed by: Vidya S. Amin
06 December, 2023
Designation: PS To Honourable Judge
Date: 06/12/2023 22:07:50
