1. The appellants are in appeal against the common order passed by the learned Commissioner of Customs appeals, Mumbai-II, dated 22-11-2012, wherein their appeal was allowed in part. The brief facts are that the appellant M/s. Daroowala Bros. & Co. is a CHA firm and the other appellant - Parvez J. Irani is the partner of the firm. The partner of appellant firm knew one Yogesh who was an employee of another CHA firm. From the said employee the appellants had received CHA work during the last 12 months on 3 occasions for clearance of import cargo as well as for clearance of shipping bills for export under the duty drawback scheme. Further fact is that on 30-4-2008 the appellant-partner met the said Yogesh at JNCH building, near parking area, and was informed that there was a job of one M/s. APW President Systems Ltd. having IEC code for export of zinc oxide under factory stuffing procedure. The said Yogesh also showed invoice bearing Central Excise examination report where
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in the factory stuffing permission was indicated. The appellant verified the genuineness of the factory stuffing permission by going to the 6th floor of the Customs house and found that the said company M/s. APW President Systems Ltd. was permitted to factory stuff the goods. The appellant CHA asked for the authority letter from the said Mr. Yogesh, on behalf of the exporting company to which Mr. Yogesh stated that the next day being 1st May, 2008 and Maharashtra holiday, the authority letter shall be handed over on the next working day that is 2nd May, 2008. It is further on record that the said Mr. Yogesh paid an amount of Rs. 10,000 to the appellant. The appellant in good faith finding the container sealed having the Customs bottle seal and Central Excise seal intact filed the shipping bill' and the container was entered in the CFS-speedy buffer yard. The accompanying invoice was also countersigned by the Preventive Officer after verifying the bottle seal and Central Excise seal. In the morning of 2-5-2008 appellant received telephone call from the DRI office enquiring about the address of the said Mr. Yogesh to which the appellant cooperated by giving the proper address with contact numbers.
2. That the appellant CHA was also made noticee by the Additional Commissioner of Customs (Export) in the main case of 9.8 MT of red sanders which was fraudulently attempted to be exported by one Mr. Parvez M. Sheikh and others. Vide Order-in-original dated 20-6-2011 the adjudicating authority imposed penalty under Section 114(i) of the Act for an amount of Rs. 5 lakhs each on the CHA firm and the partner. Being aggrieved the appellant preferred appeal before the Commissioner (Appeals).
3. The learned Commissioner (Appeals) in the impugned order has taken notice of the order dated 9-6-2010 passed by the Commissioner of Customs (General) wherein the following findings have been recorded in favour of the appellants.
"31. To sum up, I am of the view that the CHA have performed their job in a casual manner. Even though, I do not fully concur with the findings in the Inquiry Reports, there are enough evidence on records that point out that the CHA have not, behaved prudently. But for the lapses on the part of the CHA as enumerated in the Inquiry Reports as well as in my observations after weighing defence put forth by the CHA, it is seen "that no mala fide intent has been proved against the CHA". Considering magnitude of infractions on the part of the CHA, I am of the view that the CHA should be punished adequately. While considering the quantum of penalty to be imposed upon the CHA, I also take into account that the CHA Licence was placed under suspension on 25-7-2008 and they have been out of business since then causing enormous hardship to the company and to the staff and their family members."
Relying on the said finding and also the forfeiture of security deposit the punishment already given under the provisions of CHALR and also taking notice of the fact that the said order have been accepted by the Review Committee, allowed the appeal in part reducing the penalty by 50%. Being still aggrieved the appellants are before this Tribunal.
4. The Counsel for the appellant urges that it is already concluded that there is no mala fide act of omission or commission on the part of the appellants. It is further urged that there is a condition precedent for imposing penalty on the appellant under Section 114, which is that there should be an order of confiscation to the effect that the concerned person have done some act of omission or commission rendering the goods under export liable to confiscation. In absence of such a finding no penalty could've been imposed and/or retained as has been done by the impugned order. The Counsel further relies on the rulings in the case of Neptune Cargo Movers Pvt. Ltd. v. Commissioner of Customs : 2007 (219) E.L.T. 673. A Co-ordinate Bench of this Tribunal in the case of attempted export of red sandalwood, considering the fact that the CHA had no role in the transaction that led to confiscation of contraband, except that the manager of CHA being negligent, facilitated the export of prohibited, goods. The same was not sufficient to hold the satisfaction of condition precedent for imposition of penalty under Section 114(i). This Tribunal have further recorded the finding that there was no act of omission on the part of CHA which led to the confiscation. The Commissioner did not find that the CHA had knowingly involved in the attempt to export the illicit sandal woods. Only a case of negligence was made out which is not sufficient for imposition of penalty under Section 114. It is further urged that for the allegation of abetment to stand there has to be finding as to consideration for the said abetment, which is absent in the facts of the present case. The appellant further relies on the ruling in the case of Sethu Samudra - 2010 (262) E.L.T. 570, by Co-ordinate Bench in the case of Smuggling of Red Sanders on the finding that no fact come on record about the involvement of the CHA in the attempt to smuggle out red sanders. Nothing incriminating had been recorded on the part of the appellants. It has been held that the CHA did not take care to verify the genuineness of export/exporters and therefore they have aided in smuggling of red sanders. Under such facts leading to failure of duties as required under CHALR, it was held that it may lead to action under those provisions but certainly cannot lead to a conclusion that they (CHA) aided and abetted in the attempt to export prohibited goods. In absence: of evidence of any action on the part of CHA, so as to render the goods liable to confiscation, no penalty is attracted under Section 114(i). Accordingly the learned Counsel prays for deleting the penalty in full.
5. The learned AR relies on the impugned order. It is further stated that in view of the negligence and/or carelessness on the part of the appellant CHA the unscrupulous persons attempted to export prohibited goods. Had the appellant been vigilant the attempted Red Sandalwood export could have been avoided. Accordingly the learned AR prays for dismissal of the appeal.
6. Having considered the rival contentions, I find that it is already concluded in favour of the appellants that they have not indulged themselves mala fidely in filing of the shipping bill in question, leading to attempted export of prohibited goods. The act of negligence and lack of vigilance on the part of the appellants have already been taken care of under the provisions of CHALR and the security deposit stands forfeited by the order of the Commissioner of Customs (General) as noted above. I further find that there is no finding to the effect that the appellant have indulged into any act leading to an order of confiscation under the provisions of Section 113. Further I find that order of confiscation is the condition precedent for imposition of penalty under Section 114(i). For reference the provisions of Section 114(i), is reproduced herein -
"SECTION 114. Penalty for attempt to export goods improperly, etc. - Any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 113, or abets the doing or omission of such an act, shall be liable,-
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding three times the value of the goods as declared by the exporter or the value as determined under this Act, whichever is the greater."
Thus, I hold that the condition precedent for imposition of penalty under Section 114(i) is absent in the facts of the present case. Accordingly, I allow the appeal of the appellants and set aside the penalty imposed and retained vide the impugned orders. Similarly, I find that penalty was also imposed under the provisions of Section 114AA of the Act of Rs. 2,50,000/- each on the appellants and the same was also reduced to 50% in the impugned order. I further hold that the condition precedent as prescribed in Section 114AA - if a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any particular material fact, in the/transaction of any business for the purposes of this Act, shall be liable to a penalty as described. I hold that this condition is also precedent not satisfied and the same stands concluded by the earlier order of the Commissioner of Customs (G) dated 9-6-2010, noted hereinabove. Thus, the penalty imposed under Section 114AA is also set aside. The appellant will be entitled to any consequential relief, in accordance with law