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Continental Warehousing Corporation Nhyava SEVA Ltd V/S CC, Tuticorin

    C/40480/2017 (Arising out of Order-in-Original No. 18/2016 dated 21.11.2016 passed by the Commissioner of Customs, Tuticorin) and Final Order No. 41594/2017

    Decided On, 10 August 2017

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai

    By, MEMBER

    For Petitioner: A.K. Jayaraj, Advocate And For Respondents: R. Subramaniyam, AC (AR)

Judgment Text

1. The challenge in the present appeal is imposition of penalty of Rs. 25,000/- on the appellant in terms of the provisions of Regulations 12 (8) of HCCAR, 2009.

2. As per facts on record, appellant is a Customs Cargo Service provider and a custodian under Section 45(1) of the Customs Act, 1962 read with Regulation 10 of Handling of Cargo in Customs area Regulations, 2009 (in short HCCAR, 2009). The appellant is responsible for the safety and security of the imported goods and export goods under their custody and for the secured transit of goods from the customs area to any other part or customs area etc.

3. On 02.03.2015, as a result of SIIB intelligence, a container attempted to be exported by declaring the goods as cotton floor mats was intercepted and found to be concealed with red sander logs, a prohibited item. The same was stuffed into the container at M/s. SEC Services Ltd.

4. The driver of the trailer in his statement dated 04.03.2015 disclosed the modus operandi adopted in such cases indicating that though the genuine goods are stuffed at the CFS premises and put a proper seal but the trailer was taken to an in between destination and opened by opening the nuts and bolts without disturbing the seal and filled with red sander logs. The driver was also submitted on an earlier occasion also he has transported the goods from various C & F including the present appellant.

5. During the course of further investigation, the statement of the Dy. General Manager of the appellant was recorded on 13.04.2015, whereas enquiries were put to him in respect of another container transported from their custody and mentioned by the driver. The said deponent explained that the container was stuffed with the cargo declared and there is no evidence to show that the same was opened in between and substituted with red sanders.

6. On the above basis proceedings were initiated against the appellant by way of issuance of show cause notice dated 14.03.2016, proposing to suspend/revoke approval of appointment granted under HCCAR, 2009 as also to impose penalty upon them. The appellant contested the said proposals, which contentions did not find favour with Commissioner, who imposed a penalty of Rs. 25,000/- upon them.

7. After hearing both sides and after going through the impugned order, I find that the main reliance by the adjudicating authority, for imposition of penalty is the statement of the driver. For better appreciation, reasoning adopted by the Commissioner is reproduced below:-

14. I find from the statement dated 04.03.2015, of Shri S. Raja, the driver of the trailer that the goods inside the container TTNU 2045574, were substituted with red sanders on the way to Port from M/s. Continental Warehousing Corporation (Nhava Seva) Ltd., CFS, Tuticorin. On the contrary, the notice claims that the container reached the port within a time of 1hr 25 minutes and there was no diversion. However, the existence and genuine nature of the statement of the driver obtained under Section 108 of the Customs Act, 1962 during the course of investigation by the SIIB has not been disputed by M/s. Continental Warehousing Corporation (Nhava Seva) Ltd., CFS, Tuticorin. I find that the denial of cross examination of the driver has not caused any prejudice to the notice, as material facts point out to the existence of the substitution of the red sanders like toll plaza receipts which were recovered which further corroborated the statement of the driver Shri S. Raja. Also, in the absence of any evidence let in by them to contradict the veracity of the imputation made against them in the said statement, the said statement remains unassailed without any reason for doubting it. With regard to the abstract of toll plaza movement register, there is no reason to disbelieve it as it was collected during the course of investigation by SIIB.
8. As is clear, the statement of the driver of the trailer, which admittedly was not the trailer intercepted by the officer, is the basis for holding against them. It is well settled law that a statement of the co-accused cannot be made the sole basis for penalizing the assessee without there being and independent corroboration from the independent source. The veracity of the said statement ha

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s also not been tested by providing x-examination of the deponent. The statement of the appellants Dy. General Manager has clearly denied the use or substitution of the earlier cargo in the container mentioned by the driver. The appellants have also contended that no outsourcing done without the permission of the Commissioner. As such, I find no justifiable reason to impose penalty upon the appellant. The same is accordingly set aside and appeal allowed with consequential relief.