The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside penalties totalling ₹1 crore imposed on an authorised courier after pseudoephedrine hydrochloride was discovered concealed inside embroidered portions of garments presented for export.

The bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) observed that a courier cannot be held liable merely because the consignor incorrectly declared the contents of a package. Penalties under Sections 114(i) and 114AA of the Customs Act, 1962 require cogent evidence of an actionable omission, knowledge, intent, participation or facilitation, it observed.

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The dispute arose after appellant/an authorised courier, filed Courier Shipping Bill for the export of three packages containing 106 churidar tops. The shipment declared A. Thameem Ansari as the consignor and Bala, Malaysia, as the importer.

During examination, Customs officers found white crystalline powder concealed inside pouches embedded in the stitched and embroidered portions of the garments. An initial test indicated that the substance was methaqualone weighing 16,500 grams. The Central Revenue Laboratory in Chennai subsequently identified it as pseudoephedrine hydrochloride.

Export of pseudoephedrine hydrochloride required a no-objection certificate from the Central Bureau of Narcotics. Since no such certificate had been obtained, the authorities alleged that the goods were liable to confiscation under Section 113 of the Customs Act.

The investigation found that the shipment had not been booked directly with TNT. It was initially booked through Universal Worldwide Express Courier & Cargo and subsequently routed through Worldwide Express, which had an account and business arrangement with TNT.

The department alleged that TNT had allowed its courier functions to be subcontracted or outsourced without obtaining permission from the Commissioner of Customs. It also alleged that TNT had accepted the package on the strength of only one identity document and had failed to comply with the applicable know-your-customer requirements.

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