The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that knowledge and intention is must (sine qua non) for imposing penalty under section 114AA of the Customs Act.
The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that the department has not been able to establish knowledge on part of the appellant or intention on the part of the appellant to help the exporter in obtaining the alleged undue export advantage. The penalty under section 114AA of the Customs Act cannot be imposed upon the appellant.
The appellant, M/s Evergreen Shipping Agency India Private Limited is a shipping line company engaged in carrying goods through sea route, is aggrieved by the order passed by the Commissioner of Customs, Inland Container Depot, Tughlakabad to the extent it imposes penalty of Rs. 10 lakhs upon the appellant under section 114 (iii) of the Customs Act, 1962 as also a penalty of Rs. 10 lakhs under section 114AA of the Customs Act.
Out of the 211 shipping bills, the appellant carried the goods pertaining to only five shipping bills. The appellant claims that there were no amendments carried out in TR-1/TR-2. According to the department, the appellant had filed the Export General Manifest for transportation of the container stuffed with the export goods covered under the five shipping bills to Panama, as the “Port of Discharge” but the said container was actually discharged at Jebel Ali, a port in United Arab Emirates.
The Freight Forwarders involved were M/s Concorde Shipping & Logistics India and M/s Safewater Lines India Private Limited8. Imran Mirza, proprietor of M/s Concorde Shipping in his statement dated 11.08.2017 made under section 108 of the Customs Act admitted that Rajesh Dhandha, Director of Colour Cottex had instructed him to divert the container to Jebel Ali and, accordingly, he had instructed Safewater Lines, an intermediate freight forwarding agency, to divert the container to Jebel Ali. The Deputy Manager (Finance) of Safewater Lines in his statement recorded under section 108 of the Customs Act stated that Safewater Lines had further directed the appellant to change the destination of the said container from Panama to Jebel Ali.
The department contended that though the appellant in the Export General Manifest had mentioned the same “Place of Delivery” which was printed in the shipping bills against the “Port of Discharge”, but it discharged the said container at a different place and so M/s Concorde Shipping (Freight Forwarding Agency), M/s Safewater Lines (Intermediate Freight Forwarding Agency), the appellant (Shipping line) and M/s Colour Cottex (Exporter) had assisted and connived with each other in diverting the export consignment covered under the five shipping bills to Jebel Ali to assist the exporter to fraudulently avail the benefit of the Focus Market Scheme without exporting the goods to the notified country.
The issue raised was whether penalty under section 114(iii) and section 114AA could have been imposed upon the appellant.
The tribunal quashed the imposition of penalties under section 114(iii) and section 114AA of the Customs Act upon the appellant.
Case Details
Case Title: Evergreen Shipping Agency India Pvt Ltd. Versus Commissioner of Customs (Export)
Case No.: CUSTOMS APPEAL No. 51117 of 2022
Date: 04.06.2025
Counsel For Appellant: G.K. Sarkar and Prashant Shrivastava
Counsel For Respondent: Rakesh Kumar
