The Customs, Excise & Service Tax Appellate Tribunal, Bangalore observed that operating from an area which is not notified tantamount to violation of Section 45 read with Section 7 and 8 of the Customs Act, 1962, since storing and clearing of the cargo from such unnotified area would be a violation of provisions of Section 45 of the Customs Act, 1962.
Therefore, the tribunal found that imposition of penalty under Section 117 is tenable.
The tribunal noted that the appellant, Container Corporation of India was given custodianship under HCCAR, 2009 as a Customs Cargo Service Provider (CCSP). The approval of CCSP is under Regulation 10 of the HCCR 2009, which is given by the jurisdictional Commissioner of Customs on fulfillment of conditions under Regulation 5.
The bench further noted that the custodianship would have been issued to CCSP i.e. after the satisfaction of all the conditions prescribed in Regulation 5. The CCSP has applied for renewal of the custodianship. In the meantime, as per the directions of CBIC, the Customs has conducted audit of the ICDs and CFSs, the appellant (CCSP) was also audited. On audit, the Customs have noticed discrepancies/short comings/ non adherence in the working of the CCSP and based on that a show-cause was issued and adjudicated by the learned Commissioner.
The bench stated that that the discrepancies/non-adherence noticed on audit of the appellant-custodian (CCSP) are found to be non-fulfillment of conditions under Regulation 5(1)(i) (c) (f) (g) (n) and clause (iii) of Regulation 5 of HCCAR, 2009, hence the penalty imposed under Regulation 12(8) of HCCAR, 2009 is tenable.
Facts
The custodianship of the appellant was due for renewal, on application of tax ordinance issued in the wake of Covid-19 Pandemic, the due date was deferred to 31.12.2020.
In the meantime, Central Board of Indirect Taxes (CBIC) vide Circular had mandated annual inspection of ICDs/CFSs and such inspection to be completed by 30.12.2020.
The inspection/audit of the appellant was conducted in the month of December 2020 and a report was furnished by the Audit and Inspection Cell of the Customs Commissionerate, Bangalore.
In view of the discrepancies/non-adherence of/to the provisions of HCCAR, the appellants were issued a show-cause notice.
The Commissioner of Customs adjudicated the show-cause notice holding that the appellants have not adhered of certain provisions of HCCAR, 2009. The proposal to revoke the custodianship was dropped, however the renewal of custodianship was extended for a period of 6(six) months, only. The learned Commissioner held that the custodians have otherwise contravened the provisions of HCCAR, 2009 and rendered themselves liable for penalty under Regulation 12(8) of HCCAR, 2009 and penalty under Section 117 of the Customs Act, 1962 and has imposed a penalty of Rs. 50,000/- under Regulation 12(8) of HCCAR, 2009 and a penalty of Rs. 4,00,000/- under Section 117 of the Customs Act, 1962 on the appellant.
Submissions
AR for the Revenue submitted that the appellant has violated the provisions of HCCAR, 2009 and that the violations are grave enough and detrimental to Revenue’s interest and also the custodian has acted in a sheer lackadaisical manner in conforming to the Regulations, especially insurance of cargo and demarcation of Customs Notified Area.
Conclusion
The tribunal found that the penalty imposed on the appellant-custodian (CCSP) is sustainable. However, the quantum of penalties imposed are not appropriate to the discrepancies/non-adherence/contraventions of the provisions of HCCAR, 2009 and Customs Act, 1962 committed by the custodians, hence, the bench stated that the penalties imposed can be considered for reduction.
The bench reduced the penalty of Rs. 50,000/- imposed on the Custodian (CCSP) to Rs. 10,000/- under Regulation 12(8) of HCCAR, 2009. Further, the penalty imposed under Section 117 of the Customs Act, 1962 is reduced from Rs. 4,00,000/- to Rs. 25,000/-.
Case Details
Case Name: Container Corporation of India Ltd. v/s Commissioner of Customs Bangalore
Citation: Customs Appeal No. 20674 of 2021
Tribunal: CESTAT Bangalore
Coram: Mr. Pullela Nageswara Rao, Member (Technical)