Illegal export of Red Sanders - Airway bill in the name of non-existent firm : Penalty imposed
Delhi High Court Upholds Rs.10 Lakh Penalty for Freight Forwarder in Red Sanders Export Case, Court declines further penalty under Section 114AA citing disproportionate impact given limited involvement
In a significant ruling, the Delhi High Court has upheld the penalty of Rs.10 lakh imposed on Mr. Mayank Gupta, a freight forwarder involved in the illegal export of Red Sanders, while declining to impose further penalties under Section 114AA of the Customs Act, 1962. The judgment, delivered by Justices Prathiba M. Singh and Shail Jain, addresses the appeal filed by the Commissioner of Customs Export, challenging the decision of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) which had rejected the imposition of additional penalties.
The case stems from intelligence received by the Customs Department regarding the illegal export of Red Sanders, an endangered species under the international convention CITES, requiring a valid export certificate. Investigations revealed the use of forged documents and false declarations, with goods declared as household items in supporting documentation, while actually being Red Sandal Wood.
Mr. Mayank Gupta, Director of M/s Sky Barge Freight Pvt. Ltd., was implicated as the third and final freight forwarder who issued airway bills in the name of a non-existent firm, M/s Sikki Auto India Pvt. Ltd., without obtaining KYC from the main exporter. Despite his involvement, the court found his role to be limited, thus deeming the Rs.10 lakh penalty under Section 114 of the Customs Act, 1962, sufficient. Imposing further penalties under Section 114AA, which could entail five times the value of the goods, was considered disproportionate given his restricted involvement.
The judgment highlights the court's careful consideration of the role played by Mr. Gupta, who, while involved in arranging airline space for exports using forged documents, was not seen as a major player in the smuggling operation. As such, the court ruled against further penalties, asserting that the penalty already imposed was adequate.
The decision is significant in balancing the enforcement of penalties with the nature and extent of involvement in illegal activities, especially in cases involving complex chains of operation. By not imposing further penalties under Section 114AA, the court underscores the importance of proportionality in penal actions, especially when the accused's role is peripheral.
With this ruling, the Delhi High Court has left the question of law raised in the appeal open for consideration in future proceedings, offering a precedent for similar cases where limited involvement in illegal activities might be argued.
Statutory provision(s): Customs Act, 1962 Sections 114, 114AA
Commissioner Of Customs Export v. Mayank Gupta, (Delhi)(DB) : Law Finder Doc Id # 2785766
