2009 (6) TMI 828 - AT - Customs

Imposition of Penalty on Customs House Agent - Held that - The rights and liabilities of a Customs House Agent have been laid down under the Customs House Agents Licensing Regulations, 2004. According to those regulations, a CHA shall carry out the instructions of his client (importer/exporter) who has authorised him to clear goods for home consumption/warehousing or for export, as the case may be. Where an importer instructs his CHA to make certain entries in his bill of entry, the department cannot frame a case of misdeclaration (or abetment thereof) against the CHA so as to penalise him though such case can be made out against his client (importer) - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Challenge to penalty imposed on CHA under Section 112 of the Customs Act.
2. Application of vicarious liability to CHA.
3. Interpretation of Section 147 of the Customs Act in relation to CHAs.
4. Rights and liabilities of a Customs House Agent under the Customs House Agents Licensing Regulations, 2004.

Analysis:
1. The appeal involved a challenge by a Customs House Agent (CHA) against a penalty of Rs. 20,000 imposed on him under Section 112 of the Customs Act by the Commissioner of Customs. The penalty was a result of misdeclaration of goods by the importer, who had appointed the CHA for clearance. The importer had settled with the Settlement Commission, but proceedings against the CHA continued, leading to the penalty imposition.

2. The CHA contested the application of vicarious liability to him and questioned the Commissioner's interpretation of Section 147 of the Customs Act. The appellant's counsel referred to Section 147 and a relevant judgment to support his arguments, while the JCDR defended the Commissioner's order.

3. After considering the submissions, the judge found reason to set aside the penalty imposed on the CHA. The penalty was based on vicarious penal liability shared with the importer and the application of Section 147(3) of the Act. Referring to a previous Tribunal judgment, it was established that Section 147 was not applicable to Customs House Agents, thus invalidating the Commissioner's decision.

4. The judgment emphasized the rights and liabilities of a CHA under the Customs House Agents Licensing Regulations, 2004. It clarified that a CHA acts on the instructions of the client and cannot be penalized for misdeclarations made by the importer. The judge highlighted that CHAs do not fall under the purview of Section 147 of the Customs Act, as there is no reference to it in the Licensing Regulations. Consequently, the penalty was set aside, and the appeal was allowed.