2008 (2) TMI 870 - AT - Customs

Levy of penalty u/s 114(iii) of the Customs Act on CHA - offence of misdeclaration of description and value of the goods by the exporter - Commissioner (appeals) deleted the penalty - HELD THAT - In the present case, even according to the appellant, the CHA s failure was in the matter of ensuring the correctness of the declarations made in the export documents. The appellant refers to CHA s obligation under Regulation 13(d) of CHALR, 2004 and states that he has a duty to advise his client to comply with the provisions of the Act or, in the event of non-compliance, to bring the matter to the notice of the Customs authorities. There is no denial of these obligations of a CHA. The exporter filed Shipping Bills for export of what was declared as organic dye intermediate G-salt with a claim for drawback on the declared value of over ₹ 64.00 lakhs. The exporter authorized the CHA to file such documents with such declarations, and the CHA did accordingly. Whether the goods presented for export was G-salt or common salt was a fact known to the exporter but not to the CHA. It is a question to be addressed by the Customs authorities through examination of the goods. The same is the position, when it comes to the value of the goods. As rightly held in the case of Akanksha Enterprise 2006 (2) TMI 489 - CESTAT, NEW DELHI , a CHA is not required to go into the authenticity of the declarations made in the export documents. His job is confined to submission of the documents given by the exporter as also to identify the exporter to the Customs authorities. The appellant has no case that the respondents did not discharge these obligations. If they say that the CHA violated Regulation 13(d), let them proceed against the CHA under the CHALR. In the absence of evidence of the CHA having abetted misdeclaration of description or value of the goods, it cannot be held that they are liable to be penalized under Section 114(iii) of the Customs Act. The case law cited by learned counsel is to this effect. Learned JDR referred to a Circular of the Board as also to a judgment of the apex court. Both these relate to the conduct of exporters. Neither of these pertains to the conduct of a CHA. The impugned order is sustained and this appeal is dismissed. The Revenue's application for stay of operation of the said order also gets dismissed.

Summary

Issues:
Misdeclaration of goods by exporter, role and liability of Customs House Agent (CHA) under Customs Act and CHALR, abetment of offense by CHA, penalty under Section 114 of Customs Act.

Analysis:
1. Misdeclaration of Goods by Exporter:
The case involved an export consignment where the goods declared as 'organic dye intermediate G-salt' were found to be common salt after detailed examination by Customs officers and chemical analysis. The exporter, Customs House Agent (CHA), and others were implicated due to misdeclaration of goods' description and value.

2. Role and Liability of CHA:
The appellant emphasized the obligation of the CHA under Regulation 13(d) of the Customs House Agents Licensing Regulations, 2004 (CHALR). The appellant argued that the CHA failed to ensure the correctness of the exporter's declarations, thereby abetting the offense of misdeclaration. The CHA, on the other hand, contended that they fulfilled their role as per CHALR and were not required to verify the authenticity of the exporter's declarations.

3. Abetment of Offense by CHA:
The Tribunal analyzed whether the CHA abetted the exporter's misdeclaration of goods' description and value. It was established that the CHA's duty was limited to filing export documents received from the exporter and not to verify the accuracy of the declarations. The Tribunal cited relevant case laws to support the position that without evidence of CHA's abetment, they cannot be penalized under Section 114 of the Customs Act.

4. Penalty under Section 114 of Customs Act:
The Tribunal concluded that for a penalty under Section 114 based on abetment, the CHA must have actively abetted the offense. As the CHA's role was limited to filing documents as per the exporter's instructions, and there was no evidence of abetment, the Tribunal upheld the decision that the CHA was not liable for penalty under Section 114.

5. Judicial Interpretations and Precedents:
The Tribunal considered circulars and judgments cited by both parties, emphasizing that the obligations and liabilities of exporters are distinct from those of a CHA. The Tribunal dismissed the Revenue's appeal and application for stay, upholding the impugned order.

In conclusion, the Tribunal dismissed the appeal, affirming that the CHA did not abet the misdeclaration of goods and therefore was not liable for penalty under Section 114 of the Customs Act. The judgment highlighted the limited role and responsibilities of a CHA in verifying export documents and emphasized the need for evidence of active abetment to impose penalties under the Customs Act.