2010 (6) TMI 398 - AT - Customs

Penalty on CHA Abetment in fraud CHA entered into a conspiracy with the importer to get the goods cleared without payment of duty against an Advance Licence and subsequently, the goods were diverted in the local market - no evidence on record to show that the Appellants were aware of the fact that the Licence was tampered and the status of the importer was changed to manufacturer/exporter - goods were cleared and after clearance of the goods, the same were handed over to the transporter as per instructions of the importer - omission pointed out by the Revenue for evasion of the duty, not make the Appellants liable for imposition of penalties under Section 112(b) of the Customs Act - imposition of penalties on the appellants not substantiated

Summary

Issues:
Penalty imposed under Section 112(b) of the Customs Act on Custom House Agents for duty-free clearance and diversion of imported goods against Advance Licence.

Analysis:
The Appellants, Custom House Agents, appealed against a common impugned Order imposing a penalty of Rs. 4.00 lakh each under Section 112(b) of the Customs Act for their involvement in a conspiracy of duty-free clearance and subsequent diversion of imported goods against the Advance Licence. The Adjudicating Authority penalized the Appellants based on the allegation of violating the conditions of exemption Notification No. 31/97-Cus., dated 1-4-97. The Appellant, M/s. Fairdeal Enterprise Pvt. Ltd., requested a decision on merits. The Appellants contended that they were not involved in the diversion of goods after clearance, emphasizing their lack of knowledge regarding tampering of the Import Licence or the importer's intentions. The Revenue argued that the goods were imported without duty payment, the importer was untraceable, and the Appellants failed to produce the importer before the Investigating Officer, thus holding them liable for penalties.

The Appellate Tribunal analyzed the contentions of both parties. It was noted that there was no concrete evidence implicating the Appellants in the conspiracy to clear goods without duty payment and subsequent diversion. The Tribunal found merit in the Appellants' argument that they were unaware of any tampering of the Licence or the importer's status change to a manufacturer/exporter. Despite the Revenue's claims of non-cooperation and lack of effort in producing the importer, the Tribunal emphasized the absence of evidence linking the Appellants to the diversion of goods. The Tribunal highlighted that the summonses issued to the importer were returned with postal remarks indicating the importer as "left," but clarified that this did not prove the importer's non-existence. Ultimately, the Tribunal concluded that the penalties imposed on the Appellants were not substantiated, setting aside the impugned Order and allowing the Appeals.

In conclusion, the Appellate Tribunal overturned the penalties imposed on the Custom House Agents, emphasizing the lack of evidence linking them to the alleged conspiracy of duty-free clearance and diversion of imported goods against the Advance Licence. The Tribunal highlighted the importance of concrete evidence and knowledge in establishing liability under Section 112(b) of the Customs Act, ultimately ruling in favor of the Appellants due to the absence of proof implicating them in the wrongdoing.