2014 (10) TMI 797 - AT - Customs

Penalty on CHA - involvment of CHA or its employee to the fraudulent transaction - Held that - From the statement, no conclusion can be reached as to their involvement in the fraudulent transactions. All the appellants in their statements have deposed that they undertook/participated in transaction for export of goods in good faith. The CHA has also submitted the identification document such as bank opening account establishing the identity of the exporter. In these circumstances, invoking the provisions of Section 147 and deeming the CHA and his employee as agent of the exporter is clearly unsustainable in law. This Tribunal decision in case of Aspinwall & Co. (2001 (4) TMI 144 - CEGAT, CHENNAI) affirmed by Hon ble Apex Court also makes the position very clear. Therefore, in the absence of any evidence, linking the CHA firm or its employee to the fraudulent transaction undertaken by the exporter, and consequent imposition of penalty would not arise at all. As retards the role of Shri Manohar S. Anchan, it is evident that his role was limited to introducing the exporter to the CHA. In the statement recorded under Section 108, he has clearly stated that he has not seen the goods and, therefore, he was not aware of the nature of the goods under export. In these circumstances, no mala fide can be attributed to Shri Manohar S. Anchan as to his knowledge of the fraudulent transaction. Therefore, imposition of penalty is not warranted - Decided in favour of CHA.

Summary

Issues: Mis-declaration of export goods, overvaluation, penalties imposed on exporter, penalties on individuals involved, liability of CHA firm and its employee, involvement in fraudulent transactions, imposition of penalty.

In this case, three appeals were filed against an Order-in-Original passed by the Commissioner of Customs regarding mis-declaration and overvaluation of export goods by a company, leading to confiscation of goods and imposition of penalties on the exporter and other individuals involved. The main contention was the liability of a Clearing House Agent (CHA) and his employee in the fraudulent transaction. The appellants argued that they were not directly involved in the misdeclaration or over-valuation of goods and cited precedents to support their claim that CHAs cannot be held responsible for the importer's wrongdoings. The Tribunal considered statements from the appellants and found no evidence linking them to the fraudulent transactions. It was noted that the CHA had submitted identification documents establishing the exporter's identity, and the role of one individual was limited to introducing the exporter to the CHA without any knowledge of the nature of the goods. Based on these findings and legal precedents, the Tribunal concluded that the penalty imposed on the appellants was unsustainable in law. Therefore, the penalties imposed on the individuals involved, including the CHA firm and its employee, were set aside, and the appeals were allowed.