2014 (12) TMI 647 - HC - Customs

Penalty on Customs House Agent - Fraud - penalties under Section 112(a) and/or 112(b) - Held that - Tribunal as also the Adjudicating Authority concluded that it is the appellant who had filed the Bills of Entry in respect of the importers. The importers were transferees of the license. The Customs House Agent has to advise the client and particularly assist in complying with the provisions of the Customs Act and other import regulations/prohibitions. When there was no valid license in the name of the importers, then the Customs House Agent should have cautioned him. Further, the term of license was to expire on 21st November, 1999, yet the Bills of Entry were filed in December, 1999 claiming the benefit of duty exemption under advance licensing scheme. Thus, when no valid license existed in the name of the importers, the benefit could not have been derived and which has been derived with the assistance of the Customs House Agent. Thus the role of the Customs House Agent in this case has been dealt with extensively by both the adjudicating authority and the Tribunal. They have rendered concurrent finding of fact that the Customs House Agent in this case cannot be said to be innocent. If the importers had misused the facility by obtaining a duplicate license by misrepresentation and fraud, so also, manipulation of documents and with a view to avoid customs duty, then, it cannot be said that the Customs House Agent and its Director were totally innocent or unaware of these acts. - Decided against appellants.

Summary

Issues:
Appeal under Section 129B of the Customs Act, 1962 against order passed by Customs, Excise and Service Tax Appellate Tribunal regarding imposition of penalty on Customs House Agent for clearance of goods under a duplicate license obtained through misstatement and fraud.

Analysis:
The appellant, a Customs House Agent, filed an appeal against the imposition of a penalty by the Customs authorities for clearing goods under a duplicate Advance License obtained through misstatement and fraud. The appellant claimed innocence, arguing that they were not aware of any wrongdoing by the importers and should not be penalized. The Tribunal dismissed the appeal, leading to the present case.

The High Court examined the case and found that the appellant, as a Customs House Agent, had a duty to advise and assist clients in complying with Customs regulations. It was revealed that the importers had obtained a duplicate license through fraud, misrepresentation, and manipulation of documents to avoid customs duty. The Court held that the appellant should have been cautious and not facilitated the clearance of goods under an invalid license. The findings of fact by the adjudicating authority and the Tribunal established the appellant's involvement in the wrongdoing.

The Court concluded that the penalty imposed on the appellant and its Director was justified, considering their role in facilitating the misuse of the duplicate license. It was determined that the appellant could not claim ignorance of the fraudulent activities of the importers, as they were knowledgeable about the necessary procedures and formalities. Therefore, the Court held that the order of the adjudicating authority and the Tribunal did not raise any substantial question of law, and the appeal lacked merit. Consequently, the appeal was dismissed, upholding the penalty imposed on the appellant and its Director for their involvement in the customs duty evasion scheme.