2015 (12) TMI 923 - AT - Customs

Imposition of penalty on CHA under the Customs Act - Denial of benefit of DEPB Credit - Since the goods were of foreign origin and no manufacturing/processing had been undertaken in India, the exporter was not eligible for the claim of DEPB benefits - Held that - The charge against the CHA is that they failed to advise the exporter that benefits of DEPB scheme could not be claimed in respect of the goods manufactured abroad and the contravention alleged is of Regulations 13(d) and 13(e) of the CHALR, 2004. It is also on record that the CHA came to know that the product has been manufactured abroad only when the goods were examined by the Customs. There is no evidence adduced by the Revenue to say that the CHA was aware of the misdeclaration by the exporter. In these circumstances, the question of CHA being responsible for any omission or commission, making the goods liable to confiscation would not arise at all. Consequently, imposition of penalty under Section 114 of the Customs Act, 1962 is not sustainable in law. If the CHA has contravened any of the provisions of the CHALR, then action should have been taken under CHALR and not under the Customs Act. Therefore, I am of the considered view that the impugned order imposing penalty under Section 114 is unsustainable in law. - Decided in favour of appellant.

Summary

Issues:
1. Imposition of penalty on the appellant by the Commissioner of Customs (Appeals)
2. Alleged failure of the CHA to comply with obligations under CHALR, 2004
3. Validity of penalty imposed on the CHA under the Customs Act, 1962

Analysis:

1. The appeal challenged the imposition of a penalty on the appellant, M/s. Skyline Air Logistics Ltd., by the Commissioner of Customs (Appeals). The appellant declared the FOB value of export cargo under a DEPB claim, which was found to be of foreign origin during examination. Penalties were imposed on the appellant and other parties involved. The appellant appealed against this decision.

2. The Additional Commissioner (AR) for the Revenue argued that the CHA failed to comply with obligations under CHALR, 2004, leading to penalties under the Customs Act. The CHA was alleged to have erred by advising the exporter incorrectly regarding the DEPB scheme. The Revenue supported the lower authorities' findings in this regard.

3. The tribunal considered the submissions and evidence presented. It was noted that the CHA only became aware of the foreign origin of the goods during customs examination, not prior to that. The tribunal found no evidence to suggest that the CHA was aware of any misdeclaration by the exporter. As a result, the tribunal concluded that the CHA could not be held responsible for any omission or commission leading to confiscation of goods. Therefore, the imposition of penalties under Section 114 of the Customs Act was deemed unsustainable. The tribunal highlighted that if the CHA had contravened CHALR provisions, action should have been taken under those regulations, not the Customs Act. Consequently, the tribunal set aside the penalty imposed on the CHA and allowed the appeal in favor of the appellant, M/s. Skyline Air Logistics Ltd.

This detailed analysis of the legal judgment highlights the issues involved and the tribunal's reasoning behind setting aside the penalty imposed on the appellant and the CHA.