2018 (7) TMI 2189 - AT - Customs

Levy of Penalty on CHA u/s 114(3)(i) of Customs Act, 1962 - goods were misdeclared both in respect of description and value - appellant has abetted exporter in crime - HELD THAT - Admittedly, the Commissioner s order does not bring out that the appellant was having any knowledge that the goods were misdeclared both in respect of description and value. Even the Revenue s officers allowed the consignment of M/s. A.J. Corporation and could not detect the misdescription. It was only subsequently when the investigations were taken against the other two exporters exporting identical goods and the samples were drawn and sent to chemical examiner, the fraud done by the exporter came to the notice of the Revenue officers. The CHA involvement in the fraudulent activities of the exporters, without there being any evidence, so as to impose penalty upon him cannot be upheld - Penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Penalty imposed on CHA under Customs Act, 1962 for misdeclaration of goods.

Analysis:
1. Issue of Penalty Imposed on CHA:
The appeal challenged a penalty of ?25 lakhs imposed on the appellant, a Customs House Agent (CHA), under Section 114(3)(i) of the Customs Act, 1962. The appellant, M/s. Mahendra Shipping Agency, denied involvement with the exports of M/s. A.J. Corporation, stating their name was being misused. The Adjudicating Authority, however, concluded that the CHA was complicit in the misdeclaration of goods based on the presence of the CHA's signature on shipping bills in similar fraud cases. The Tribunal found fault with this reasoning, noting that there was no evidence to suggest the CHA had knowledge of the misdeclaration. The Revenue officers themselves did not detect the misdescription initially, and it was only through subsequent investigations that the fraudulent activities of the exporter came to light. Therefore, the Tribunal set aside the penalty imposed on the CHA, ruling that without concrete evidence, penalizing the CHA for the exporter's actions was unjustified.

2. Misdeclaration of Goods and Investigations:
The case involved the export of Beta Napthol by M/s. A.J. Corporation under multiple bills of entries. Investigations revealed that other firms were misdeclaring goods as well, leading to proceedings against all exporters. The Chief Chemists confirmed the misdeclaration, showing that the goods were of lesser value than declared. While the CHA denied involvement with M/s. A.J. Corporation, the Adjudicating Authority linked the CHA to the exporter's fraudulent activities based on signature presence on shipping bills in other cases. However, the Tribunal emphasized the lack of direct evidence connecting the CHA to the misdeclaration, highlighting the Revenue officers' initial failure to detect the fraud and the subsequent discovery through investigations on other exporters.

In conclusion, the Tribunal, comprising Ms. Archana Wadhwa and Shri Raju, Members, overturned the penalty imposed on the CHA, M/s. Mahendra Shipping Agency, citing insufficient evidence linking the CHA to the misdeclaration of goods by the exporter. The judgment emphasized the importance of concrete proof before penalizing individuals in customs-related offenses, ultimately providing consequential relief to the appellant.