2017 (5) TMI 1181 - AT - Customs

Penalty u/s 114(iii) of the CA, 1962 - Fraudulent availment of drawback - appellant had filed the documents for non-existent party and the goods cleared just for claiming drawback - Held that - it was revealed that the exporter was existing on the address given on record, but subsequently he left the premises, therefore at the stage when the exporter had left the premises the allegation against the CHA is not proved that he dealt with export consignment on behalf of the non-existent exporter. The appellants CHA is not in anyway concerned with or was aware of the valuation of the goods so it cannot be expected from a CHA to know whether the drawback was correctly availed or not - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Allegation of fraudulent availment of drawback, imposition of penalty on CHA, involvement of non-existent exporter, aiding and abetting in export of goods.

In this case, the appellant, a Customs House Agent (CHA), was handling export goods for Asian Exports. The exporter was accused of fraudulent availment of drawback for cutting tools and readymade garments. The penalty was imposed on the appellant CHA for filing documents for a non-existent party and aiding in the clearance of goods for claiming drawback. It was alleged that the appellant aided and abetted Asian Exports in exporting readymade garments in the name of a fictitious party, rendering the goods liable for confiscation. The appellants challenged the order.

The appellant's counsel argued that the issue of fraudulent availment of drawback was related to cutting tools, not readymade garments, for which another CHA was responsible. The appellant CHA had filed shipping bills only for readymade garments, not cutting tools. The counsel contended that the allegation against the appellant was unsustainable as the exporter was found to be existing, despite summons being returned. Legal precedents were cited to support the argument.

The revenue's representative reiterated the findings of the impugned order, supporting the penalty on the appellant CHA.

Upon considering the submissions, the tribunal found that the appellant was not involved in filing shipping bills for cutting tools, and the penalty based on dealing with a non-existent exporter was not proven as the exporter was initially existing. The tribunal also noted that the appellant, as a CHA, was not expected to be aware of the valuation of goods for fraudulent drawback availment. Therefore, the tribunal concluded that the appellant could not be penalized for aiding and abetting in fraudulent drawback availment. Consequently, the impugned order was modified, and the appeal was allowed.

The judgment was pronounced in court on 25/04/2017.