2018 (1) TMI 960 - AT - Customs

Penalty on CHA in terms of Regulation 22 of Customs Broker Regulations 2013 - entire act was done by the assessee s employees without knowledge of the Directors - Held that - On appreciating the fact that FSSAI has subsequently issued the NOC that the goods have been cleared for home consumption and in the absence of any evidence to show that present CB was actively involved in improper action of his employee Shri Hemant Pol and was having any knowledge of the illegal act done by his employees, there are no reasons to impose penalty upon the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalty on a Customs Broker under Regulation 22 of Customs Broker Regulations 2013 for involvement in clearance of goods based on false documents.

Analysis:
The appellant, a Customs Broker, was penalized ?50,000 for involvement in clearing a consignment of goods with fake documents. The investigation revealed that the import required a certificate from FSSAI, which was found to be counterfeit. Prior to the penalty, the appellant's license was suspended, but the CESTAT Bombay found no serious charges or revenue loss against the appellant. The Tribunal's order was challenged in the Bombay High Court, which directed the authorities to expedite proceedings regarding license revocation. The Commissioner dropped the revocation proceedings but imposed the penalty under Regulation 22.

The appellant's employee, who dealt with imports, made genuine efforts to obtain the required NOC from FSSAI. The fraud was committed by another agent who provided the forged documents. Notably, there was no revenue loss, and the Directors were not aware of the actions of the employees. The enquiry report highlighted these facts. The Commissioner observed that the goods were later found to comply with FSSAI norms, and there was no evidence of the Customs Broker's active involvement or awareness of the improper actions. The penalty was imposed based on the inability to control employees.

However, considering that FSSAI later issued the NOC for the goods, and there was no evidence of the Customs Broker's involvement in the illegal acts of the employees, the penalty was deemed unjustifiable. Consequently, the penalty was set aside, and the appeal was allowed with consequential relief.