2018 (6) TMI 936 - AT - Customs

Penalty u/s 112(a) of the Customs Act, 1962 on partner of CHA - The case against the appellant is that he facilitated with the IEC of Rudraksh Enterprises to the actual importer - Held that - The appellant has acted as a CHA and filed bill of entry in respect of imports made on the basis of IEC of M/s Rudraksh Enterprises. Since CHA filed the bill of entry on the basis of documents produced to him by the importer and in such documents no discrepancy was pointed out, the undervaluation of the imported goods was determined only on the basis of independent investigation carried out by the customs authorities - CHA cannot be made responsible for undervaluation in the peculiar fats of the case. The adjudicating authority himself is not sure about the involvement of the appellant in the modus operandi of the importer - the entire finding is based on assumption and presumptions and on that basis the appellant cannot be punished. Penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Penalty imposed under Section 112(a) of the Customs Act, 1962 on the appellant for alleged undervaluation of imported goods.

Analysis:
The appeal was directed against an Order-in-Original passed by the Commissioner of Customs imposing a penalty on the appellant under Section 112(a) of the Customs Act, 1962. The appellant, a partner of a Customs House Agent (CHA), was accused of facilitating undervaluation of imported goods by using the Importer Exporter Code (IEC) of another entity. The case revolved around discrepancies between the declared value of goods in import documents and the actual value revealed through an investigation. The appellant's involvement in the undervaluation was contested based on the argument that merely using another entity's IEC does not necessarily imply guilt. The appellant's representative cited relevant case laws to support this contention.

The appellant's representative further argued that the CHA firm, owned by the appellant, filed the bill of entry based on the documents provided by the importer, and there was no indication of undervaluation in those documents. It was emphasized that the undervaluation was only discovered through an independent investigation by customs authorities, not through the documents submitted by the CHA. Various judgments were cited to support the argument that CHA cannot be held responsible for undervaluation based on the documents provided to them.

The Authorized Representative for Revenue reiterated the findings of the impugned order, highlighting the adjudicating authority's observation that the appellant was aware of the undervaluation based on the prices at which identical goods were cleared by other importers. However, the final decision by the Tribunal considered the submissions from both sides and examined the records. It was noted that the undervaluation was determined through independent investigation, and the CHA cannot be expected to know about undervaluation based solely on the documents provided by the importer. The Tribunal specifically referenced a paragraph from the impugned order to highlight the lack of direct evidence implicating the appellant in the undervaluation scheme.

Ultimately, the Tribunal found that the adjudicating authority's finding was based on assumptions and presumptions, lacking concrete evidence of the appellant's direct involvement in undervaluation. Citing the judgments relied upon by the appellant's counsel, the Tribunal set aside the penalty imposed under Section 112(b) of the Customs Act, 1962, and allowed the appeal in favor of the appellant.