2018 (8) TMI 256 - AT - Customs

Principles of Natural Justice - appellant did not appear for the hearing nor was he represented by any counsel - Held that - It is seen that this appellant was not represented even during the early hearings on 5.6.2018, 10.4.2018 and 07.03.2018. The only obvious inference that can be drawn is that the said appellant is not interested in pursuing the appeal - appeal was dismissed for non-prosecution. Penalty u/s 114 (i) of the Customs Act on CHA - Held that - The matter has been more amply covered in their favour in the case of CC (Exports) Chennai Vs I. Sahaya Edin Prabhu 2015 (1) TMI 1032 - MADRAS HIGH COURT wherein the Hon ble High Court of Madras has held that for the failure of the CHA to discharge his functions, penalties are provided in the CHALR, and imposition of penalty under Section 114 (i) of the Customs Act is unwarranted. The adjudicating authority while dropping proposed penalty under Section 114AA has categorically found that no mens rea can be alleged against these appellants - the alleged infraction should at the most result, if at all, be initiation of proceedings under CHALR 2004 and surely not under the Customs Act, 1962. Appeal allowed in part.

Summary

Issues:
1. Alleged smuggling of Ketamine Hydrochloride in an export cargo declared as Free Flow Iodized salt.
2. Imposition of penalties under Sections 114 and 117 of the Customs Act, 1962 on various individuals and entities involved in the export process.

Analysis:

Issue 1: Alleged smuggling of Ketamine Hydrochloride
The case involved the examination of an export cargo declared as Free Flow Iodized salt, where Ketamine Hydrochloride was found concealed. The Directorate of Revenue Intelligence issued a show cause notice proposing confiscation and penalties under Sections 114AA and 117 of the Customs Act, 1962. The adjudicating authority confirmed the proposals and imposed penalties on the involved parties. The appellants challenged the penalties imposed, arguing against their involvement in the smuggling.

Issue 2: Imposition of penalties under Sections 114 and 117
The appellants contended that the penalties imposed under Section 117 for violations related to the Customs Act, 1962 were not justified. They argued that the violations, if any, should be dealt with under the Customs Agents Licensing Regulations, 2004 (CHALR) and not under Section 117. The appellants relied on case laws to support their argument that penalties under Section 117 cannot be imposed for infractions falling under CHALR 2004. The appellants also highlighted findings by the adjudicating authority that indicated a lack of mens rea and intentional mis-declaration in their actions, leading to the conclusion that penalties under Section 114AA were not applicable.

Judgment Summary:
The Tribunal dismissed one appeal for non-prosecution due to the appellant's lack of interest. For the remaining appellants, the Tribunal referred to relevant case laws and found that penalties under Section 117 of the Customs Act, 1962 were not justified. The Tribunal held that the alleged infractions should be addressed under CHALR 2004 and not under the Customs Act, 1962. Consequently, the penalties imposed under Section 117 on the appellants were set aside, and the appeals were allowed with consequential benefits. The judgment emphasized that penalties under Section 117 were not applicable in this case, and the appellants were not liable for such penalties.