2018 (9) TMI 508 - AT - Customs

Penalty u/s 114 of CA on CHA - it was alleged that appellant had abetted the exporter in the misuse of drawback scheme - Held that - The SCN does not examine specific role of the CHA. The nature of omission or commission conducted by CHA has not been identified. The impugned order also fails to point out any specific act or omission of the CHA. In absence of any evidence, whatsoever against the CHA and in absence of identification of any specific act or omission on the part of the CHA, the penalty imposed against the CHA cannot be sustained - Appeal allowed - decided in favor of appellant.

Summary

Issues: Imposition of penalty under Section 114 of the Customs Act, 1962 against the Customs House Agent (CHA) for alleged abetment in the misuse of drawback scheme by failing to ensure proper classification for export consignment.

Analysis:
1. The appellant, M/s. Union Clearing Service, challenged the penalty imposed under Section 114 of the Customs Act, 1962, arguing that the CHA was not responsible for ensuring proper classification of goods for export, as it was the exporter's duty. The appellant contended that the impugned order did not specify the CHA's role or any specific act or omission on their part. The Tribunal noted that the show cause notice did not examine the specific role of the CHA and failed to identify any nature of omission or commission by them. Without any evidence against the CHA and the absence of identification of any specific act or omission, the penalty could not be sustained, leading to the appeal being allowed.

2. The Assistant Commissioner (AR) relied on a decision of the Hon'ble High Court of Delhi in a similar case involving misdeclaration of goods' value in a drawback claim to support the imposition of penalty on the CHA. However, the Tribunal observed that the impugned order did not provide any specific evidence or reasoning against the CHA. The Tribunal emphasized the importance of identifying the CHA's specific act or omission before imposing penalties. In this case, the lack of such identification led to the penalty being overturned.

3. The Tribunal's analysis highlighted the necessity of establishing a direct link between the CHA's actions or inactions and the alleged violation to sustain penalties under the Customs Act. Without specific evidence or identification of the CHA's role in the alleged misuse of the drawback scheme, the penalty imposed could not be justified. The Tribunal's decision underscored the importance of due process and evidentiary support in penalty proceedings against Customs House Agents to ensure fairness and accountability in customs enforcement.