2018 (11) TMI 578 - AT - Customs

Penalty on CHA - Under valuation - Diamond powder - misdeclaration - Held that - The appellant as a CHA was engaged by the importer for clearance of the Diamond powder and he has admitted that they were aware that the carats were wrongly shown in the Documents. When it is so then it is a case of negligence on the part of the appellant - penalty upheld but the quantum is reduced - appeal allowed in part.

Summary

Issues: Alleged under-valuation of imported goods, failure to verify KYC norms, imposition of penalty on the clearing agent.

Analysis:
1. Under-valuation of imported goods: The appellant, a Clearing House Agent (CHA), filed Bills of Entry for the clearance of Synthetic Diamond Powder on behalf of the importer. Customs Authorities found discrepancies in the declared value of the goods, leading to allegations of under-valuation. The appellant admitted awareness of the incorrect information in the documents, indicating negligence on their part. The Tribunal acknowledged the negligence but considered the appellant's lack of expertise in carats versus grams, leading to a reduction in the penalty imposed.

2. Failure to verify KYC norms: It was alleged that the appellant failed to verify Know Your Customer (KYC) norms as per a circular dated 8-4-2010. The Customs Authorities claimed that the appellant did not properly verify all documents, facilitating customs duty evasion in collusion with the importer. This failure to adhere to KYC norms was a contributing factor in the penalty imposition.

3. Imposition of penalty: The Customs Authorities levied a penalty of ?5 Lakhs on the appellant for their involvement in the under-valuation of goods and failure to verify KYC norms. The Tribunal, after hearing both parties, recognized the negligence on the part of the appellant but considered the penalty amount excessive due to the appellant's limited expertise in the specific domain. Consequently, the Tribunal modified the order and reduced the penalty to ?2,50,000, granting the appellant partial relief.

In conclusion, the Tribunal partially allowed the appeal filed by the appellant, acknowledging the negligence but considering the appellant's expertise level in the matter. The penalty was reduced to ?2,50,000 from the initial ?5 Lakhs, providing the appellant with some relief in the case.