2019 (6) TMI 1230 - AT - Customs

Imposition of penalties on CHA under the provisions of Regulations 22 of CBLR, 2013 - misdeclaration, misclassification and under valuation of imported goods - wireless Point of Sale Devices (POS) - Mobile Point of Sale Device (MPOS) - Department is of the opinion that the product (MPOS) has been imported by M/s.Pax Technology India Pvt. Ltd. and cleared through the Customs broker, M/s. Rubal Logistics Pvt. Ltd. - HELD THAT - From the Order-in-Original, it is observed that the adjudicating authority has gone into the details of the statements of all concerned recorded at the stage of investigation. Not only this, the authority has perused the Master Distribution Agreement of M/s. Pax Technology India Pvt. Ltd. and has observed that the soft-ware license was an integral part of the devices without which the impugned devices could not be operated and that the value of soft ware license fee has to be included in the total value of the devices. Based on these observations that the impugned goods were held to be misclassified and misvalued/ misdeclared. However, as far as the role of the appellant is concerned, it is observed by the adjudicating authority that he bonafidely believed about the changed invoice to be the correct one. The CHA is rather observed to have complied with the formalities as that of KYC documentation. It is in view whereof that his license has not been revoked. However, the penalty has been imposed under 11 (d), (e) (m) of CBLR, 2013. The provisions under 11 (d), (e) (m) of CBLR, 2013 require the Customs Broker to exercise due diligence to ascertain the correctness of any information and to advice the client accordingly. Though the CHA was accepted as having no mensrea of the noticed mis-declaration /under- valuation or mis-quantification but from his own statement acknowledging the negligence on his part to properly ensure the same, we are of the opinion that CH definitely has committed violation of the above mentioned Regulations. These Regulations caused a mandatory duty upon the CHA, who is an important link between the Customs Authorities and the importer/exporter. Any dereliction/lack of due diligence since has caused the Exchequer loss in terms of evasion of Customs Duty, the original adjudicating authority has rightly imposed the penalty upon the appellant herein. Appeal dismissed - decided against appellant.

Summary

Issues:
Appeal against imposition of penalty under Regulations 22 of CBLR, 2013 on a Customs Broker for alleged misdeclaration, misclassification, and undervaluation of imported goods.

Analysis:
The case involved an appeal against the imposition of a penalty on a Customs Broker under Regulation 22 of CBLR, 2013 for alleged misdeclaration, misclassification, and undervaluation of imported goods. The importer, M/s. Pax Technologies Pvt. Ltd., was found to have imported Point of Sale Devices (POS) and Mobile Point of Sale Devices (MPOS) from China. The investigation revealed discrepancies in the declared value of the imported goods compared to the actual value, leading to the interception and seizure of subsequent consignments. The Customs Broker, the appellant, was accused of facilitating the import process without due diligence in verifying the information provided by the importer. The adjudicating authority imposed a penalty of ?40,000 on the Customs Broker under Regulations 11(d), (e), and (m) of CBLR, 2013.

The appellant argued that their role was limited to paperwork, customs compliance, and facilitating clearance, with limited knowledge of the goods' valuation and quality. They contended that the penalty was unjustified as they had fulfilled all necessary requirements and complied with KYC norms. However, the department maintained that the Customs Broker failed to exercise due diligence in verifying the accuracy of the information provided by the importer, leading to evasion of Customs duty. The adjudicating authority found the Customs Broker negligent in ensuring the correctness of information provided to the client, as mandated by the regulations.

Upon reviewing the case, the Tribunal concluded that the Customs Broker had indeed violated the mandatory duties outlined in Regulations 11(d), (e), and (m) of CBLR, 2013. Despite the lack of mens rea regarding the misdeclaration and undervaluation, the Customs Broker's negligence in verifying the information had resulted in evasion of Customs duty. Therefore, the Tribunal upheld the order imposing the penalty on the Customs Broker, as it was deemed appropriate given the circumstances. The appeal was dismissed, and the order was upheld, affirming the penalty imposed on the Customs Broker for the violations identified during the import process.