2019 (9) TMI 1220 - AT - Customs

Imposition of penalty on Customs Broker - Valuation of imported goods - import of heavy melting scrap on high sea sale basis - It was alleged against the appellant that they had not obtained any authorization or document from M/s. V.V. Iron Steel Company Ltd. on behalf of whom they have filed Bill of Entry - imposition of penalty - HELD THAT - The appellant has filed the Bill of Entry of M/s. V.V. Iron Steel Company Ltd. The high seas sales between MM Traders and the client of the appellant is a DDP transaction. As per such nature of transaction, the seller bears cost, risk and responsibility for the cleared goods. The seller is thus responsible for import, clearance, duties and taxes that have to be paid. It is therefore the responsibility of MM Traders. Further in the Show Cause Notice, the allegation is that the appellant has not obtained document from M/s. V.V. Iron Steel Company Ltd. There is no allegation that the appellant has knowingly and intentionally abetted any misdeclaration of goods. The authorities below, though have come to the conclusion that the appellant has abetted making false declaration in the Bill of Entry, there is no iota of evidence furnished by the department to support this conclusion. Imposition of penalty - HELD THAT - There is nothing to establish or prove that the appellant has knowingly or intentionally abetted to make false declaration in the Bill of Entry - the penalty imposed under section 112(a) of the Customs Act, 1962 cannot sustain. The penalty imposed u/s 114AA would be attracted only if the person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect. In the present case, the appellant has not abetted in mis-declaration of the goods, the penalty imposed under section 114AA of the Customs Act, 1962 also cannot sustain. The impugned order is set aside insofar as the penalties imposed under section 112(a) and 114AA of the Customs Act, 1962 on the appellant - Appeal allowed.

Summary

Issues: Mis-declaration of goods, Penalty under section 112(a) of the Customs Act, 1962, Penalty under section 114AA of the Customs Act, 1962

Mis-declaration of goods:
The case involved a Customs Broker who filed a Bill of Entry on behalf of a company importing heavy melting scrap. Upon examination, it was found that MS iron plates were concealed within the cargo. The authorities alleged mis-declaration and issued a Show Cause Notice. The appellant argued that they had no knowledge of any mis-declaration as they were not provided with the necessary authorization or document from the importing company. The appellant contended that they were not involved in the mis-declaration and should not be penalized.

Penalty under section 112(a) of the Customs Act, 1962:
The original authority imposed a penalty under section 112(a) for the alleged mis-declaration. The Commissioner (Appeals) upheld this penalty, leading the appellant to appeal against the decision. The appellant argued that as a Customs Broker, they were not aware of any mis-declaration and should not be held liable for it. The appellant presented evidence to support their claim that they had no knowledge of the concealed iron plates.

Penalty under section 114AA of the Customs Act, 1962:
Additionally, a penalty under section 114AA was imposed, which was reduced by the Commissioner (Appeals) but still contested by the appellant. The appellant argued that since they were not involved in any mis-declaration and had no knowledge of it, the penalty under section 114AA should not apply to them. The appellant maintained that they had acted in accordance with the DDP transaction terms and had received the necessary documentation from the responsible party.

Analysis:
Upon review of the case and evidence presented, the Tribunal found that there was no proof that the appellant knowingly or intentionally abetted the mis-declaration of goods. The Tribunal noted that the appellant, as a Customs Broker, had filed the Bill of Entry on behalf of the importing company involved in a DDP transaction. The responsibility for the cleared goods, including any mis-declaration, lay with the seller according to the DDP terms. The Tribunal concluded that since there was no evidence of the appellant's involvement in the mis-declaration, the penalties under sections 112(a) and 114AA of the Customs Act, 1962 could not be upheld. Therefore, the Tribunal set aside the penalties imposed on the appellant and allowed the appeal with consequential relief.