2019 (11) TMI 734 - AT - Customs

Levy of penalty on CHA - Prohibited goods - The case of the revenue is that, the CHA firm namely M/s R.U. Imports-Exports Pvt. Ltd. has played a crucial role in violation of the provision of the Foods Safety Standards Act, 2006 as well as violation of provisions of the Customs Act, 1962, however, the Adjudicating Authority has failed to impose penalty on the respondent CHA firm and, therefore, the Adjudicating Authority has erred in not imposing penalty under Section 112A on the CHA firm namely M/s R.U. Imports-Exports Pvt. Ltd. HELD THAT - There is no doubt that the import consignment was of the prohibited goods as same was not found fit for human consumption. The statement of various persons including the Director of the CHA firm reveals that the Director of the CHA firm was aware that the present import consignment as well as the consignment, which have been cleared previously were not meeting with the legal requirement of the FSS Act, 2006 and thereby the same had been imported and cleared in violation of the provision of the Customs Act, 1962 - the Adjudicating Authority under para 28.3 of the order-in-original has categorically mentioned that the CHA firm is responsible for filing the documents for clearance of goods from the customs and the firm has failed to ensure compliance of the provisions of Food Safety Standards Act, 2006 as well as the provision of the Customs Act, 1962, still the Adjudicating Authority did not impose any penalty under Section 112A of the Customs Act, 1962. CHA firm being independent legal entity and responsible for ensuring compliance of the customs provisions. The CHA firm has been provided with a CHA license as per the provisions of the Customs Broker Regulations CBLR which mandate them to ensure compliance of provisions of the Customs Act and since they have failed in their duty and such act have rendered the subject consignment liable for confiscation as per provisions of Section 111 (d) of the Customs Act, 1962, a penalty under Section 112 (a) of Customs Act is required to be imposed. The Adjudicating Authority after providing an opportunity hearing to the respondent CHA firm will adjudicate the matter afresh only with regard to issue of the imposition of the penalty under Section 112A of the Customs Act, 1962 - Appeal allowed with the way of remand to the original Adjudicating Authority.

Summary

Issues:
Violation of Food Safety & Standards Act, 2006 and Customs Act, 1962 by importing Dietary Supplements without necessary approvals and compliance. Imposition of penalties under Section 112A of the Customs Act on the CHA firm.

Analysis:

1. Importation of Dietary Supplements:
The case involved the importation of a consignment of Dietary Supplements without the required no objection certificate from the Food Safety & Standards Authority of India (FSSAI). The consignment was subjected to examination, and it was found that essential details were missing from the packaging, violating Legal Metrology Rules. Samples were chemically tested by FSSAI, which declared them unsafe for human consumption, leading to the initiation of proceedings for confiscation under the Customs Act.

2. Confiscation and Penalties Imposed:
The Adjudicating Authority held that the seized goods were liable for confiscation as prohibited goods under Section 111(d) of the Customs Act. Penalties equivalent to the seizure value were imposed on the involved parties under Section 112(a) of the Customs Act. However, penalties were not imposed on certain individuals, leading to an appeal by the department against the order-in-original.

3. Role of CHA Firm:
The appeal focused on the role of the Customs House Clearing Agency (CHA) firm, which was alleged to have played a crucial part in the violations. The department argued that the CHA firm should have been penalized under Section 112A of the Customs Act for failing to ensure compliance with legal requirements. The investigation revealed that the CHA firm had previously cleared consignments without meeting FSSA requirements.

4. Decision and Remand:
After considering the arguments, the Tribunal found that the import consignment indeed violated the Food Safety & Standards Act. It was noted that the CHA firm, as an independent legal entity, had a duty to ensure compliance with customs provisions, making it liable for penalties under Section 112(a) of the Customs Act. The appeal was allowed, and the case was remanded to the Adjudicating Authority to reconsider imposing penalties on the CHA firm under Section 112A of the Customs Act.

In conclusion, the judgment highlighted the importance of compliance with regulatory requirements when importing goods, emphasizing the responsibility of all involved parties, including CHA firms, in ensuring adherence to legal provisions.