2019 (11) TMI 966 - AT - Customs

Imposition of penalty on CHA u/s 112(a) of the Customs Act, 1962 - short paid duty paid along with interest and penalty on being pointed out - HELD THAT - Once the original importer after being pointed out by the audit have paid the differential duty along with interest, there was no necessity to issue the show-cause notice under Section 28 of the Customs Act. Also, Department has not been able to bring any material on record to show that there is a aiding and abetting by the appellant to the importer - Further, in the impugned order no penalty has been imposed on the importer and penalty has only been imposed on the CHA under Section 112(a) of the Customs Act for abetting or aiding which is not established in the present case and therefore there is no justification for imposing the penalty on the CHA. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Imposition of penalty on the custom broker for short payment of duty on imported goods.

Analysis:
The appeal was directed against an order imposing a penalty of ?5,000 on the custom broker for aiding in the short payment of duty on imported gold bars. The appellant, a custom broker, facilitated the import of gold bars for a bank, claiming an exemption on customs duty. However, an inquiry revealed a shortfall in duty payment by the bank, leading to a penalty imposition on the broker. The appellant argued that the penalty was unjust as the bank had paid the differential duty promptly upon discovery, and there was no evidence of aiding or abetting by the broker. The Department failed to establish any wrongdoing on the part of the broker, especially since no penalty was imposed on the bank. The tribunal, after reviewing the submissions and evidence, concluded that there was no justification for penalizing the broker and dropped the penalty, allowing the appeal.

In conclusion, the appellate tribunal ruled in favor of the appellant, the custom broker, stating that the penalty imposed for aiding in the short payment of duty was unwarranted. The tribunal found that once the bank rectified the duty shortfall upon notification, there was no basis for penalizing the broker. The tribunal emphasized the lack of evidence of aiding or abetting by the broker and noted that no penalty was levied on the bank, further supporting the decision to drop the penalty on the broker. The tribunal's decision highlights the importance of establishing culpability and wrongdoing before imposing penalties in customs duty cases, ensuring fairness and adherence to legal standards.