2020 (1) TMI 949 - AT - Customs

Imposition of penalty on CHA u/s 112(1)/(b) of the Customs Act - misdeclaration of quantum of imported goods - Synthetic Diamond Powder - allegation that the valuation of Synthetic Diamond Powder is based on the unit of carats , thus by declaring less number of carats, the importer had declared only 1/5th of the quantity and thus undervalued the consignment to the extent of 80% of the quantity declared in the aforesaid two Bills of Entry. HELD THAT - There is no allegation of any connivance on the part of the appellant-CHA with the importer. Further, in the statement recorded the appellant-CHA have stated that it was mistake on his part but he was not knowing about the no. of carats in 1 Kg., but the Bs/E were filed as per Carats shown in Invoices and same were appraised by the group as such and he never questioned about this. The appellant had not committed any act of omission or commission rendering the goods liable to confiscation and consequently no penalty is attracted under Section 112(a)/(b) of the Act - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of a Customs House Agent (CHA) for penalty under Section 112(1)/(b) of the Customs Act.

Analysis:
The case involved the question of whether a CHA was liable for penalty under Section 112(1)/(b) of the Customs Act. The issue arose from a specific intelligence report regarding the import of 'Synthetic Diamond Powder' by an importer. It was found that the importer had undervalued the consignment by declaring only 1/5th of the actual quantity, leading to an 80% undervaluation. The CHA's statement revealed that he filed the Bill of Entry based on the documents provided by the importer, without knowledge of the correct conversion rate of carats to kilograms.

The show cause notice was issued to the importer and the CHA, proposing penalties under various sections of the Customs Act. The goods were held liable for confiscation, and penalties were imposed on the importer and the CHA under Section 112(a) and 114AA. The Commissioner (Appeals) upheld the penalties, noting the admission of misdeclaration by the CHA and the 'G' card holder.

On appeal to the Tribunal, the CHA argued that the penalties were imposed mechanically without considering the facts. It was contended that there was no connivance with the importer, and the misdeclaration was a bona fide mistake based on the documents provided. The CHA had filed several bills of entry earlier without objections, and there was no evidence of extra remuneration received. Legal precedents were cited in support of the appeal.

The Tribunal, after considering the arguments, found that there was no connivance on the part of the CHA with the importer. The CHA's statement indicated a lack of knowledge regarding the correct conversion rate, and the bills of entry were filed based on the information provided by the importer. As there was no act of omission or commission by the CHA rendering the goods liable to confiscation, the Tribunal held that no penalty was warranted under Section 112(a)/(b) of the Act. The appeal was allowed, and the impugned order was set aside, granting the appellant consequential benefits.