2020 (2) TMI 59 - AT - Customs

Imposition of penalties on CHA u/s 112 of Customs Act, 1962 - jurisdiction for imposition of penalties - mis-declaration of vessel - HELD THAT - It is clear that the case against the custom broker is dependant entirely on the variance with the description found in the certificate issued by the Registry of Indian Ships as well as the certificate issued by the Fiji Shipping Registry. We are unable to arrive at the same conclusion as the licensing authority that the description in these two documents would indicate the classifiability of the vessel as tugs . On the contrary, the inclusion of supply vessel in the description is equally ambiguous in deciding upon the classification. It was, therefore, an overreach on the part of the licensing authority to conclude that description made in the documents despite the possession of these two certificates indicate a deliberate attempt to mislead. There is no adducing to any other motive for erroneous declaration in the bills of entry. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Forfeiture of security deposit by custom house agent under Custom House Agent Licensing Regulations, 2004 based on alleged misdeclaration of imported vessel and imposition of penalties under section 112 of Customs Act, 1962.

Analysis:
1. Forfeiture of Security Deposit: The appeal challenged the forfeiture of the security deposit by M/s Falcon Cargo Services (India) Pvt Ltd, a custom house agent, ordered under regulation 22(7) and 20(1) of Custom House Agent Licensing Regulations, 2004. The appellant sought relief, claiming that the authority was influenced by the outcome of proceedings against the importer and others for penalties under section 112 of Customs Act, 1962. The Tribunal considered previous judgments, including Devraj M Salian v. Commissioner of Customs (I), Mumbai, which emphasized that penalties imposed on a custom house agent should be justified by concrete evidence of aiding or abetting duty evasion, which was found lacking in this case.

2. Alleged Misdeclaration of Vessel: The case revolved around the misdeclaration of a 'sea-going vessel' imported by M/s Hind Offshore Pvt Ltd, described incorrectly as an 'exclusive supply vessel' instead of a 'tug/supply vessel or AHTS' in the bill of entry. The charges against the custom house agent included failure to advise compliance with Customs Act, 1962, lack of due diligence in declaration, and inefficiency, violating regulations 13(d), 13(e), and 13(n) of Custom House Agent Licensing Regulations, 2004. The licensing authority's findings highlighted discrepancies in vessel descriptions and the agent's responsibilities to ensure accurate declarations.

3. Judicial Findings: The judgment analyzed the evidence presented, including certificates from ship registries, to determine the vessel's classification. The Tribunal disagreed with the licensing authority's interpretation, stating that discrepancies in vessel descriptions did not conclusively prove deliberate misdeclaration. The judgment emphasized the custom house agent's obligation to verify document accuracy and ensure compliance with import regulations, holding the agent accountable for failing to prevent misdeclaration and aiding in claiming ineligible duty exemptions.

4. Legal Defenses: The appellant argued that in related proceedings under the Customs Act, 1962, the custom house agent was exonerated from all allegations, questioning the basis of the impugned order. The Tribunal, considering the lack of substantial evidence supporting the allegations and the clearance in previous proceedings, concluded that the impugned order was not sustainable. Consequently, the appeal was allowed, and the impugned order was set aside based on the failure of the foundation of the allegations.

In conclusion, the judgment addressed the forfeiture of security deposit by a custom house agent, the implications of misdeclaration of imported goods, the agent's responsibilities under licensing regulations, and the necessity of concrete evidence to justify penalties under the Customs Act, 1962. The decision highlighted the importance of verifying document accuracy, ensuring compliance with regulations, and the need for substantial evidence to support allegations against custom house agents.