2020 (6) TMI 263 - AT - Customs

Imposition of penalty u/s 112(a) of the Customs Act - Charge of abatement - Connivance between the employee of the CHA and importer - Illegal Import - prohibited goods - Import of the undeclared goods namely R-22 Gas Cylinders and Salaam Mishri - HELD THAT - The lapses on the part of the appellant can at worst be termed as negligence in discharge of his obligations under the CBLR. However, the Revenue has failed to adduce any evidence of deliberate involvement or connivance of the appellant in the mis-declaration. Therefore, the charge of abetment on part of the appellant to render the goods liable to confiscation is unsustainable. Thus, the appellant is not liable to penalty under Section 112 (a) of the Customs Act, 1962. Secondly, on the basis of aforementioned findings, which are self-contradictory, inasmuch as the appellant has been charged of not knowing the importer/proprietor and at the same time has been alleged to have aided /abetted the importer in his wrong doings. It is a matter of ordinary prudence that one cannot connive with a person he does not know or has not met. Further, the appellant, as the employee of the CHA firm, G-Card Holder, has only filed the bill of entry on the basis of the documents received by him from the representative of the importer. There is no allegation of forging or manipulation of any documents by the appellant. Further, there is no case or allegation that the appellant knowingly made wrong declaration in the bills of entry on behalf of the importer. Further, there is no statement by any co-noticee or other person suggesting connivance or knowledge of any mis-declaration on the part of this appellant - It is inappropriate interpretation on the part of the Adjudicating Authority that under Regulation 11 (n) of CBLR, it is required to make physical verification of his clients address, IEC No. and other KYC documents. The appellant-CHA firm had known the said Shri Deepak Kapoor Intermediary, who was bringing them the clearance work on regular basis. Further, the said Shri Deepak Kapoor was also known to Mr. Narinder Narula, Proprietor of the CHA firm. The appellant, being employee of the CHA firm, placed great reliance on Mr. Kapoor and thus, was negligent in ensuring the KYC compliance - Further, the appellant under the influence of Mr. Deepak Kapoor, filed the bills of entry without completing the KYC formalities. Further, from the appreciation of the facts and on perusal of the impugned order, it is evident that no case of connivance is made out against the appellant /employee i.e. no allegation or finding of any additional gain or reward received by him. The penalty imposed is very high and disproportionate to the offence by this appellant. Accordingly, the penalty imposed under Section 112(a) of the Customs Act is reduced from ₹ 34,14,020/- to ₹ 10,00,000/- - Appeal allowed in part.

Summary

Issues Involved:
1. Imposition of penalty under Section 112(a) of the Customs Act.
2. Examination and seizure of goods by DRI officers.
3. Verification of import documents and KYC compliance.
4. Statements and involvement of various individuals.
5. Adjudicating authority's findings and penalty imposition.
6. Appeal against the imposition of penalty.

Issue-Wise Detailed Analysis:

1. Imposition of Penalty under Section 112(a) of the Customs Act:
The core issue in this appeal is whether the penalty of ?34,14,020/- imposed under Section 112(a) of the Customs Act is justified. Section 112(a) pertains to penalties for acts or omissions that render goods liable to confiscation or abet such acts. The appellant contended that his actions, at worst, amounted to negligence rather than deliberate involvement or connivance in the mis-declaration of goods.

2. Examination and Seizure of Goods by DRI Officers:
On 30.03.2013, DRI officers examined a container imported by M/s Pixel Overseas at ICD, TKD, New Delhi. The container, covered under B/E No. 9699034 dated 28.03.2013, contained gas stoves, refrigerant R-22 gas cylinders, and unidentified dried herbs. These goods were seized under a panchnama dated 30.03.2013.

3. Verification of Import Documents and KYC Compliance:
The appellant, an employee of M/s GND Cargo Movers (CHA), was responsible for filing the Bill of Entry (B/E). He admitted to filing the B/E without verifying the antecedents of the importer or completing the KYC requirements, such as obtaining a PAN Card and IEC attested copy. The appellant claimed to have informed Shri Deepak Kapoor, who brought the documents, about the missing KYC documents and awaited their submission before further actions.

4. Statements and Involvement of Various Individuals:
Several individuals provided statements during the investigation:
- Shri Deepak Kapoor, who facilitated the import clearance, claimed he was acting on behalf of Shri Ramesh Gupta and Shri Sonu.
- Ms. Saheema Khan, proprietor of M/s Pixel Overseas, denied involvement in the import and stated that her company’s IEC was used without authorization.
- Shri Narinder Narula, proprietor of M/s GND Cargo Movers, stated he was unaware of the B/E filing as he was out of station.

5. Adjudicating Authority's Findings and Penalty Imposition:
The adjudicating authority found the appellant responsible for filing the B/E without proper verification, accepting cash for duty payment, and failing to inform his CHA about the filing. Consequently, the authority imposed a penalty of ?34,14,020/- on the appellant under Section 112(a).

6. Appeal Against the Imposition of Penalty:
The appellant argued that his actions were negligent rather than deliberate. He emphasized the lack of evidence for deliberate involvement or connivance in the mis-declaration. The appellant also highlighted that he had only received ?5,500/- as agency charges and had no personal monetary gain. The Tribunal found that the appellant's negligence did not amount to connivance or deliberate abetment. It was noted that the appellant had relied on Mr. Deepak Kapoor, a known intermediary, and had requested the necessary KYC documents, which were promised but not delivered. The Tribunal concluded that the penalty imposed was disproportionate to the appellant's actions and reduced it from ?34,14,020/- to ?10,00,000/-.

Conclusion:
The appeal was allowed in part, with the penalty reduced to ?10,00,000/-. The Tribunal found that while the appellant was negligent, there was no evidence of deliberate involvement in the mis-declaration of goods. The appellant was entitled to consequential benefits.