2021 (3) TMI 560 - AT - Customs

Customs Brloker - Penalty u/s 112(a) of the Customs Act, 1962 and Section 114AA of the Customs Act, 1962 - misdeclaration of imported consignment - clearance of cosmetic items in personal baggage in commercial quantities imported by the passenger - suppression of facts - HELD THAT - The Revenue has not been able to bring any evidence on record which shows that the appellant had prior knowledge regarding the violation of the provisions of the Customs Act - Further this Tribunal in SHAHIN TAJ BEGUM VERSUS COMMISSIONER OF CUSTOMS, MANGALORE 2020 (2) TMI 1132 - CESTAT BANGALORE reduced the penalties imposed on the passenger after holding that there was no suppression of facts by the passenger. Once the passenger has not suppressed any material fact then how it can be said that the appellant has abetted the passenger in the commission of certain violation of the Customs Act. In the present case, no proceedings were initiated against the appellant under the Customs Broker Licensing Regulations, 2013. Moreover, issuance of show-cause notice in de novo remand proceedings is not permitted under law. The imposition of penalty of ₹ 2,50,000/- on the appellant is not sustainable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Reduction of penalty under Section 112(a) of the Customs Act, 1962
2. Setting aside of penalty under Section 114AA of the Customs Act, 1962

Detailed Analysis:
1. The appeal was against the order reducing the penalty under Section 112(a) of the Customs Act, 1962. The appellant was a Customs Broker involved in the clearance of a consignment declared as personal effects/household articles. However, upon examination, it was found that a significant portion of the consignment contained commercial quantity cosmetic items instead. The Additional Commissioner imposed penalties under Sections 112(a) and 114AA of the Act, which were challenged. The Commissioner reduced the penalty under Section 112(a) to ?2,50,000 and set aside the penalty under Section 114AA. The appellant argued that the penalty was unsustainable as they were unaware of the actual contents of the consignment and had not violated any provisions leading to confiscation. The appellant also contended that the show-cause notice issued in remand proceedings was impermissible under the law.

2. The appellant's counsel argued that there was no evidence to suggest the appellant had prior knowledge of the violation. Referring to a previous tribunal decision, it was emphasized that lack of due diligence or failure to take precautions does not automatically lead to penal consequences under Section 112(a) of the Customs Act. The counsel also highlighted that the passenger, in a separate case, had penalties reduced by the CESTAT after it was established that there was no suppression of facts. Therefore, it was asserted that without any material evidence, it was unjustified to hold the appellant accountable for abetting illegal imports. The appellant further relied on a precedent stating that penalties under Section 112(a) cannot be imposed on a Customs Broker when no proceedings are initiated against them under the Customs Broker Licensing Regulations, which was the case here.

3. The Appellate Tribunal, after reviewing the arguments and records, found that there was no evidence indicating the appellant had prior knowledge of the violation. Referring to a previous tribunal decision, it was noted that penalties under Section 112(a) cannot be imposed on a Customs Broker if no proceedings were initiated against them under the relevant regulations. The Tribunal also emphasized that the show-cause notice in the remand proceedings was not permissible under the law. Consequently, the Tribunal concluded that the penalty of ?2,50,000 imposed on the appellant was unsustainable in law and set it aside, allowing the appeal of the appellant.