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2021 (12) TMI 47 - HC - CustomsLevy of penalty on CHA - Enhancement in the quantum of penalty u/s 114(i) of the Customs Act - export of prohibited goods by mis-declaration - Red Sanders - authorities have failed to properly appreciate the facts and circumstances of the case - HELD THAT - The Customs House Agents Licensing Regulations, 2004 is nothing but supporting legislation passed in exercise of the powers conferred by sub-section 2 of Section 146 of the Customs Act, 1962. The role and responsibility of the Customs House Agent in case of mis-declaration of goods has to be dealt with based on mens rea to the contribution of the Customs House Agent allowing the smugglers to misuse the licence issued to him. In the present case, Red Sanders has been stealthily exported to Malaysia in a Container bearing No.VMLU 3200873 covered under Shipping Bill No.1955099, dated 09.07.2008 along with Annexure A signed by the appellant herein. It is admitted by the appellant that the blank signed Annexure A was handed over to his employee one Ravi working at Tuticorin. The very admission itself is sufficient to hold that the appellant was reckless and negligent in using his Customs House Agent Licence. The declaration of goods found in the shipping bill hold sway by Annexure A. In a scheme of conspiracy, the Customs House Agent cannot escape from liability pleading ignorance of the transaction - Plea that action against the erring Customs House Agent can be initiated only as per the procedure under CHALR 2004 and not under Section 114(i) of the Customs Act is baseless argument. It is clear that the appellant had not discharged these obligations, which cast on him. It is a case where under the guise of Coco Peats, prohibited goods namely, Red Sanders weighing 10.760 MTs. has been transported. The DRI based on the intelligence gathered, had rescued the goods and found the Cargo was transported based on the Annexure A containing the signature of the appellant Customs House Agent. Customs House Agent is governed by the Regulations framed by the Government in exercise of the powers conferred under the Customs Act, 1962. Therefore, misdeclaration of goods and attempt to export such goods is punishable under Section 114 of the Customs Act - The licence issued to the Customs House Agent under conditions not to commit any grave offence. If action under the Regulations not sufficient for the grave offence, the Customs House Agent is liable also to be proceeded under the Customs Act. There is no legal impediment to proceed against the Customs House Agent under the Customs Act besides action under the Regulations. There can be no excessive exercise of power in imposing penalty of ₹ 5,00,000/-. Hence, this Court holds that the appeals challenging the order of CESTAT deserves to be dismissed - Petition dismissed.
Issues Involved:
1. Imposition of penalty under Section 114(i) of the Customs Act, 1962. 2. Applicability of Section 50(2) of the Customs Act, 1962 to the Customs House Agent. 3. Legality of enhanced penalty by the CESTAT. 4. Liability of the Customs House Agent for mis-declaration by third parties. 5. Applicability of Customs House Agents Licensing Regulations, 2004 versus the Customs Act, 1962. Detailed Analysis: Issue 1: Imposition of Penalty under Section 114(i) of the Customs Act, 1962 The appellant was penalized under Section 114(i) of the Customs Act, 1962 for the illegal export of Red Sanders logs. The initial penalty imposed by the Additional Commissioner was ?10,00,000, which was later reduced to ?3,00,000 by the Commissioner of Customs and Central Excise (Appeals). The CESTAT enhanced this penalty to ?5,00,000, leading to the present appeal. The court upheld the penalty, stating that the appellant's admission of providing a blank signed Annexure – A to his employee indicated recklessness and negligence, justifying the penalty under Section 114(i). Issue 2: Applicability of Section 50(2) of the Customs Act, 1962 to the Customs House Agent The appellant argued that Section 50(2), which pertains to the declaration of the truth of the contents of the shipping bill by the exporter, should not apply to him as a Customs House Agent. The court, however, found that the appellant's role in providing a signed blank Annexure – A facilitated the mis-declaration, making him liable under Section 50(2) as well. Issue 3: Legality of Enhanced Penalty by the CESTAT The CESTAT's decision to enhance the penalty from ?3,00,000 to ?5,00,000 was challenged by the appellant. The court upheld the CESTAT's decision, stating that the appellant's actions warranted a higher penalty due to the severity of the offense and the appellant's role in facilitating the smuggling activity. Issue 4: Liability of the Customs House Agent for Mis-Declaration by Third Parties The appellant contended that he should not be held liable for the mis-declaration made by third parties, specifically his employee, Ravi. The court rejected this argument, emphasizing that the appellant's negligence in providing a signed blank Annexure – A enabled the mis-declaration and subsequent smuggling, making him liable for the penalty. Issue 5: Applicability of Customs House Agents Licensing Regulations, 2004 versus the Customs Act, 1962 The appellant argued that any action against him should be under the Customs House Agents Licensing Regulations, 2004, and not under the Customs Act, 1962. The court dismissed this argument, stating that the Regulations are supplementary to the Customs Act, and violations can be penalized under both. The court highlighted that the appellant's actions constituted a grave offense under the Customs Act, justifying the penalty under Section 114(i). Conclusion: The court concluded that the appellant's actions demonstrated recklessness and negligence, justifying the penalties imposed under the Customs Act. The appeals challenging the CESTAT's order were dismissed, and the enhanced penalty of ?5,00,000 was upheld. The court emphasized the importance of the Customs House Agent's role in ensuring the accuracy of shipping documents and held that violations could be penalized under both the Customs Act and the Licensing Regulations. The substantial questions of law raised by the appellant were answered accordingly, affirming the legality of the penalties imposed.
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