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2021 (12) TMI 1243 - HC - CustomsEnhancement of penalty, levied on Employee of CHA - appellant was reckless and negligent in using the Customs House Agent Licence of his Employer. - Smuggling - red Sander Woods - liability of Customs House Agent for mis-declaration or misuse of the licence - HELD THAT - From the records and the admission of the appellant and his Employer, 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, prepared by the Appellant herein, containing the signature of the employer of the appellant. Therefore, mis-declaration of goods and attempt to export such goods is punishable under Section 114 of the Customs Act. A person, who is a party to the mis-declaration, is liable to pay penalty not exceeding three times of the value of the goods mis-declared. The first respondent Tribunal is empowered to enhance the penalty imposed, if the penalty imposed is not adequate. Section 117 of the Customs Act is a residuary provision for imposing penalty for contravention. When penalty is prescribed elsewhere in the Act, the maximum cap of Rs.One Lakh fixed under Section 117 is not applicable. The submission of the Appellant that penalty of ₹ 5,00,000/- is excessive and beyond power is ex facie untenable. Further, the provisions under the Regulations to punish a person for violation and contravention of the Regulations is in addition to the penal provisions prescribed under the parent act, namely, the Customs Act. Therefore, it is incorrect to say that the Appellant is liable only under the Regulations for any violation and contravention and if the action under the Regulations is not sufficient for the grave offence, there is no legal impediment to proceed against the employee / appellant of the Customs House Agent under the Customs Act besides action under the Regulations. There is no mala fide or infirmity in the order of imposition penalty at ₹ 5,00,000/- - appeal dismissed.
Issues Involved:
1. Imposition of penalty under Section 114(i) and 117 of the Customs Act, 1962. 2. Liability of the employee of the Customs House Agent (CHA) for mis-declaration of goods. 3. Applicability of Customs House Agents Licensing Regulations, 2004 (CHALR) in conjunction with the Customs Act, 1962. Detailed Analysis: 1. Imposition of Penalty under Section 114(i) and 117 of the Customs Act, 1962: The appeals arose from a common order that dismissed the appeal against a penalty of ?2,00,000 and partially allowed the Department’s appeal to enhance the penalty to ?5,00,000. The appellant argued that the penalty was unjustified as the authorities failed to appreciate the facts and circumstances, and the application of Sections 50(2) and 114 of the Customs Act, 1962. The appellant contended that there was no mens rea, and the penalty imposed was arbitrary. The Court found that the appellant played a role in the mis-declaration of goods and upheld the enhanced penalty of ?5,00,000, citing the appellant's negligence and recklessness in using the CHA licence. 2. Liability of the Employee of the Customs House Agent (CHA) for Mis-Declaration of Goods: The appellant, an employee of the CHA, was involved in the preparation of a shipping bill for exporting red sanders mis-declared as Coco Peat. The Court held that the employee of the CHA could not escape liability by pleading ignorance of the transaction. The appellant's admission under Section 108 of the Customs Act was sufficient to hold him liable for the mis-declaration. The Court referenced a similar case (K.V. Prabhakaran Vs. Commissioner of Customs) to support the view that misuse of a CHA licence for smuggling activities should be viewed seriously, and penalties under the Customs Act were justified. 3. Applicability of Customs House Agents Licensing Regulations, 2004 (CHALR) in Conjunction with the Customs Act, 1962: The appellant argued that action should be initiated only under CHALR 2004 and not under Sections 114(i) or 117 of the Customs Act. The Court dismissed this argument, stating that the provisions of CHALR are supplementary to the Customs Act. The Court emphasized that the CHA and its employees have obligations under CHALR to exercise due diligence and verify the correctness of information related to cargo clearance. The appellant failed to discharge these obligations, leading to the mis-declaration of goods. The Court held that penalties under the Customs Act were applicable in addition to any action under CHALR. Conclusion: The Court found no mala fide or infirmity in the order imposing a penalty of ?5,00,000 and dismissed the appeals. The Court reiterated that the appellant, as an employee of the CHA, was liable for the mis-declaration of goods and the penalty imposed was justified under the Customs Act. The Court also clarified that actions under CHALR do not preclude penalties under the Customs Act for grave offenses.
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