2022 (5) TMI 995 - AT - Customs

Levy of penalty u/s 114(i) of the Customs Act, 1962 on Customs Broker - goods are not confiscated, as there is no such proposal in the Show Cause Notice - it is claimed that the question of imposing penalty under sec. 114(i) does not arise as the provision of section 114 will be invocable only when section 113 of the Customs Act, 1962 has been invoked - HELD THAT - It is seen from the facts that the appellant had only filed the shipping bill and had not got registered or filed any KYC documents along with it to proceed with the export of the goods. It is submitted by the learned counsel that after filing the shipping bill, as they had not got documents from the exporter, they did not pursue the matter so as to get the shipping bill registered. On perusal of the records, there are no evidence established against the appellant to show that they have abetted in the attempt to export the prohibited goods namely Star Tortoises. In para 51 of the Order in Original, the original authority has stated that Shri P. Thirumoorthy, Manager of M/s. AKR Logistics India Pvt. Ltd. has failed to exercise due diligence and has not been able to furnish KYC documents. It is also stated that he has lend his Customs Broker card to one Shri Gokula Kannan who was not an employee of the company to handle the export. All these allegations if any, would fall under the Customs Broker Licensing Regulations. No evidence has been adduced to show that the appellant has connived with the exporter in the attempt to export the goods. The penalty imposed under section 114(i) of the Customs Act, 1962 on the appellants herein cannot sustain and requires to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Jurisdiction of the investigating Commissionerate
2. Allegation of abetment in smuggling of prohibited goods
3. Propriety of penalties imposed under sec. 114(i) of the Customs Act, 1962
4. Validity of the Corrigendum issued for confiscation of goods

Jurisdiction of the investigating Commissionerate:
The appeals questioned the jurisdiction of Chennai III Commissionerate to conduct investigations and issue Show Cause Notice based on searches conducted in the Kasimedu area. The appellant argued that the investigating Commissionerate lacked jurisdiction over the Chennai VII Commissionerate, where the shipping bills pertained. The respondent contended that the searches were legal as the goods were seized in Kasimedu, falling under Chennai III Commissionerate's jurisdiction.

Allegation of abetment in smuggling of prohibited goods:
The appellant, a Customs Broker, denied abetting in the smuggling of Star Tortoises, emphasizing they had only filed the shipping bills without further action due to lack of KYC and authorization from the exporter. The tribunal found no evidence to establish the appellant's involvement in the attempt to export the prohibited goods. The original authority's observations regarding the appellant's failure to exercise due diligence and lending their Customs Broker card to an unauthorized individual were deemed to fall under Customs Broker Licensing Regulations.

Propriety of penalties imposed under sec. 114(i) of the Customs Act, 1962:
The appellant challenged the penalties imposed under sec. 114(i), arguing that since the Show Cause Notice did not propose confiscation of the goods, the penalties were not sustainable. The tribunal concurred, noting a serious error in the Show Cause Notice where confiscation was vaguely mentioned in one paragraph but not proposed in subsequent sections. The Corrigendum issued to rectify this error was deemed invalid, as it exceeded the scope of correcting typographical errors.

Validity of the Corrigendum issued for confiscation of goods:
The tribunal scrutinized the Corrigendum issued to order confiscation of the Star Tortoises, finding it improper as it attempted to cover up a substantive issue rather than rectifying a typographical error. The tribunal held that the penalties imposed under sec. 114(i) could not be sustained due to the lack of a proper proposal for confiscation in the Show Cause Notice. Consequently, the penalties were set aside, and both appeals were allowed.

This comprehensive analysis of the judgment addresses the key issues raised in the appeals, including jurisdiction, allegations of abetment, penalty imposition, and the validity of the Corrigendum, providing a detailed overview of the tribunal's findings and reasoning.