2022 (5) TMI 996 - AT - Customs

Levy of penalty u/s 112(a) of the Customs Act, 1962 on the Customs Broker - wrongful availment of benefit of exemption under N/N. 69/2011-Cus. dated 29.07.2011, N/N. 46/2011-Cus. dated 01.06.2011 and N/N. 12/2012-Cus. dated 17.03.2013 dated, which was not available to the importer - HELD THAT - The allegation levelled against this appellant in the Show Cause Notice is clearly the violation of Regulations 13(d) and (e) of the CBLR, no specific act or omission is attributed to this appellant. What is important is the act or omission that leads to the confiscation of improperly imported goods. Section 111 of the Customs Act, 1962 deals with confiscation of improperly imported goods, etc. and Section 112 prescribes penalty for improper importation of goods, etc. It becomes clear that both Section 111 and Section 112 are attracted only when the goods are held to be liable for confiscation when they are improperly imported goods . Once the Revenue collects duty along with interest, then there remains nothing improper about import as the import itself becomes a proper import, in which event both these Sections will have no role, since when there is no improper import, then there remains nothing to confiscate. Moreover, Section 112 ibid. does not contemplate penal action for violations of provisions or regulations under any other law, much less violation under the CBLR; the charge is very specific the act or omission should result in improper import of goods and consequently, confiscation of such goods, which is not the case of the Revenue here in the case on hand. The penalty levied here under Section 112 ibid. on the appellant, that too for violation under the CBLR, on the peculiar facts of the case, cannot be sustained - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Levy of penalty under Section 112(a) of the Customs Act, 1962 on a Customs House Agent (CHA) for alleged violation of Regulations 13(d) and (e) of the Customs Brokers Licensing Regulations (CBLR).

Analysis:
The appellant, a CHA, challenged the penalty imposed under Section 112(a) of the Customs Act, 1962, for allegedly failing to comply with Regulations 13(d) and (e) of the CBLR. The Revenue claimed that the importer wrongly availed exemptions, leading to the penalty imposition. The impugned Order-in-Original confirmed the penalty on the appellant. The appellant argued that the CBLR itself provides penal provisions for violations and contended that since the duty and interest were already appropriated by the Revenue, the import could not be termed improper, thus Section 112 was not applicable. The appellant also highlighted the absence of specific allegations against them in the Show Cause Notice.

The Tribunal analyzed the case considering Sections 111 and 112 of the Customs Act. It noted that for penalties under Section 112 to apply, goods must be improperly imported and liable for confiscation. Once duty and interest are collected, the import is considered proper, rendering Sections 111 and 112 irrelevant. The Tribunal emphasized that Section 112 does not cover violations of other laws, specifically the CBLR. As the Revenue did not establish improper importation leading to confiscation, the penalty under Section 112 on the appellant for CBLR violations was deemed unsustainable. Despite various arguments presented, the Tribunal concluded that the penalty was not lawful, setting aside the impugned order and allowing the appeal.

In conclusion, the Tribunal ruled that the penalty imposed on the appellant, a CHA, under Section 112(a) of the Customs Act for alleged violations of CBLR Regulations 13(d) and (e) was not valid as the import was not deemed improper. The judgment emphasized the specific requirements for penalties under Section 112 and the inapplicability of such penalties in cases where imports are not considered improper.