2023 (8) TMI 65 - AT - Customs

Levy of penalty u/s 114 and 114AA of the Customs Act, 1962 - Personal penalty on General Manger of the Customs Broker - not verifying genuineness of the exporter and his place of functioning - attempt to smuggle out red sanders in the guise of General Merchant (Idly Rice, Atta in bags) (by exporter) - HELD THAT - The Hon ble Tribunal in the case of THAWERDAS WADHOOMAL VERSUS COMMR. OF CUS. (GENERAL), MUMBAI 2007 (9) TMI 102 - CESTAT, MUMBAI has held that the CHA is not supposed to look into details of genuineness of the importer when IEC is produced by the importer. It is seen that documents required as per the KYC are basically issued by government authorities and agencies and the presumption is that the details like name, address etc shown there in are true. The department has not alleged that these documents submitted by the appellant were fake. Nor is there any concrete allegation of connivance with the exporter. This being so, it is found that there was no concrete proof of a blame worthy conduct by the appellant to impose penalties or for any other action as per the Act or Rules to merit a remand. Penalties should not be imposed merely because a legal provision provides for it. It is a discretion of the authority to be exercised judicially and in consideration of all the relevant circumstances, bound by the rules of reason and law. Such action cannot be taken on assumptions and presumptions devoid of concrete facts showing wrongdoing. The impugned order merits to be upheld - Appeal dismissed.

Summary

Issues involved:
The issues involved in the judgment are the exoneration of the respondent from charges of smuggling red sanders and penalty imposition under sec. 114 and 114AA of the Customs Act, 1962.

Details of the Judgment:

1. Background and Investigation:
- An attempt to smuggle red sanders was made under the guise of 'General Merchant (Idly Rice, Atta in bags)'.
- Specific intelligence led to the seizure of red sanders valued at Rs.5.89 crores.
- Show Cause Notices were issued to the involved parties.

2. Adjudication and Appeal:
- The adjudicating authority exonerated the respondent from charges and penalty based on lack of evidence of wrongdoing.
- The department filed an appeal before the Commissioner (Appeals), who upheld the adjudication order.
- The department then approached the Appellate Tribunal CESTAT Chennai.

3. Arguments and Counterarguments:
- The appellant argued that the respondent failed to verify the antecedents of the exporter and contravened regulations.
- The respondent's counsel contended that failure to comply with regulations does not warrant penalty under sec. 114 and 114AA.
- Various case laws were cited to support the argument against penalty imposition.

4. Tribunal's Analysis:
- The charge against the appellant was limited to not verifying the genuineness of the exporter and his place of functioning.
- The Tribunal referred to precedents emphasizing that penalties should not be imposed without concrete proof of wrongdoing.
- Lack of evidence of blame-worthy conduct led the Tribunal to uphold the adjudication order.

5. Decision:
- The Tribunal found no merit in the appeal and upheld the impugned order.
- The cross objections filed by the appellant were also disposed of in line with the main decision.
- The judgment was pronounced in open court on 31.07.2023.