2023 (9) TMI 312 - AT - Customs

Levy of penalty on CHA u/s 112(a) and Section 114AA of the Customs Act 1962 - misdeclared goods - Abetting in illegal imports - goods declared as Calcium Carbonate were found to be AA size, 1.5 volt Chinese batteries of Zabai Brand and Ammonium Chloride - appellants claims that he was under the bonafide belief that the goods under export were Calcium Carbonate and not mis-declared - HELD THAT - It is observed that the show cause notice has been issued to the appellant for aiding and abetting the aforesaid illegal imports liable for confiscation (para 18 of the notice) and apparently no notice has been issued to the appellants for imposing penalty under Section 114AA. Thus, it is a foregone conclusion that having not been put to notice for imposition of penalty under Section 114AA, the appellant cannot be subjected to such a penalty, howsoever grave the case be - to the extent of imposition of penalty under Section 114AA of the act, the impugned order is bad in law and cannot be sustained. The import of Calcium Carbonate was discussed by the appellants with Raj Kumar Kothari and Vinod Lachwani repeatedly, even in the latter s office. Having come to know about the firm M/s. S.D. Commotrade International and Md. Asgar (Proprietor) on receipt of the authorization letter dated 01.10.2012 as early as in the middle of October, nearly two weeks before filing of the Bill of Entry, there is nothing to show by way of measures taken by the appellant as regards subject import vis- -vis their promising role as a Customs Broker. Thus to believe the theory of innocently taken for ride with no mistake at the appellant s end belies complete logic - once having come to know the actual and complete identities of the importer and those brokering the deal viz. Raj Kumar Kothari and Vinod Lachwani and despite that signing of blank documents for shifting of the cargo from the port to the CFS or non-seeking of KYC particulars directly or undertaking appropriate verification, are nothing but a conscious act of omission and commission. Thus, it is quite evident that A.K. Singh by his wilful act, despite being aware of the whole factual matrix, has deliberately and consciously played alongwith the key conspirators of mis-declared imports and contributed to the illegal importation of battery and ammonium chloride by filing B/E mis-declaring the imported cargo as calcium carbonate. The appellant has this certainly rendered himself liable to penal action under Section 112(a) of the Customs Act 1962. No case is made out for waiver of penalty imposed under Section 112 (a) of the Act. However, in so far as the appellants have not been made noticee for imposition of penalty under Section 114AA of the Act, no penalty on them can therefore be imposed under the said section - Appeal allowed in part.

Summary

Issues Involved:
1. Imposition of penalty under Section 112(a) of the Customs Act, 1962.
2. Imposition of penalty under Section 114AA of the Customs Act, 1962.

Summary:

Issue 1: Imposition of penalty under Section 112(a) of the Customs Act, 1962
The Appellant, a partner of the Customs Broker firm Babhravi Exim Services, was involved in the import of Chinese Batteries declared as Calcium Carbonate. The Directorate of Revenue Intelligence (DRI) observed the mis-declaration during surveillance at Haldia Port. The Appellant claimed to have acted in good faith, being approached by Raj Kumar Kothari and Vinod Lachwani for the import. However, investigations revealed that Mohammed Asgar, the purported proprietor, was merely a car driver, and the actual importers were Kothari and Lachwani. The Appellant admitted to repeated discussions about the import with Kothari and Lachwani and to having signed blank documents for cargo movement. The Tribunal found that the Appellant, aware of the true nature of the consignment, consciously facilitated the mis-declaration, rendering himself liable to penal action under Section 112(a).

Issue 2: Imposition of penalty under Section 114AA of the Customs Act, 1962
The Tribunal observed that the show cause notice issued to the Appellant did not include a charge under Section 114AA. Consequently, the Appellant could not be subjected to a penalty under this section. The Tribunal concluded that the imposition of penalty under Section 114AA was bad in law and could not be sustained.

Conclusion:
The Tribunal upheld the penalty imposed under Section 112(a) but discharged the Appellant from the penalty under Section 114AA, as no notice for the latter was issued. The appeal was disposed of with the modification that the penalty under Section 114AA was not enforceable.