2024 (7) TMI 1119 - AT - Customs

Penalty u/s 112a(ii) of the Customs Act, 1962 - Smuggling - mis-declaration and undervaluation of goods - HELD THAT - The extent of duty defrauded is anybody s guess as the importer had been regularly importing these goods for quite a bit of time. The forensic evidence retrieved to whatever extent is sufficient enough to establish the scale of undervaluation. This, was undertaken both in respect of past shipments as well as the current imports relevant to the present case, personally benefiting the importers along with others involved and defrauding the Government of its legitimate dues. The appellants have not been able to justify a case for waiver of penalty. However, considering the facts and circumstances of the case, that the appellant was playing upon the instructions of the importer though with self-serving intents; the fact that the appellants failed to discharge their obligation in law, the fact of filing the Bill of Entry on the basis of unsigned invoices and such other considerations as brought out in the investigations, the fact that digital mapping and cyber forensic examination and imaging of the appellant s hard disks and CPUs and laptops seized from their office revealed explosive documentary evidence exposing the entire racket, no case for completely setting aside the penal liabilities imposed is made out by the appellants. The ends of justice shall be met by imposing penalty of Rs.4.00 Lakh on M/s.Prethvisha Logistics Pvt.Ltd. and Rs.1.00 Lakh on Shri Palash Banerjee under Section 112(ii) of the Customs Act - appeal disposed off.

Summary

Issues Involved:
1. Imposition of penalty under Section 112(a)(ii) of the Customs Act, 1962.
2. Mis-declaration and undervaluation of imported goods.
3. Role and culpability of the Customs House Agent (CHA) and its Director.
4. Use of false and incorrect material under Section 114AA of the Customs Act.
5. Compliance with Customs House Agents Licensing Regulations (CHALR), 2004.

Detailed Analysis:

1. Imposition of Penalty under Section 112(a)(ii) of the Customs Act, 1962:
M/s. Prethvisha Logistics Pvt. Ltd. and its Director, Shri Palash Banerjee, were penalized Rs. 20.00 Lakh each under Section 112(a)(ii) of the Customs Act, 1962, for their involvement in the improper importation of goods. The appellants challenged this penalty, leading to the present appeals.

2. Mis-declaration and Undervaluation of Imported Goods:
The appellants were involved in the clearance of nine consignments of consumer goods imported by M/s. Aakash Exports. Investigations revealed gross mis-declaration and undervaluation of these imports. The department found undeclared goods and goods in excess of the declared quantity. The declared values were significantly lower than the determined values, leading to substantial duty evasion. For instance, one consignment declared at Rs. 4,33,663 was determined to be worth Rs. 95,20,402, resulting in a confirmed duty difference of Rs. 25,87,313.

3. Role and Culpability of the Customs House Agent (CHA) and its Director:
The CHA firm and its Director were found complicit in aiding and abetting the smuggling activities of M/s. Aakash Exports. They handled import consignments based on unsigned invoices and packing lists, failing to comply with their obligations under Regulation 13 of the CHALR, 2004. The forensic examination of the Director's laptop revealed documents indicating systematic undervaluation in past consignments, further implicating them in the fraudulent activities.

4. Use of False and Incorrect Material under Section 114AA of the Customs Act:
The appellants were also charged under Section 114AA for knowingly using false and incorrect material in the transaction of business under the Customs Act. The investigation found manipulated Bills of Lading and invoices, and discrepancies in the declared and actual quantities and descriptions of goods. This fraudulent documentation supported the smuggling activities and duty evasion.

5. Compliance with Customs House Agents Licensing Regulations (CHALR), 2004:
The CHA firm failed to fulfill its regulatory obligations, including advising their client to comply with the Customs Act. The use of unsigned documents for clearing consignments and handling past consignments similarly implicated them in systematic smuggling and duty evasion activities. The Commissioner noted their failure to discharge their duties under CHALR, 2004, rendering them liable for penal action.

Conclusion:
The tribunal concluded that the appellants were unable to justify a waiver of the penalty. Considering their role in the fraudulent activities, the tribunal reduced the penalties to Rs. 4.00 Lakh for M/s. Prethvisha Logistics Pvt. Ltd. and Rs. 1.00 Lakh for Shri Palash Banerjee under Section 112(ii) of the Customs Act. The appeals were disposed of accordingly.

(Order pronounced in the open court on 18 July 2024.)