2024 (8) TMI 1219 - AT - Customs

Levy of penalty u/s 114(i) and 114(iii) of CA without evidence of abetment - export of red sanders - failure to obtain and verify the KYC of the exporter for which they were filing the subject shipping bill - failure to fulfill the obligation as envisaged under Regulation 11 of the CHALR 2004 by not advising their client to comply with the various Provision of Customs Act 1962 read with Regulation 2 of Shipping Bill of Export (Form) Regulations 1991 - HELD THAT - From the observations in the Order in Original as well as in the impugned order, it is seen that they only relate to violation of various provisions of CHALR 2004. On the basis of the said violation, it has been alleged that the appellant had abetted the export of red sanders. It is apparent that abetment can occur only if the person has knowledge about the wrong or illegal act. In the instant case, there is no admission of any knowledge by the appellant. None of the other co-noticees or witness has also indicated that the appellant had any knowledge about the red sanders. There is no evidence of the knowledge of appellants. In this background, the allegation of abetment solely based on violation of CHALR without any knowledge on the part of the appellant cannot be sustained. The penalty under section 114 (i) and 114 (iii) cannot be sustained. The impugned order is, therefore, set aside - Appeal allowed.

Summary

Issues:
Alleged violation of CHALR 2004 leading to penalty under Customs Act sections 114(i) and 114(iii) without evidence of abetment.

Analysis:

The appeal was filed by a CHA firm, M/s. Viksun Carriers Private Ltd., regarding a Show Cause Notice issued for alleged involvement in the export of red sandalwoods concealed in a consignment of canola seeds. The appellant was accused of failing to obtain and verify the KYC of the exporter and not advising the client to comply with Customs Act provisions and CHALR 2004. The Original Adjudicating Authorities imposed penalties under Customs Act sections 114(i) and 114(iii), which were upheld by the first appellate authority, leading to this appeal.

The appellant argued that the allegations were related to CHALR 2004 violations, and no proceedings under CHALR had been initiated against them. They claimed no knowledge of the content of the consignment beyond the exporter's declaration and no evidence or admission of knowledge about the red sanders. The appellant contended that abetment charges based solely on CHALR violations without knowledge could not be sustained.

The impugned order highlighted the failure of the appellant to obtain and verify the exporter's KYC, leading to allegations of abetment in the attempted export of prohibited goods. However, the Order-in-Original and impugned order primarily focused on CHALR 2004 violations as the basis for the abetment allegations under Customs Act sections 114 and 114(iii).

The judgment analyzed the definition of abetment as aiding or encouraging illegal acts, emphasizing that knowledge is essential for abetment. In this case, no evidence or admission indicated the appellant's knowledge of the red sanders. Without proof of knowledge, the allegations of abetment based solely on CHALR violations were deemed unsustainable, leading to the setting aside of penalties under Customs Act sections 114(i) and 114(iii), and allowing the appeal.