2024 (12) TMI 683 - AT - Customs

Levy of penalties u/s 114 (i) and 114AA of the Custom Act 1962 - mis-declaration of export goods - failure to fulfil obligations of the Customs Broker Licensing Regulations 2013 - HELD THAT - Custom Broker Licencing Regulations are complete code in itself and provide for penal action upon the Custom Broker for failing to fulfill his obligations under the said regulation. For the alleged failure to comply with the said Regulation 11 penal proceedings could have been initiated under the relevant provisions of the Custom Broker Licencing Regulations 2013 leading to revocation of the licence of broker along with the penalties as prescribed therein. The facts stated by the appellant in his statement have been corroborated by the statements of other co-noticees. Cross examination as sought by the appellant was also denied by the original authority. However as is evident from para 34.7 of the order in original the said request was denied by the competent authority vide letter dated 05.04.2018. The appellant has not challenged the said denial of the cross examination much before the adjudication was done before any authority. Hence it would not be justified to reopen the issue at this stage. From the evidences as adduced in the orders of lower authority it is evident that appellant has in manner abetted in clearance of undeclared/ mis-declared goods for export. For that penalty is imposable under Section 114 (i) of the Customs Act 1962 without establishing an element of mens-rea. However taking note of the fact that commissioner (Appeal) has vide two order referred by the appellant dropped the proceedings against the two departmental officers holding their acts of omission and commission as act of innocent negligence the penalty imposed on the appellant as excessive and reduce the same to Rs 10, 00, 000/-. There are no reason for invocation of Section 114AA for the reason that the appellant had filed the shipping bills as per the documents provided to him be the exporters in the case. He himself was not responsible for forging any documents for the clearance of the said goods for export. Section 114AA is very specific in nature and needs to be invoked only in case where the ingredients as specified therein are present. In absence of such ingredients invocation of said section against the appellant cannot be justified and hence the penalty imposed under Section 114AA is set aside - penalty imposed under Section 114 (i) is reduced to Rs.10, 00, 000/- and penalty imposed under Section 114AA is set aside. Appeal allowed in part.

Summary

Issues Involved:
1. Whether the appellant fulfilled the obligations under the Customs Broker Licensing Regulations, 2013.
2. Legality of penalties imposed under Section 114(i) and 114AA of the Customs Act, 1962.
3. Denial of cross-examination and its impact on the principles of natural justice.
4. Consideration of retracted statements and their evidentiary value.

Issue-wise Detailed Analysis:

1. Obligations under Customs Broker Licensing Regulations, 2013:
The appellant was accused of failing to fulfill the obligations as a Customs Broker under the Customs Broker Licensing Regulations, 2013. The investigation revealed that the appellant did not employ a G-card or H-card holder and facilitated customs clearance through an unauthorized person. Despite being aware of his duties, the appellant failed to act prudently and knowingly indulged in facilitating the export of prohibited goods, namely counterfeit Vimal Gutkha, in contravention of the Customs Act, 1962 and Plastic Waste (Management & Handling) Rules, 2011. The appellant's actions were found to be in violation of Regulation 11, which mandates due diligence in verifying client information and compliance with customs laws.

2. Penalties under Section 114(i) and 114AA of the Customs Act, 1962:
The adjudicating authority imposed penalties of Rs. 25,00,000/- each under Section 114(i) and 114AA of the Customs Act, 1962, for the appellant's role in the smuggling of prohibited goods. However, it was argued that penalties under these sections were not justified as the appellant, being a Customs House Agent (CHA), had no knowledge of the mis-declaration. The tribunal noted that the Customs Broker Licensing Regulations provide a complete code for penal action, and Section 114(i) and 114AA should not be invoked for non-compliance with these regulations. Consequently, the penalty under Section 114(i) was reduced to Rs. 10,00,000/-, and the penalty under Section 114AA was set aside as the appellant did not forge any documents.

3. Denial of Cross-examination:
The appellant contended that the denial of cross-examination violated the principles of natural justice, as the allegations were based on statements of co-noticees. The tribunal acknowledged that the request for cross-examination was denied by the competent authority, and the appellant did not challenge this denial before the adjudication. Citing precedents, the tribunal held that the denial of cross-examination did not justify reopening the issue at this stage, as the appellant had the opportunity to challenge it earlier.

4. Retracted Statements and Evidentiary Value:
The appellant argued that the self-incriminating statements were obtained under duress and were retracted at the first opportunity, thus lacking evidentiary value. The tribunal referred to legal precedents, emphasizing that retracted confessions could be relied upon if corroborated by other evidence and if found to be voluntary and truthful. In this case, the statements of co-noticees corroborated the appellant's involvement, and the tribunal found no reason to disbelieve the statements recorded under Section 108 of the Customs Act.

Conclusion:
The appeal was partly allowed, with the penalty under Section 114(i) reduced to Rs. 10,00,000/- and the penalty under Section 114AA set aside. The tribunal highlighted the need for adherence to Customs Broker Licensing Regulations and emphasized that penalties should align with the specific provisions and evidence of the case.