2025 (1) TMI 157 - AT - Customs

Levy of penalty u/s 112(a) of CA, on appellant, a Customs House Agent (CHA) - whether there was abetment of the appellant in the misdeclaration of the imported goods? - HELD THAT - It is on record that the statement of Shri Gyan Prakash Nirmal, Vice President of the importer has never implicated the appellant in the act of alleged misdeclaration of the imported goods. The impugned order vide para 81 categorically places the responsibility of the misdeclaration of the impugned goods on the importer, and specifically on Mr Gyan Prakash Nirmal, based on the investigations evidences available with the Department. There is not even a whisper of any advice or action undertaken by the appellant to facilitate or abet the said misdeclaration. There is nothing on record to prove that the appellant had connived/abetted with the importers in filing the Bills of Entry for importing the said products, without the mandatory documents. It is also noted that the impugned order for the said offence has already penalized the importer in terms of redemption fine and penalty. Hence, penalty under Section 112(a) can be imposed only if there is evidence of abetment by the appellant. Conclusion - As there is nothing on record to prove that the appellant had connived/abetted with the importers in filing the documents for importing the restricted products without the mandatory documents, the penalty cannot be sustained. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the appellant, a Customs House Agent (CHA), is liable for a penalty under Section 112(a) of the Customs Act for alleged abetment in the misdeclaration of imported goods.
Whether the appellant had knowledge or intent to abet the misclassification and misdeclaration of goods, thereby rendering them liable to confiscation.
Whether the issuing authority had jurisdiction to issue a show-cause notice to the appellant.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Liability for Penalty under Section 112(a) of the Customs Act

Relevant Legal Framework and Precedents: Section 112(a) of the Customs Act pertains to penalties for improper importation of goods, focusing on acts or omissions that render goods liable to confiscation. The term 'abet' implies knowledge and intent to aid or encourage an offense. Relevant precedents include cases such as Shree Ram vs. State of U.P, Amritlakshmi Machine Works vs. The Commissioner of Customs, and others, which discuss the necessity of proving abetment.
Court's Interpretation and Reasoning: The court examined whether the appellant had any role in abetting the misdeclaration. It noted that the statement of the importer's Vice President did not implicate the appellant. The court emphasized that liability under Section 112(a) requires evidence of abetment, which was absent in this case.
Key Evidence and Findings: The court found no evidence that the appellant had connived or abetted the importer in the misdeclaration. The appellant filed the Bills of Entry based on the import documents provided by the importer, without any indication of wrongdoing.
Application of Law to Facts: The court applied the legal requirement of proving abetment, concluding that the appellant's actions did not meet this threshold. The appellant's routine filing of documents, based on the importer's instructions, did not constitute abetment.
Treatment of Competing Arguments: The appellant argued that they acted based on the importer's instructions and had no intent to abet any misdeclaration. The Department contended that the appellant failed to verify the classification of goods independently. The court sided with the appellant, noting the absence of evidence for abetment.
Conclusions: The court concluded that the appellant was not liable for a penalty under Section 112(a) as there was no evidence of abetment in the misdeclaration of goods.

Issue 2: Jurisdiction of the Issuing Authority

Relevant Legal Framework and Precedents: The appellant challenged the jurisdiction of the authority issuing the show-cause notice. However, the court focused primarily on the substantive issue of abetment and did not delve deeply into jurisdictional arguments.
Court's Interpretation and Reasoning: The court did not find it necessary to address jurisdictional issues in detail, given its conclusion on the primary issue of abetment.
Conclusions: The court did not make a specific determination on jurisdiction, as the resolution of the abetment issue rendered it moot.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The court stated, "As there is nothing on record to prove that the appellant had connived/abetted with the importers in filing the documents for importing the restricted products without the mandatory documents, the penalty cannot be sustained."
Core Principles Established: The judgment reinforces the principle that liability under Section 112(a) requires clear evidence of abetment, including knowledge and intent to facilitate an offense. Mere procedural compliance based on an importer's instructions does not constitute abetment.
Final Determinations on Each Issue: The court set aside the penalty imposed on the appellant, concluding that there was no evidence of abetment. The appeal was allowed, and the impugned order was overturned.

The judgment underscores the importance of distinguishing between procedural compliance by CHAs and active participation in offenses such as misdeclaration. It highlights the necessity of evidence in establishing abetment and clarifies the scope of liability under Section 112(a) of the Customs Act.

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