2010 (1) TMI 439 - AT - Customs

Penalty on Custom House Agent - The allegation against the current appellant is that he being a CHA instead of filing the shipping bills on his name, the appellant filed the same through M/s. CSR Inter national. It was alleged that Shri V.K. Singh, the proprietor was fully aware of the fraud and mis-declaration of the goods and knowing this he deliberately got the shipping bills filed by another person who did not have elementary knowledge of export of the goods or procedures thereto. Held that in absence of any categorical findings as to the role played by appellant, in misdeclaration of goods meant for export, he cannot be visited with a penalty under section 114(i) of the Act.

Summary

Issues:
1. Imposition of penalties on a Customs House Agent for abetting in fraudulent exports.
2. Interpretation of Section 114(i) of the Customs Act, 1962 for penalizing the appellant.
3. Role of the appellant in the mis-declaration of goods for export.
4. Evidence required to establish abetment and mala fide intention under Section 114(i).

Issue 1: Imposition of penalties on a Customs House Agent for abetting in fraudulent exports:
The case involved two appeals against penalties imposed on the appellant, a Customs House Agent (CHA), under Orders-in-Original for abetting in fraudulent exports by certain firms. The appellant was accused of filing shipping bills through another entity, knowing about the mis-declaration of goods. The Revenue authorities issued a show cause notice, which the appellant contested before the adjudicating authority leading to the imposition of penalties.

Issue 2: Interpretation of Section 114(i) of the Customs Act, 1962 for penalizing the appellant:
The primary issue revolved around the interpretation of Section 114(i) of the Customs Act, 1962 to determine the liability of the appellant for penalties. The appellant's counsel argued that there was no evidence of mala fide intention or active participation in the fraudulent exports. It was contended that penalties under Section 114(i) cannot be imposed without a clear role attributable to the appellant.

Issue 3: Role of the appellant in the mis-declaration of goods for export:
The adjudicating authority's findings highlighted the appellant's involvement in passing on the responsibility of filing shipping bills to another CHA, indicating potential awareness of the fraud. However, the appellate tribunal noted that the adjudicating authority failed to establish the appellant's direct participation or knowledge of the mis-declaration of goods for export, as he had delegated the task to another individual.

Issue 4: Evidence required to establish abetment and mala fide intention under Section 114(i):
The tribunal scrutinized the evidence presented by both sides, emphasizing the lack of concrete proof linking the appellant to the fraudulent activities. The adjudicating authority's reliance on assumptions and presumptions, such as payments made to the appellant by exporters, was deemed insufficient to establish abetment or mala fide intention under Section 114(i). The tribunal concluded that without clear evidence of the appellant's active involvement in the fraud, penalties under the Customs Act could not be upheld.

In the final judgment, the appellate tribunal set aside the impugned orders and allowed the appeals, providing consequential relief to the appellant based on the lack of substantial evidence linking the appellant to the fraudulent exports.