2001 (5) TMI 318 - AT - Customs

Summary

Issues:
1. Imposition of penalty on Custom House Agents in absence of penalty proceedings against exporter.
2. Confiscation of goods without show cause notice to exporter.
3. Imposition of penalty on Custom House Agents for violation of Regulations.
4. Allegations of contumacious conduct or deliberate violation of law without evidence in show cause notice.

Analysis:

Issue 1: Imposition of penalty on Custom House Agents
The Custom House Agents (CHA) filed an application claiming that penalty under Section 114 of the Customs Act cannot be imposed on them without penalty proceedings against the exporter. However, the Tribunal found that the service of the show cause notice to the exporter's director was valid as per Section 153(a) of the Customs Act. The Tribunal clarified that the penalty imposed on the director was not a penalty on the company itself, which is a separate legal entity. Therefore, the absence of penalty proceedings against the exporting company did not prevent the imposition of penalties on the CHA.

Issue 2: Confiscation of goods without show cause notice to exporter
The CHA raised concerns about the confiscation of goods without a show cause notice to the exporter. The Tribunal determined that the show cause notice served on the director of the exporting company was sufficient as he was considered an agent of the company. The confiscation of goods was under a specific clause of Section 113, and the absence of a notice directly to the owner of the goods did not invalidate the confiscation process.

Issue 3: Imposition of penalty on Custom House Agents for violation of Regulations
Regarding the imposition of penalties on CHA for violating the Regulations, the Tribunal explained that Section 114 applies to individuals whose actions render goods liable to confiscation under Section 113. In this case, the CHA's failure to ensure compliance with export regulations led to fraudulent activities in claiming excess duty drawback. The Tribunal upheld the penalties on the CHA, emphasizing that their actions constituted abetment of the exporter's violations, making them liable for penalties under Section 114.

Issue 4: Allegations of contumacious conduct or deliberate violation of law without evidence
The CHA questioned the imposition of penalties based on allegations of contumacious conduct or deliberate violation of the law without specific evidence in the show cause notice. The Tribunal clarified that the absence of such allegations in the notice did not impact the decision to impose penalties. The focus was on the CHA's involvement in abetting the exporter's fraudulent activities, leading to penalties under Section 114. The Tribunal concluded that the questions raised did not merit reference under Section 130 of the Customs Act, and the application by the CHA was rejected.