2015 (10) TMI 206 - AT - Customs

Imposition of penalty on CHA Transacting business for non-existent exporter Appellant filed shipping bills under claim of drawback However it was alleged that while filing shipping bill in respect of said exporter, appellant failed to ascertain genuineness of said exporter and transacted business for non-existent / non-traceable exporter Adjudication took place and penalty on appellant is confirmed as per show cause notice Held that - In law it is nowhere required that before dealing with new client CHA is required to meet client personally But to verify antecedents of exporter which appellant has done in this case by verifying bank account, IEC and by obtaining proper authorization Therefore, appellant has taken due care for knowing antecedent of exporter Appellant was not having any knowledge that exporter was fraudulent and their shipping bill have been filed to claim undue drawback by overvalue of exported goods In view of discussion, appellant has not violated provisions of Customs Act Penalty imposed on appellant set aside Decided in favour of appellant.

Summary

Issues:
Appeal against penalty under Section 114 of the Customs Act 1962.

Detailed Analysis:
1. Facts of the Case:
The appellant, a Customs House Agent (CHA), filed shipping bills for export of textile items on behalf of M/s. Sanjay Sales Corporation, allegedly overvalued. The appellant was accused of facilitating the export of poor quality goods under false claims.

2. Adjudication and Penalty:
The penalty of Rs. 8,82,464 under Section 114 of the Customs Act 1962 was confirmed following adjudication, leading to the appellant's appeal against the order.

3. Appellant's Defense:
The appellant contended that all necessary authorizations were obtained, and due diligence was exercised by verifying the exporter's details and IEC from DGFT. The appellant argued that personal meetings with the exporter were not mandatory for CHAs, and no evidence proved awareness of fraudulent activities.

4. Revenue's Position:
The Revenue argued that the exporter was non-existent, with fraudulent accounts and IEC. It was emphasized that CHAs are responsible for verifying client antecedents, citing relevant case laws supporting penalty imposition.

5. Judgment Analysis:
Upon review, it was found that the appellant had obtained proper authorizations, verified essential documents, and exercised due diligence by checking the exporter's details. There was no evidence of the appellant's awareness of fraudulent activities by the exporter.

6. Legal Precedents Considered:
The judgments cited by the Revenue were deemed irrelevant to the case at hand, as they involved different circumstances and admissions not present in this case.

7. Conclusion:
The Tribunal held that the appellant did not contravene any laws and was not liable for penalty under Section 114 of the Customs Act 1962. The penalty imposed on the appellant was set aside, allowing the appeal with any consequent relief.

This detailed analysis outlines the key aspects of the legal judgment, including the facts, arguments, legal precedents, and the ultimate decision in favor of the appellant.