2017 (2) TMI 47 - AT - Customs

Imposition of penalty on CHA u/s 117 of the CA, 1962 - smuggling of red sanders, attempt to export - Held that - the appellant made contacts with the members of the racket for a consideration of ₹ 10,000/- to attempt export of red sanders. It cannot be said that the appellant was not aware of the contents of the container and what the goods to be exported. He has no answer when the IE Code was found to be of some other person and there was mis-declaration in the exporting documents. Custom was defrauded - It may be noted that a person working in customs area is never an innocent since customs area is a sensitive place and they are responsible for each and every act they do in that area. Whether penalty should have been imposed u/s 114 of CA, 1962? - Held that - active role of appellant in the attempted export is on record and that could not be ruled out by appellant demolishing fraudulent document filed by appellant using IE code of another. The penalty under Section 117 is stricter than Section 114 penalty. Any dereliction in duty by the CHA calls for penalty under the residuary provisions of Section 117 of Customs Act, 1962 - conscious involvement of the appellant with the smuggling racket is proved. Therefore there is no need to interfere with the order passed by learned adjudicating authority. Otherwise, that shall send a message to the society that infringement of law is rewarded with a bonus of waiver of penalty or a lesser penalty to perpetuate fraud. Appeal dismissed - decided against appellant-CHA.

Summary

Issues:
1. Alleged involvement in attempted export of red sanders
2. Imposition of penalty under section 117 of Customs Act, 1962
3. Role and responsibility of Customs House Agent (CHA)

Issue 1: Alleged involvement in attempted export of red sanders

The appellant, a Customs House Agent (CHA), faced penalties under section 117 of the Customs Act, 1962, for his alleged involvement in the attempted export of red sanders. The Customs authorities contended that the appellant was an active member of a smuggling racket involved in the export of prohibited red sanders. The appellant denied any conscious involvement and pleaded innocence, stating that he was not connected to the smuggling activities. However, the adjudicating authority found evidence linking the appellant to the attempted export, including filing forged documents and misusing an Importer-Exporter Code (IE Code) belonging to another entity.

Issue 2: Imposition of penalty under section 117 of Customs Act, 1962

The adjudicating authority imposed a penalty of &8377; 1,00,000 under section 117 of the Customs Act, 1962, on the appellant for his role in the attempted export of red sanders. It was established that the appellant received a consideration of &8377; 10,000 for facilitating the export and was aware of the mis-declaration of goods in the export documents. The authority emphasized the significant responsibility of a CHA in ensuring the accuracy of import/export details and held the appellant accountable for his involvement in the smuggling racket. The penalty under section 117 is stricter than under section 114, reflecting the seriousness of the appellant's actions in abetting smuggling activities.

Issue 3: Role and responsibility of Customs House Agent (CHA)

The judgment highlighted the essential role of a CHA in customs operations, emphasizing their duty to verify all details before filing clearance documents. The appellant's active participation in the attempted export of red sanders, including the use of fraudulent documents and misrepresentation, demonstrated a breach of the CHA's responsibilities. The tribunal affirmed the penalty imposed under section 117, emphasizing the need to deter individuals from engaging in fraudulent activities within the customs domain. The decision was guided by precedents from the High Courts of Himachal Pradesh and Madras, reinforcing the importance of upholding penalties for violations of customs laws.

This detailed analysis of the judgment underscores the appellant's alleged involvement in smuggling activities, the imposition of penalties under the Customs Act, and the accountability of Customs House Agents in maintaining the integrity of customs operations.