2020 (9) TMI 309 - AT - Customs

Levy of penalty on Customs Broker u/s 114 and 114AA of the Customs Act, 1962 - allegation that appellant had helped in claiming false drawback by misdeclaration - Section 138A of Customs Act, 1962 - HELD THAT - There are two middleman between the exporter M/s Ayaan International and the appellant CHA, namely Shri Rohit Sharma a forwarder and Shri Rakesh Sagar. Further, the allegation against the appellant CHA of their having received ₹ 1 lakh per consignment is not substantiated, over and above the usual charges. Shri Rakesh Sagar have stated that he was to receive ₹ 4,000/- on bill and remaining amount of ₹ 1 lakh in cash, is not the representative of the CHA firm, and is an outsider. Thus, receipt of ₹ 1 lakh by Shri Rohit Sharma or Shri Rakesh Sagar is not the amount received by the appellant CHA. Further, it is found that the Prop. of the exporter firm and its Authorised Signatory have nowhere stated that they have paid any amount over and above usual charges to the appellant CHA. Further, there is no allegation of any flow back of ill gotton draw back money to the appellant CHA - Further, it has nowhere come on record that CHA was present at the time of packing and stuffing of container for shipping. Further, there is no allegation that CHA has cooked or concocted any document for presenting it to the Customs, knowing it to be false. Penalty - Section 113 and 114 of CA - HELD THAT - Appellant have not done any act of omission or commission leading to violation of any of the provisions mentioned in Section 113 of the Customs Act - Also, appellant have not done any act or omission nor knowingly used any document for the clearance knowing to be false. The appellant have given cogent explanation as regards the undervaluation, that the samples shown to them were of good quality and hence on such reasonable belief they have undertaken the clearance work. No case is made out that the appellant knowingly filed the shipping bills that the goods are overvalued - penalty under Section 114AA is also not imposable. Appeal allowed - decided in favor of appellant.

Summary

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

Detailed Analysis:

1. Background and Antecedents:
The appellant, a Customs House Agent (CHA), appealed against the penalty imposed under Sections 114 and 114AA of the Customs Act, 1962. The appellant, with a valid CB License, had been working efficiently since 1985 without any complaints. The Commissioner of Customs (Appeals) erred in considering a middleman as an 'export manager' of the appellant, leading to the penalty imposition.

2. Nature of Business and Facilitation:
The appellant facilitated customs transactions for exporter M/s Ayaan International without involvement in the quality assessment of goods. The appellant's role was that of a facilitator, not directly responsible for the quality or valuation of goods. The appellant denied any overcharging and argued against the penalty based on lack of mens-rea or malicious intent.

3. Documentation and Compliance:
The appellant filed shipping bills based on documents provided by clients, believing them to be genuine. The appellant procured necessary documents through a freight forwarder, not directly from the exporter. The appellant emphasized compliance with procedures and lack of fraudulent intentions in filing shipping bills.

4. Allegations and Lack of Evidence:
The Commissioner's observations regarding inflated invoices lacked corroborative evidence or motive. The confessional statement of a third party was deemed unreliable without additional evidence, as per legal precedents requiring corroborative proof for prosecution.

5. Penalty Imposition Analysis:
The Tribunal found no evidence of acts or omissions by the appellant leading to goods' confiscation under Section 113, rendering penalty under Section 114 inapplicable. Similarly, the appellant was not found to have knowingly used false documents, justifying the non-imposition of penalty under Section 114AA.

6. Final Decision and Ruling:
The Tribunal set aside the impugned order, allowing the appeal against the penalty. The lack of evidence supporting the allegations and the appellant's compliance with procedures and lack of fraudulent intent led to the decision in favor of the appellant. The ruling was pronounced on 02.09.2020 by the Tribunal.