2022 (4) TMI 605 - AT - Customs

Levy of penalty on Customs Broker u/s 112 (a) of the Customs Act, 1962 - It was alleged that the appellant dealt with unauthorized person instead of dealing with the actual IEC holder thereby violated KYC norms - HELD THAT - In the present case, it is not disputed that M/s.Vaaraahi Traders are licensed to import goods and that their IE Code is valid. The case set up by the department is that the goods imported are for the use / purchase of Shri A. Govindaraj and not for the use of M/s.Vaaraahi Traders. There is no law which prohibits the importer to sell the goods to another after importing the same. It is also brought from evidence that the appellant has nothing to do with excess weight or undeclared goods in the consignment. The penalty imposed on the allegation that the goods imported are not for use of the importer but for the use / sale to another person would not attract ingredients of section 112 (a) of the Customs Ac, 1962. The penalty imposed is totally unwarranted. The impugned order to the extent of imposing penalty of ₹ 50,000/-under Section 112 (a) of the Customs Act is set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Penalty under Section 112 (a) of the Customs Act, 1962 for improper importation of goods and dealing with unauthorized person instead of the actual IEC holder.

Analysis:
1. The appellant, a Licensed Customs Broker, appealed against a penalty of &8377; 50,000 imposed by the original authority under Section 112 (a) of the Customs Act, 1962, which was confirmed by the Commissioner (Appeals).

2. The case involved discrepancies in the importation process where the consignment was found to have excess weight and contained undeclared goods, leading to suspicions of customs duty evasion. The appellant was accused of dealing with an unauthorized person instead of the actual IEC holder, violating KYC norms.

3. The appellant argued that they acted diligently by collecting necessary documents directly from the importer, M/s.Vaaraahi Traders, and had no knowledge of the excess weight or undeclared goods. The appellant emphasized compliance with Circular No.9/2010-Cus. regarding KYC document collection.

4. The department's case relied on statements indicating that the goods were imported for the benefit of a specific individual, not the importer. However, the appellant contended that there was no prohibition on the importer selling goods to another person post-importation.

5. The adjudicating authority imposed the penalty based on the belief that the goods were intended for a specific individual, leading to the appellant being held responsible. However, the Tribunal found the penalty unwarranted as there was no legal basis for penalizing the appellant under Section 112 (a) of the Customs Act.

6. The Tribunal set aside the penalty of &8377; 50,000 under Section 112 (a) of the Customs Act, allowing the appeal with any consequential relief as per the law. The judgment was pronounced on 13.04.2022 by the Appellate Tribunal CESTAT CHENNAI, with a detailed analysis of the issues involved in the case.