2022 (11) TMI 639 - HC - Customs

Levy of penalty on CHA u/s 112(a) and 114A of the Customs Act - undervaluation of goods - it is alleged that the appellant as CHA has abetted the importer to undervalue the goods and that the appellant had prior knowledge as to the actual value of the imported goods - samadhan scheme - Confiscation - HELD THAT - Where the benefit has been granted under the Samadhan Scheme to the main party, that benefit must also enure in favour of the other co-noticees and it would be unreasonable and discriminatory if the benefit is not extended. Once an order of settlement is passed by the Settlement Commission, the entire dispute comes to an end and thereafter, the case cannot be adjudicated qua the other co-noticees - In this case, the Settlement Commission found that the importer had made true and full disclosure of all the facts relating to imported goods. The Commission also took into consideration the additional amount of Customs duty and interest paid by the importer. Accordingly, the importer was granted immunity from prosecution, fine and penalty. If the proceedings against the importer has thus come to an end, it will be discriminatory and unfair to continue the proceedings as against the CHA in relation to the very same transaction. The order of the Customs and Central Excise Settlement Commission, dated 30.11.2010 granting immunity to the importer from prosecution, fine and penalty, will also enure to the benefit of the appellant. The substantial questions of law having been answered in favour of the appellant, this Court holds that the appellant is not liable to pay any penalty - Appeal allowed.

Summary

Issues:
Challenge to order passed by Customs, Excise and Service Tax Appellate Tribunal confirming Commissioner (Appeals) order on penalty imposition for undervaluation by Customs House Agent (CHA). Consideration of Settlement Commission's order granting immunity to importer and its impact on CHA's liability.

Analysis:
1. The appeal was filed by the CHA under Section 130 of the Customs Act, challenging the penalty imposition for undervaluation of goods imported by the importer. The Customs found discrepancies in the declared value versus actual value of the goods, leading to a penalty against the CHA for connivance in misdeclaration.

2. The Tribunal's order confirming the penalty was challenged on the grounds of not addressing the appellant's arguments and relevance of Settlement Commission's order. The Tribunal's decision was criticized for not considering the Settlement Commission's order and focusing on irrelevant issues, rendering the order perverse.

3. The Settlement Commission's order granting immunity to the importer was crucial in determining the CHA's liability. The High Court emphasized that when the main importer is granted immunity, the benefit should extend to the CHA as well. The judgment cited the principle of non-discrimination in granting benefits under settlement schemes.

4. The High Court held that once the Settlement Commission's order is passed, the dispute ends, and proceedings against co-noticees should not continue. The Commission's decision to grant immunity to the importer should also apply to the CHA involved in the same transaction. Consequently, the High Court set aside the Tribunal and Commissioner (Appeals) orders, absolving the CHA from penalty payment.

5. The judgment highlighted the importance of Settlement Commission orders in resolving disputes and ensuring fairness in liability determination. The CHA's liability was nullified based on the principle that benefits granted to the main party should extend to other involved parties, preventing discrimination and ensuring a just outcome.

6. The High Court's decision to set aside the penalty imposition underscored the significance of Settlement Commission orders and their impact on co-noticees' liabilities. The judgment provided clarity on the applicability of settlement benefits to related parties, promoting fairness and consistency in legal proceedings.