2022 (12) TMI 986 - AT - Customs

Imposition of penalty under Section 114 of the Customs Act, 1962 - undervaluation - alleged violation of Regulations 11(n) and 11(d) of the Customs Brokers Licensing Regulations, 2013 - HELD THAT - Section 114 of the Customs Act, 1962 prescribes imposition of penalty on any person who, in relation to any goods, does or omits to do any act, which act or omission would render such goods liable for confiscation under Section 113, or abets the doing or omission of such an act. Unfortunately, in the case on hand, the only allegation is undervaluation of the goods for which the same were held liable for confiscation under Section 113(i) and 113(ia) of the Customs Act. Here, in the case on hand, in the guise of re-determination of value of goods, the Adjudicating Authority has not given any justifiable reasons except adopting the valuation in terms of Rule 6 ibid. after rejecting the FOB value in terms of Rule 8(1) ibid. Rule 8 authorizes the proper officer to reject the declared value when he has the reason to doubt the truth or accuracy of the same and from a reading of the Adjudication Order, there are no reasons brought on record as to the doubts about the truth or accuracy of the value declared in relation to the export of goods. The Customs Broker, in the facts of this case, cannot be fastened with a liability under the Customs Act, more so having alleged a different violation altogether. The imposition of penalty on the appellant / Customs Broker is bad in law - Appeal allowed.

Summary

Issues:
Imposition of penalty under Section 114 of the Customs Act, 1962 on the Customs Broker for alleged violation of Regulations 11(n) and 11(d) of the Customs Brokers Licensing Regulations, 2013.

Analysis:

1. Issue of Imposition of Penalty:
The appeal was filed against the penalty imposed under Section 114 of the Customs Act, 1962 by the Adjudicating Authority, upheld by the First Appellate Authority. The central question was whether the Revenue was justified in imposing the penalty on the Customs Broker for the alleged violation of specific regulations. The Show Cause Notice highlighted undervaluation of goods and the subsequent penalty proposed under the Customs Act. The Adjudicating Authority rejected the declared value and imposed a substantial penalty on the appellant. The appellant appealed the decision, leading to the current forum's consideration.

2. Evaluation of Alleged Violations:
The judgment scrutinized the alleged violations of Regulations 11(n) and 11(d) of the Customs Brokers Licensing Regulations, 2013. The Adjudicating Authority's basis for the penalty was the undervaluation of goods, leading to liability under Sections 113(i) and 113(ia) of the Customs Act. However, the judgment pointed out the shaky foundation of the case, emphasizing that the Customs Broker's role in determining the value of goods is limited by the exporter-importer contract. The Adjudicating Authority's failure to provide justifiable reasons for rejecting the declared value raised doubts about the accuracy of the valuation process.

3. Role of Customs Broker:
The judgment highlighted that the valuation of goods is primarily governed by the exporter-importer contract, and Customs Brokers have limited influence over this process. The lack of clarity regarding the Customs Broker's involvement in setting or declaring the value of goods further weakened the case against the appellant. The judgment emphasized that the Customs Broker cannot be held liable under the Customs Act for violations that are not directly attributable to their actions.

4. Legal Precedents and Decision:
The judgment referenced legal precedents, including the case of M/s. Kunal Travels (Cargo) v. C.C. (I&G), IGI Airport, New Delhi, to support the view that the imposition of the penalty on the appellant was unjustified. By analyzing the legal framework and previous judgments, the judgment concluded that the penalty imposed on the Customs Broker was legally flawed. Consequently, the impugned order was set aside, and the appeal was allowed.

In conclusion, the judgment critically examined the imposition of the penalty on the Customs Broker, emphasizing the lack of substantial evidence linking the alleged violations to the appellant's actions. By highlighting the limited role of Customs Brokers in the valuation process and referencing legal precedents, the judgment concluded that the penalty was unjust and set it aside, allowing the appeal.