2023 (1) TMI 1149 - AT - Customs

Levy of penalty of various persons - Allegation of abating the Smuggling - Detention of goods - illegal removal of the container using forged documents from the customs area - creation of forged out of charge (OOC) and Pass- out documents and handing over documents for clearance to Karthikeyan and told him to take delivery - HELD THAT - There is much contradiction as to the dates on which the container was removed. The investigation of the removal of this container was taken up along with alleged illegal removal of containers in respect of five other bills of entry. However, the date of removal of the container of this case is not satisfactorily established. That apart from the statement of Shri Karthikeyan, there is nothing to establish that the appellant had any role in forging documents or removing the container from the CFS area. The contradiction pointed out by the learned counsel also shakes the case put up by the department. The department has failed to establish the allegations raised against the appellants. The penalties imposed therefore require to be set aside - Appeal allowed. The allegation is that the goods have been misdeclared. Though the adjudicating authority has absolutely confiscated goods under Annexure II, the reason for such confiscation is that the goods have violated IPR / BIS Rules. In regard to goods imported under Annexure I and III, the adjudicating authority has given an option to the importer to redeem the goods on payment of redemption fine. The appellant who is a Customs Broker cannot be expected to have knowledge about the goods in the container - On such circumstance, when there is no dispute with regard to the KYC documents submitted on behalf of the importer, the penalty imposed under sec. 112(a) alleging that the appellant has abetted smuggling of misdeclared / undeclared goods is without any factual basis. The penalty imposed on the appellants alleging abetment, that they have rendered the goods liable for confiscation, is totally unwarranted. The penalty imposed on the appellants require to be set aside - Appeal allowed.

Summary

Issues Involved:
1. Alleged illegal removal of a container using forged documents.
2. Imposition of penalties on various parties under sections 112(a) and 114AA of the Customs Act, 1962.
3. Compliance with Customs Broker Licensing Regulations (CBLR) 2013.

Issue-wise Detailed Analysis:

1. Alleged Illegal Removal of a Container Using Forged Documents:
The main allegation was that the appellants created forged Out of Charge (OOC) and other documents to facilitate the illegal removal of a container from the Continental Warehousing Corporation (NS) Ltd. (Continental II CFS). The department based its case primarily on the statement of a co-noticee, Shri M.D. Karthikeyan, who implicated the appellants. However, the Tribunal noted significant contradictions in the department's case, particularly regarding the dates of the alleged removal of the container. The Tribunal emphasized the lack of direct evidence or documentary proof linking the appellants to the forgery or illegal removal. The department's failure to obtain expert opinion on the alleged forged documents further weakened its case. Consequently, the Tribunal held that the department failed to establish the allegations against the appellants and set aside the penalties imposed.

2. Imposition of Penalties on Various Parties Under Sections 112(a) and 114AA of the Customs Act, 1962:
The adjudicating authority imposed penalties on several parties, including Shri Hari Prabhu and Shri Thirumalai Thiyagarajan, under sections 112(a) and 114AA for their alleged involvement in forging documents and facilitating the illegal removal of the container. The Tribunal, however, found that the penalties were based solely on the uncorroborated statements of a co-accused, which is insufficient to prove guilt. The Tribunal cited previous judgments, including the case of Ram Lal Kataria, which established that the statement of a co-accused alone cannot be the sole basis for imposing penalties without corroborating evidence. Given the contradictions and lack of substantial evidence, the Tribunal set aside the penalties imposed on the appellants.

3. Compliance with Customs Broker Licensing Regulations (CBLR) 2013:
The Customs Broker, M/s. Southern Clearing and Forwarding Agencies Pvt. Ltd., and its Director, Ms. J. Lakshmi, were penalized for allegedly not obtaining KYC documents directly from the importer, M/s. A.K. Imports and Exports, in violation of Regulation 11(n) of CBLR 2013. The Tribunal noted that the CBLR 2013 does not explicitly require Customs Brokers to obtain documents directly from the importer. The appellants had obtained the documents through M/s. We Can Shipping and Logistics, which was deemed sufficient compliance. The Tribunal also highlighted that the Customs Broker cannot be expected to know the exact nature of the goods in the container. The penalties imposed for alleged abetment of misdeclaration were found to be without factual basis. The Tribunal relied on previous decisions, including Trade Wings Logistics Pvt. Ltd. and Poonia & Brothers, which supported the view that Customs Brokers are not required to verify every detail of the importer's business. Consequently, the Tribunal set aside the penalties imposed on the Customs Broker and its Director.

Conclusion:
The Tribunal allowed the appeals, setting aside the penalties imposed on all appellants due to lack of substantial evidence, contradictions in the department's case, and misinterpretation of the Customs Broker Licensing Regulations. The appellants were granted consequential relief as per law.