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2024 (9) TMI 943 - AT - CustomsLevy of penalty u/s 114(i) of the Customs Act, 1962 - appellant, proprietor of Customs Broker firm, having handled all the eight S/Bs involving overvaluation of export goods - HELD THAT - It is found that the exporter Shri Aijaz Esmail Pawaskar, in his voluntary statement given before the Customs investigation authorities on 18.10.2011, to a specific question regarding why he had submitted eight shipping bills for one consignment had answered as following I prepared 8 Invoices and gave to my CHA and submit the paper accordingly to Customs . It thus transpires, that the exporter himself had prepared eight separate consignments for export, leading to the appellant requiring eight shipping bills to be filed in the present case, as per the directions of the exporter. Since the Customs EDI facility under ICES provide for filing multiple commercial invoices under single S/B, the department had alleged that the appellant had failed to file such eight export consignments under eight different invoices in one single S/B instead of eight S/B, resulting in artificial splitting single export consignment, for avoiding examination of the goods by the customs officers and in exploitation of the simplified procedure of assessment / examination of export consignments. It is a fact on record, that the exporter himself had prepared eight different invoices and asked the appellant to prepare the export documents accordingly. Further, there is no evidence on record to suggest that the appellant had prepared eight different S/Bs on his own; even if this was done to avoid examination by the Customs officers, all such S/Bs were filed on the same day, simultaneously as the S/B Numbers reveal that they are almost in same serial order. Thus, it does not stand to logic that the appellant had purposefully split the consignments to avoid examination and to facilitate availment of simplified procedure. For the alleged non-compliance of procedure in filing S/Bs, the right course of option open for the customs authorities is to take action under Customs House Agents Licensing Regulations, 2004/Customs Brokers Licensing Regulations, 2018 for any failure of the obligation on the part of appellant as CB. It is also seen from the records, that such an action has already been taken by the customs authorities and the licensing authority i.e., the Commissioner of Customs (General), Mumbai vide Order dated 24.05.2013 had imposed penalty by forfeiture of security deposit of Rs.20,000/- on the appellant CB. Further, the legal provisions governing Section 114(i) ibid deal with imposition of penalty in respect of prohibition in force for export of goods, leading such export goods liable for confiscation under Section 113 ibid. There are no specific findings in this regard being mentioned by the authorities below, except overvaluation of export goods on the basis of market survey, and hence even on this account, the impugned order upholding imposition of penalty under Section 114(i) ibid, on the appellant is not sustainable. In the case of P.D. Prasad 2017 (5) TMI 1179 - CESTAT NEW DELHI , the Co-ordinate Bench of the Tribunal has held that there is no evidence of CB being aware of overvaluation, then he cannot be held liable for any aiding and abetting and consequently to penalty. Thus, on the basis of the factual matrix of the present case, particularly when the appellant is the proprietor of the CB, who was not aware of the overvaluation of export goods, it cannot be said that the appellant is responsible for such act and for imposition of penalty under Section 114 ibid. There are no merits in the impugned order passed by the learned Commissioner (Appeal), Mumbai Zone-III, in upholding imposition of penalty under Section 114(i) of the Customs Act, 1962 on the appellant - impugned order set aside - appeal allowed.
Issues Involved:
1. Mis-declaration and overvaluation of export goods. 2. Imposition of penalty on the Customs Broker under Section 114(i) of the Customs Act, 1962. 3. Role and responsibility of the Customs Broker in filing shipping bills based on exporter-provided documents. 4. Validity of market survey for determining the value of export goods. 5. Applicability of precedents and legal provisions to the case. Detailed Analysis: 1. Mis-declaration and Overvaluation of Export Goods: The case involves eight shipping bills for export consignments, each declaring 3240 pieces of 'Wallets for Gents' with a declared value of Rs.9,66,680.18/- per consignment. Upon examination by Customs officers, it was found that the goods were highly overvalued. The market enquiry revealed that the actual market value was significantly lower. Consequently, the goods were seized, and the FOB value was re-determined, leading to confiscation under Section 113(d) and 113(i) of the Customs Act, 1962. 2. Imposition of Penalty on the Customs Broker under Section 114(i) of the Customs Act, 1962: The primary issue was whether the Customs Broker (CB) should be penalized under Section 114(i) for abetting the mis-declaration of export goods. The Customs authorities imposed a penalty of Rs.1,00,000/- on the CB, which was upheld by the Commissioner of Customs (Appeals). However, the Tribunal found that the CB acted based on the documents provided by the exporter and did not have any knowledge or intent to abet the mis-declaration. 3. Role and Responsibility of the Customs Broker in Filing Shipping Bills: The Tribunal emphasized that the CB's role is limited to facilitating the proper filing of documents as received from the exporter. The CB is not required to verify the authenticity of the value or the description of the goods. The Tribunal referred to previous judgments, such as Akanksha Enterprises and P.D. Prasad & Sons Pvt. Ltd., which held that a CB cannot be penalized under Section 114 if there is no evidence of their involvement in the mis-declaration. 4. Validity of Market Survey for Determining the Value of Export Goods: The Tribunal scrutinized the market survey report used to determine the value of the export goods. It found that the report lacked proper evidence and did not comply with the Customs Valuation (Determination of Value of Export Goods) Rules, 2007. The Tribunal noted that the methodology used in the market survey was rudimentary and not legally sound, leading to an unsustainable basis for the overvaluation allegation. 5. Applicability of Precedents and Legal Provisions to the Case: The Tribunal referred to several precedents, including the Supreme Court's judgment in Pine Chemical Suppliers, but found them inapplicable to the present case as the facts differed significantly. The Tribunal concluded that the CB cannot be held responsible for the overvaluation of export goods and that the penalty under Section 114(i) was not justified. Conclusion: The Tribunal set aside the impugned order dated 25.06.2014, ruling in favor of the appellant (the Customs Broker). The appeal was allowed, and the penalty imposed under Section 114(i) of the Customs Act, 1962, was deemed unsustainable. The Tribunal emphasized that the CB acted in good faith based on the documents provided by the exporter and did not abet the mis-declaration of the export goods.
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