2024 (11) TMI 1242 - AT - Customs

Levy of penalty - Customs Broker - Import w/o payment of Customs duty under Advance Authorization - sale of consignments on High Sea Sale basis - confiscation of goods when any goods do not correspond in respect of value or any other particular - On the basis of information received from the DRI, Pune that the imports made by M/s Blazeing Star Trade Pvt. Ltd. under Advance Authorization appears to be suspicious, enquiry was initiated and on being reported by CGST, Dehradun that the said importer firm is non-existent at the declared address Whether the Appellant and its proprietor are liable to pay penalty u/s 112(a)(ii) and 114AA of the Act, respectively, along with redemption fine on alleged premise that the Appellant in connivance with High Sea Buyer i.e M/s Blazeing Star Trade Pvt. Ltd. facilitated the import of PVC resin to non-existent entity i.e Blazeing Star on the basis of fake Advance Authorisation and GST certificate and whether penalty under Section 117 of the Customs Act is imposable on M/s Saarthee Shipping Co. (Custom Broker)? - HELD THAT - We find that Appellant and Blazeing Star entered into a High Sea Sales agreement wherein Blazeing Star imported the said goods vide Bills of Entry No. 5440564 dtd. 14.09.2021 under Advance Authorisation and another Bill of Entry No. 5548138 dtd. 22.09.2021 without duty under Advance Authorisation. After the investigation, revenue alleged that Blazeing Star is fictitious and non-existent entity. Appellant vide its letter dtd. 17.01.2022 and 18.02.2022 requested to cancel the High Sea Sales Agreement and requested to allow to amend the Bill of Entry dtd. 14.09.2021 and 22.09.2021. Deputy Commissioner of Customs House, Mundra vide letter dtd. 07.06.2022 accepted the request of the Appellant and directed them to make payment of duty, execution of Bond/ Bank Guarantee etc., and on payment of duty and on furnishing of Bond/Bank Guarantee, the Bills of Entry were amended. The said goods were released provisionally, and value was reduced on account of deduction of 2% High Sea Sales charges. We find that by allowing amendment, obviously under Section 149, the authority had no rationale to deny having allowed said amendment under Section 149. In the present matter in terms of Section 149 of the Customs Act, the importer s name was substituted in the Bill of Entry and department allowed him to clear the imported goods with payment of customs duty without taking benefit of disputed advance authorization. So after allowing such amendment the Department had no ground to confiscate the goods and impose fine and penalty. The revenue has not challenged the said amendment. Further we also find that Revenue did not appeal against the order passed by Original Authority under Section 149 of Customs Act, 1962, allowing the amendment to the Bills of Entry. Section 111(m) deals with confiscation of goods when for any goods information given is not correct in respect of value or any other particular, however after amendment in Bills of Entry, in the present disputed matter, there is no mis-declaration in Bills of Entry. After the amendment, the goods in dispute are not imported under Advance Authroization and there are no discrepancies in relation to value, quantity of the goods. In these circumstances, we find no reason to sustain the confiscation of goods and imposition of penalties on Appellant. We also find that appellant has, prior to issuance of show cause notice dtd. 17.05.2023, deposited the entire duty, without taking benefit of Advance Authorization, alogn with interest. This shows that the intention of Appellant was always bona fide. Further revenue has not brought any evidence to show that the Appellant in any way abetted Balzeing Star in importing the said goods under fake Advance Auhorisation or that the Appellant was aware about the fictitious nature of Blazeing Star. Further it is also not the case of the revenue that the Appellant had any stake in the firm or business of Blazeing Star. It is also not the case that the Appellant Proprietor had any connection with Blezeing Star. Importantly, the Appellant on realising that the original importer may be fictitious, paid entire duty along with interest. We also agree with the argument of Ld. Counsel that for imposition of penalty mens-rea has to be established about the wrongful act. In the present case, the only document made/signed by the Appellant are High Sea Sales agreements which are not alleged to be fake/incorrect. From the plain reading of Section 114AA it is evident that penalty under this section can be imposed on a person who intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular for the transaction of any business under the Customs Act, 1962. In the present case nothing has been brought on record by which it can be said that the appellant had made or caused to be made any declaration/used or caused to be used any statement or document which is false or incorrect. No document etc., which has been produced by him was found to be materially wrong. As the ingredients for invocation of provisions of Section 114AA are absent in the present case penalty under the said section is not justified. As it is clear, penalty under Section 117 are for contravention, not expressly mentioned. But, there should be sufficient evidences to show mala fide intention resulting in contravention of any provisions warranting penalty. There is no material on record to conclude that the appellant facilitated misdeclaration of imported goods. Penalty under Section 117 of the Customs Act, 1962 can be imposed only if abetment on the part of the appellant is brought out which means that the appellant should have knowledge or reason to believe that the provisions of the Customs Act relating to correct valuation of the goods were being contravened. No such evidence is forthcoming; therefore, penalty upon the appellant cannot be sustained. Further in the present matter being a customs broker appellant only performing his duties. He is not aware about the fictitious status of High Sea Buyer. We do not find any justifiable ground to impose penalty on the Appellant.

Summary

Issues Involved:

1. Confiscation of goods under Section 111(m) of the Customs Act, 1962.
2. Imposition of penalties under Sections 112(a), 112(b), 114AA, and 117 of the Customs Act, 1962.
3. Amendment of Bills of Entry and its implications.
4. Bona fide intent and mens rea in penalty imposition.
5. Role and liability of the Customs Broker under Section 117 of the Customs Act, 1962.

Detailed Analysis:

1. Confiscation of Goods:

The primary issue was whether the imported goods should be confiscated under Section 111(m) of the Customs Act, 1962, due to alleged discrepancies in the Bills of Entry. The appellants argued that post-amendment, there was no mis-declaration in the Bills of Entry as the goods were no longer imported under Advance Authorization, and there were no discrepancies concerning the value or quantity. The Tribunal found that after the amendment of the Bills of Entry under Section 149 of the Customs Act, the goods were imported without taking the benefit of Advance Authorization, and there were no grounds for confiscation. The Tribunal noted that the Revenue had not challenged the amendment, and thus, the confiscation of goods was not justified.

2. Imposition of Penalties:

The Tribunal examined the imposition of penalties under Sections 112(a), 112(b), and 114AA of the Customs Act. The appellants contended that penalties should not be imposed in the absence of mens rea, as they had paid the entire Customs Duty along with interest before the issuance of the show cause notice. The Tribunal agreed, citing the absence of any evidence showing that the appellants had knowingly or intentionally made false declarations or documents. The Tribunal referenced previous judgments to support the view that penalties under Section 114AA require intentional false declarations, which were not present in this case.

3. Amendment of Bills of Entry:

The Tribunal noted that the amendment of the Bills of Entry was allowed by the customs authorities, and the importer's name was substituted, allowing the appellants to clear the imported goods upon payment of duty. This amendment negated the grounds for confiscation and penalties, as the goods were no longer imported under the disputed Advance Authorization.

4. Bona Fide Intent and Mens Rea:

The Tribunal considered the appellants' bona fide intent, noting that they had paid the duty and interest upon realizing the original importer might be fictitious. The Tribunal emphasized that for penalties to be imposed, mens rea or a wrongful act must be established, which was not demonstrated in this case. The appellants had not gained any undue benefit from the transaction, further supporting their bona fide intent.

5. Role and Liability of the Customs Broker:

Regarding the penalty imposed on the Customs Broker under Section 117 of the Customs Act, the Tribunal found no evidence of contravention or abetment by the broker. The broker's role was limited to filing the Bills of Entry based on the documents provided by the importer, and there was no indication of knowledge of the fictitious nature of the High Sea Buyer. The Tribunal concluded that penalties under Section 117 require evidence of abetment or contravention, which was absent in this case.

Conclusion:

The Tribunal set aside the impugned order, finding no justification for confiscation of goods or imposition of penalties on the appellants or the Customs Broker. The appeals were allowed with consequential relief as per law.