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2025 (4) TMI 704 - AT - CustomsLevy of penalties under Section 114(iii) and 114AA of the Customs Act 1962 - allegedly abetting the submission of false documents leading to the overvaluation and attempted illegal export of goods - HELD THAT - The department sent a simple letter to the appellant to inquire about receipt of export documents to which he replied as having been received from M/s Mass Shipping Agencies New Delhi through E-mail. No further investigation seem to have been done at his end to bring out is role in alleged export of goods. The appellant has acted as intermediary in the case who only transmitted the export documents received from M/s Mass Shipping Agency to the CHA for filing the shipping bills with the Customs Authorities. The department has not substantiated charges of abetment or submission of false documents or material to justify penalty upon him under Section 114(iii) and 114AA of the Customs Act respectively. A similar issue was decided by this Tribunal in the case of Bansal Fine Foods Pvt. Ltd. Vs. Commissioner of Customs Mundra 2022 (7) TMI 372 - CESTAT AHMEDABAD wherein it was held that CHA who filed shipping bills as per documents provided by Indian exporter is not liable to penalty under section 114 and 114AA of Customs Act 1962 when export consignment was rerouted to another country but ultimately delivered to original consignee. Penalty under Customs Act can be imposed on a person only if some positive Act of his involvement in fraudulent import/export is found with credible evidence. If a CHA fails to fulfill the obligation cast upon him under CBLR 2018 appropriate action needs to be taken under those regulations. In this case the appellant is not even a CHA. He just acted as an intermediary to forward the export documents/ KYC etc. received from M/s Mass Shipping Agency to the CHA. As discussed the department has not adduced any evidence against the appellant establishing abetment in alleged fraudulent activity of the exporter. Also no evidence has been brought forward to show that the appellant used false and incorrect material in the case which led to confiscation of export goods. What has come out is that the appellant received KYC documents export invoices packing lists etc. of the exporter from some other Agency on his mail which he forwarded to CHA for filing papers with Customs. Therefore the appelant cannot be penalised under Section 114(iii) and 114AA of the Customs Act 1962. Conclusion - The department has not brought out any evidence in this case to sustain allegation against the appellant. Therefore penalty has been imposed on him without credible evidence which is held unsustainable. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Liability under Section 114(iii) and 114AA of the Customs Act, 1962 The relevant legal framework involves Section 114(iii) and 114AA of the Customs Act, which pertain to penalties for abetment in the commission of acts leading to the confiscation of goods. The court examined whether the appellant's actions amounted to abetment as defined under these sections. The court's interpretation emphasized that abetment requires knowledge and intent to assist or encourage the wrongful act. The appellant's role was limited to forwarding documents received from M/s Mass Shipping Agency to the CHA, without any evidence of intentional participation in the fraudulent activity. Key evidence included the lack of any statement or direct involvement of the appellant in the investigation. The appellant had merely acted as an intermediary, transmitting documents without any indication of knowledge or intent to abet the alleged overvaluation and export fraud. The court applied the law to the facts by distinguishing the appellant's actions from those that would constitute abetment. The court noted that mere facilitation without knowledge does not meet the threshold for abetment under the Customs Act. Competing arguments were addressed by contrasting the appellant's role with that of a CHA, who has specific obligations under the Customs Broker Licensing Regulations, 2018. The appellant, not being a CHA, was not bound by these obligations, and no evidence suggested a breach of duty or intent to abet the offense. The court concluded that the appellant's actions did not meet the criteria for abetment under the Customs Act, and thus, the penalties imposed were unsustainable. 2. Violation of Principles of Natural Justice The appellant argued that the principles of natural justice were violated as the lower authorities did not consider relevant case law or provide sufficient evidence for the penalties imposed. The court reviewed the process followed by the lower authorities and found a lack of substantive evidence linking the appellant to any fraudulent activity. The court noted that the appellant was not given a fair opportunity to present their case, as the lower authorities failed to address the appellant's arguments and cited case law adequately. This oversight contributed to the court's decision to set aside the penalties. SIGNIFICANT HOLDINGS The court preserved the following crucial legal reasoning verbatim: "The department has not substantiated charges of abetment or submission of false documents or material to justify penalty upon him under Section 114(iii) and 114AA of the Customs Act respectively." Core principles established include the necessity of knowledge and intent for a charge of abetment under the Customs Act. The court emphasized that mere transmission of documents does not constitute abetment without evidence of intentional involvement in the wrongful act. The final determination was that the penalties imposed on the appellant under Section 114(iii) and 114AA of the Customs Act were unsustainable due to the lack of evidence of abetment. The appeal was allowed, and the order-in-appeal dated 13.02.2024 was set aside to the extent of upholding penalties on the appellant.
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