Penalty Can't Be Imposed U/S 114AA Of Customs Act On Broker Merely For Failing To Physically Verify Importer's Premises: CESTAT

The Bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that “the allegations that the appellant did not physically verify the premises of the importer, are not sufficient to fasten the appellant with the penalty. It has not been established that the appellant handled this consignment with any malafide motive. It is essential to establish an intentional or deliberate act or omission and to the act of abetment for imposition of penalty under Section 114AA of the Customs Act.”

In this case, the assessee/appellant is a Customs Broker. The assessee is engaged in the business of the clearance of the import and export consignments.

M/s. Jagdamba Enterprises sought assessee's services for the clearance of the import consignment. The assessee cleared eleven consignments of M/s Jagdamba Enterprises prior to the impugned consignment.

The assessee filed the Bill of Entry on behalf of the importer viz., M/s. Jagdamba Enterprises declaring the items as per the import documents. However, on examination of the goods, some undeclared goods as well some the declared goods in varying quantities were found. Consequently, the container was detained and seized.

The assessee was made co-noticee to the show cause notice for imposition of penalty under Section 112(a) and 114AA of the Customs Act, 1962. The adjudicating authority-imposed penalty under Section 112 (a) and also under Section 114AA of the Customs Act, 1962.

Aggrieved by the decision of Adjudicating Authority the assessee filed an appeal to the Commissioner of Customs (Appeals) which was rejected. The assessee has challenged the order passed by the Commissioner of Customs (Appeals) before the Tribunal.

The assessee submitted that the adjudicating authority had failed to appreciate that in the absence of charge of aiding and abetting, even the penalty under Section 112 (a) of the Customs Act, 1962 could not have been imposed.

The department submitted that the appellant/assessee being the licensed, and authorized under the Custom Broker Licensing Regulation 2018 was required to undertake the work of clearance of consignments on behalf of his clients (importer/exporter) in the manner as prescribed.

The Tribunal observed that the appellant/assessee had simply facilitated the customs transaction on behalf of the importer/exporter and no evidence has been led by Revenue to establish that the he was directly involved in any wrongdoing in respect of the impugned consignment. Consequently, the penalty under Section 112(a) cannot be upheld.

The bench opined that penalty cannot be imposed unless there is explicit evidence of collusion or wilful mis-statement or suppression of facts by the appellant, which are essential ingredients for imposing penalty under section 114A.

“The appellant/assessee was in possession of the required KYC documents as mandated by the provisions of the law. The said KYC documents have not found to be fake or forged. It is an admitted fact that the assessee had in the past filed customs clearance documents for the said importer which had been cleared by the authorities. Revenue has not been able to clearly establish either active or passive role or any deliberate or mala fide act on part of the assessee” stated the bench.

In view of the above, the Tribunal allowed the appeal.

Case Title: HIM Logistics Private Limited v. Commissioner of Customs Export (ICD TKD), New Delhi

Case Number: Customs Appeal No.53566 Of 2018

Counsel for Appellant/ Assessee: Shivendu Sharma

Counsel for Respondent/ Department: Rajesh Singh

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