M.K. Raja Mohammed Vs Commissioner of Customs (CESTAT Chennai)
Customs, Excise and Service Tax Appellate Tribunal, Chennai Bench allowed the appeal filed by the appellant, a manager of a Customs House Agent (CHA) firm, and set aside penalties imposed under Sections 114(iii) and 114AA of the Customs Act, 1962. The penalties arose from the appellant issuing signed blank Annexure-A forms of his CHA firm to an individual, who misused them to file shipping bills for exporters whose goods were later found liable for confiscation due to mis-declaration of quantity and value and claims of ineligible drawback.
The adjudicating authority had imposed penalties on the ground that the appellant recklessly issued signed blank forms, which facilitated fraudulent drawback claims. The first appellate authority upheld this view. Before the Tribunal, the appellant argued that there was no allegation or evidence that he had knowledge of the misuse of the forms or of the fraudulent exports, and that the forms were issued in good faith for filing shipping bills of a regular exporter. It was also contended that there was no finding that the appellant benefited monetarily from the ineligible drawback claims.
The Tribunal examined the impugned order and found that it did not establish any active role of the appellant in mis-declaration, ineligible drawback claims, or in knowingly making or using false declarations or documents. Relying on judicial precedents, including a Madras High Court decision on the scope of Section 114(iii), the Tribunal held that penalty under that provision can be imposed only if the person omitted to do an act that rendered the goods liable for confiscation. In the present case, such omission or knowledge was not established.
