K. C. Jacob & Company Vs Commissioner of Customs (CESTAT Bangalore)
CESTAT Upholds Section 112(b) Penalty Due to Diversion of Duty-Free Cashew Imports; Penalty Sustained Because Customs Broker Knew Advance Licence Conditions Were Violated; Customs Broker Penalised for Aiding Transport of Imported Goods Beyond Licensed Units; CESTAT Rejects Defence That Customs Broker Merely Followed Importer’s Instructions.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore, dismissed an appeal filed by a Customs Broker challenging imposition of penalty under Section 112(b) of the Customs Act, 1962. The dispute arose from import of raw cashew nuts by an importer under Advance Authorization Licences issued under the Foreign Trade Policy 2015-2020 and Notification No. 18/2015-Customs dated 01.04.2015. The importer had availed duty-free import benefits subject to conditions that the imported goods would be processed only at specified factory premises mentioned in the licences.
Investigations by the Directorate of Revenue Intelligence (DRI) revealed that imported cashew nuts were diverted to the local market in violation of licence conditions. Duty demand and penalties were proposed against the importer and the Customs Broker who facilitated filing of Bills of Entry and transportation of goods.
The appellant argued that it acted merely as a Customs House Agent and transporter following the importer’s instructions. It contended that penalty under Section 112(b) could be imposed only when a person knowingly dealt with goods liable to confiscation and that the imported goods had initially been cleared by customs authorities under valid advance licences.
