Case Law Details
R.S. Arunachalam Vs Commissioner of Customs (CESTAT Chennai)
These appeals are filed against the orders passed by Commissioner (Appeals) who set aside the order passed by original authority and remanded the matter to reconsider the non-imposition of penalty on the appellants under Section 114 of the Customs Act, 1962. M/s.R.S. Arunachalam is the Customs Broker firm and Smt. R.A. Vijayalakshmi is a Partner of the same.
It is submitted by revenue, that the appellant, Smt. R.A. Vijayalakshmi has admitted that she has lent digital ID and password of their customs broker firm to M/s. Bro Logistics for filing shipping bill for monthly monetary consideration of Rs.10,000/-. M/s.Bro Logistics were using the digital key of the appellants herein for handling customs clearance of various clients. It is also brought out from evidence that one Shri P. Suresh who was employee of Bro Logistics was doing customs clearance work without having a Customs card. The appellant Smt. R.A. Vijayalakshmi has signed blank annexures and handed over to Bro Logistics for filing before Customs. All these would indicate that the appellants have played a major role in the smuggling activity. By merely pleading ignorance, appellants cannot escape their liability under the Customs Act, 1962. He argued that the order passed by the adjudicating authority is factually and legally incorrect. It is established from the statement recorded under Section 108 of the Customs Act that she has lent digital ID and password to M/s.Bro Logistics. This facilitated in filing the shipping bill. The contention of the Ld. Counsel that these violations would fall only under CBLR, 2013 and not under Customs Act, 1962 cannot be accepted. The Customs Broker Regulations have been framed under the Customs Act, 1962. Further, sub-section (2) of Section 50 states that the exporter has to file a declaration as to the truth of contents along with shipping bill. The appellant who is the customs broker has filed false declaration of the exporter. If the D.R.I. had not intercepted the consignment, the prohibited goods would have been exported out of the country.
The Commissioner (Appeals) has relied upon the decision of Hon’ble jurisdictional High Court in the case of V. Prabhakaran Vs CC Chennai – 2019 (365) ELT 877 (Mad.) wherein it was held that misuse of CHA license by lending it to unscrupulous persons for facilitating smuggling activities has to be viewed seriously. The penalty imposed in that case was upheld by the Hon’ble High Court.
Filing of a Shipping Bill is a major step in export of goods. A shipping bill has to be in the prescribed form. It should contain the details like, name of exporter, consignee, Invoice number, details of packing, description of goods quantity, FOB value etc. The exporter has to submit declaration in the prescribed form along with shipping bill. To complete the customs formalities like filing of shipping bill along with declaration and necessary documents, the exporter usually engages a Customs Broker. The officers of the Customs place much trust on the Customs Brokers. In the present case, as per records, though the Shipping Bill is seen to have been filed by the appellants, they plead ignorance of the entire transaction. The appellants have lent their Customs Broker’s Digital ID and Password to M/s.Bro Logistics for filing the shipping bill. It has also come out from the voluntary statement given by Smt. R.A. Vijayalakshmi that they have lent out their Customs Broker digital ID and password for a monetary consideration of Rs.10,000/- per month.
The very same issue on identical set of facts had come up before Shri Rama Thenna Thayalan – 2021 (12) TMI 47 – MADRAS HIGH COURT. From Para-4 of the said judgment, the facts reveal that Customs House Agent had handed over blank annexures to be used for filing the shipping bill. The Hon’ble High Court held that mere admission itself is sufficient to hold that the Customs Broker was reckless and negligent in using his license. In para-16 of the said judgment, it is noted that the CHA in the said case was not a bonafide person and was just collecting rental income by leasing the license; there is positive finding and there is no illegality or perversity in the penalty imposed. In para-15 of the judgment, it was observed that in a scheme of conspiracy, the Customs House Agent cannot escape from liability pleading ignorance of the transaction. The Hon’ble High Court held that the Customs House Agent who is party to the misdeclaration is liable to penalty. Further, it was held that it is incorrect to say that the Customs House Agent is liable only under the Regulations for any violation or contravention.
CESTAT upheld he order of Commissioner (Appeals).
FULL TEXT OF THE CESTAT CHENNAI ORDER
These appeals are filed against the orders passed by Commissioner (Appeals) who set aside the order passed by original authority and remanded the matter to reconsider the non-imposition of penalty on the appellants under Section 114 of the Customs Act, 1962. M/s.R.S. Arunachalam is the Customs Broker firm and Smt. R.A. Vijayalakshmi is a Partner of the same.
2. Brief facts of the case are that the Directorate of Revenue Intelligence, Chennai Zonal Unit received specific intelligence that attempts were made to smuggle Red Sanders (prohibited item for export) through Chennai Port vide a consignment covered under Shipping Bill dated 21.08.2017 filed in the name of M/s.A.B. Traders, Chennai. The shipping bill had been filed by Customs House Agent / Customs Broker namely M/s.R.S.Arunachalam. The goods declared were 117 bales of Polyester Lady Lungies, Polyester Saree, Ladies In-Skirt and Ladies Nighty for export to M/s.NP Waja Resources at Malaysia. Pursuant to the intelligence, the containers were intercepted and examined. On opening the container and destuffing the goods, it was found that Red Sander Logs were found stacked up at the end of the container.
3. On verification of the IEC profile of M/s.A.B. Traders (the exporter as per shipping bill), it revealed that it is a proprietorship concern with Shri E. Stephen as proprietor with registered address at Ambattur, Chennai. Though the Customs officers visited the given address on 28.08.2017, it was found that no such company in the name of M/s. A.B Traders was found functioning in the given address and that no person by name Shri E.Stephen ever resided there.
4. As part of the investigation, statement was recorded from Smt.R.A. Vijayalakshmi, who is partner of M/s.R.S. Arunachalam, Customs Broker, Pammal, Chennai. In her voluntary statement given on 29.08.2017 under Section 108 of the Customs Act, 1962, inter alia, she stated that M/s.R.S. Arunachalam is a partnership firm and she is one of the partners. The other partner is her daughter Smt. Gomathi Sankari; Her husband, Late Shri R.S.Arunachalam was holding Customs Broker license. It was obtained by him in the year 1996. Her husband (R.S.Arunachalam) died in 2013 and thereafter R.A.Vijayalakshmi cleared exam and obtained the licence in 2015. She is holding “F” card with Broker Licence obtained on 11.02.2016, which is valid till 19.02.2025. It is stated by her that after obtaining the licence, she did not have clients on her own and Sri Indrajit of M/s.Bro Logistics contacted her and requested her to part with the digital key of M/s.R.S. Arunachalam for a consideration of Rs.10,000/- per month; that since November 2015, M/s.Bro Logistics has been using digital key of M/s.R.S. Arunachalam for handling customs clearance of their clients. She stated that to her knowledge, M/s.Bro Logistics were clearing imported goods of M/s.Refex Industries and M/s.Rigid Foundations; that she came to know about M/s.A.B. Traders only after the D.R.I issued summons to her. Two export consignments of M/s.A.B. Traders were handled by Sri Suresh, employed with M/s.Bro Logistics. To the specific query on how she got the documents relating to M/s.A.B. Traders for attending to their export clearance, she stated that she did not know anything and all the details were known only to Shri Suresh who had joined M/s.Bro Logistics two months back; that she had signed some blank annexures and handed over to M/s.Bro Logistics for filing with Customs. She was not aware of the day to day transactions done by M/s.Bro Logistics; that she had not met the IEC holder of M/s.A.B Traders and not verified the existence of the said company. It is stated by her that the said transaction was done by Shri Suresh of M/s.Bro Logistics and that Shri Suresh did not possess any Customs card. Based on the investigations, Show Cause Notice was issued to the exporter and to various persons including the appellants herein. After due process of law, the original authority vide Order-in-Original dated 06.03.2019 held as under :
“(i) …. …. ….
(xii) I refrain from imposing any penalty on M/s.R.S.Arunachalam, Customs Broker under Section 114 of the Customs Act, 1962 in view of my findings at para 52 of this Order.
(xiii) I refrain from imposing any penalty on Smt. R.A. Vijayalakshmi, Partner of M/s.R.S.Arunachalam, Customs Broker under Section 114 of the Customs Act, 1962 in view of my findings at para 52 of this Order.
…. ……”
5. Against the above order of non-imposing penalty, the department filed appeal before the Commissioner (Appeals). After granting personal hearing to the respondents, the Commissioner (Appeals) vide orders impugned herein set aside the order passed by the original authority and remanded the matter for reconsideration of imposition of penalty. Aggrieved by such order, the appellants viz. M/s.R.S. Arunachalam and Smt. R.A. Vijayalakshmi are now before this Tribunal.
6. The Ld. Counsel Shri K.S. Ramaswamy appeared and argued for the appellants. He opened his argument adverting to para-52 of the OIO and argued that the original authority has categorically held that there is no evidence to prove that the customs broker had actively abetted the exporter in the illegal export of red sanders.
7. The adjudicating authority after appreciating the evidence has found that Mr. E.Stephen, Proprietor of M/s.A.B. Traders was the mastermind in the smuggling operations. Ld. Counsel adverted to para-45 of the said order in which it is stated as under :
“45. From the statements of Shri G.K. Ramesh, driver of the lorry which carried the export container, I find that the entire operation of smuggling of Red Sander was well planned and executed by Shri E.Stephen, Proprietor M/s. A.B. Traders, Shri Karthick and Shri K. Rajesh, Shri K.S. Jiavu Dharik, Proprietor, M/s. Global Transport. It was clear from the investigation findings and also the statement of Shri Shri G.K. Ramesh, that the perpetrator of this illegal operation sourced the container from M/s. Transvision Shipping P. Ltd., tampered the fasteners of handle of the container, and brought the same to CFS for stuffing of export cargo. After customs sealing of container and moving out of the CFS, enroute to Chennai diverted the lorry to an isolated location and substituted the cargo with Red Sanders without affecting the customs seal. I further find that for this purpose, they contacted Shri P Suresh, Operation Manager of M/s.Bro Logistics who arranged to file the shipping bill and other documents through the user id and password of Customs Broker M/s. R.S. Arunachalam. In all these activities, Shri E.Stephen, Proprietor of M/s. A.B. Traders and Shri Karthik have not revealed their identities and not personally approached the Customs Broker and the Logistic company. They gave instructions through email/phone to avoid detection on a future date. I observe that the said exporter had already made 16 shipments through M/s. J.J.Exim Traders, CHA. For the present consignment they colluded with Shri P.Suresh of M/s. Bro Logistics who was running a firm in the name of M/s. Sun Shine Shipping & Logistics for filing of shipping bill and customs clearance at the CFS. Further, it is evident from the statement of Shri G.K.Ramesh, driver, that one Shri K.Rajesh had carried out the work of substituting the export cargo with Red Sanders. The owner of lorry which was used to transport the container has been absconding and not traceable. The exporter as well as its Proprietor, Shri E.Stephen were not available at the given address and avoiding the investigation till date. Shri Karthik, representative of the exporter company who liaised with the Customs Broker, freight forwarder and the shipping line was also not available for investigation and is absconding ever since the fraud came to light. All these goes to prove that a well conspired plan was hatched by Shri E.Stephen, Proprietor of M/s.A.B.Traders, to illegally export red sanders with the active collusion of Shri Karthick and Shri K.Rajesh and substituted the customs sealed containerised cargo with red sanders enroute to Port. Shri E.Stephen was actively abetted by Shri P.Suresh of M/s.Bro Logistics in filing of the shipping documents and customs clearance with the illegal use of user id and password of the Customs Broker M/s.R.S.Arunachalam. The entire operation would have gone unnoticed had not the DRI intercepted the container on the basis of specific information about the smuggling. Thus, the role of the exporter, its Proprietor Shri E.Stephen, Shri Karthick and Shri K.Rajesh is very clear and substantial in the smuggling operation. I observe that the export of Red Sanders is prohibited in India in terms of Sl.No.188 of Schedule 2 (Export Policy) of ITC (HS) Classification of Import and Export items issued under the provisions of Foreign Trade (Development & Regulation) Act, 1992. Therefore, for the reason of attempted illegal export, the 277 Nos of Red sander logs totally weighing 8.420 MT valued at Rs.3,36,80,000/- is liable for confiscation under Sec.113 (d), 113 (h) and 113 (k) of the Customs Act, 1962. I also find that DRI had also seized 21 LDPE bags of Door mats and 20 bags of Sri Chakra Supertech 50 Kg 53 Grade cement valued at Rs.30,000/- and Rs.7,000/- totally valued at Rs.37,000/- used for concealing the red sanders are also liable for confiscation. Shri E Stephen, Proprietor of M/s.A B Traders, who is mastermind in the smuggling operation, is liable for penalty under Sec.114 of the Customs Act, 1962 for rendering the prohibited goods, viz., Red Sanders liable for confiscation.”
8. Besides this, the adjudicating authority has found that the goods were substituted after tampering the empty container during transit. Shri K. Rajesh is the person who actually undertook the tampering of empty container and substituted the export cargo with red sanders on the way to port and thus handled work of tampering the seal of container for illegal export. The discussion on this is in para-47 of the order.
9. Counsel stressed that the only allegation against the appellants herein is that they lent their digital user ID and password to M/s.Bro Logistics to file shipping bill for a monthly consideration. There is no evidence to show that the appellant had received monetary consideration for allowing to use their Customs Broker Digital user ID and password. The appellants had come to know about the export made by M/s.A.B. Traders only after seizure of the consignment by D.R.I. The entire customs clearance of this container of red sanders was carried out by P. Suresh of M/s.Bro Logistics. The said firm had obtained customs card for persons who are not their employees. The appellant Smt. R.A. Vijayalakshmi had signed blank annexures and handed over the same to M/s.Bro Logistics. Further, it is stated that KYC documents in the nature of IE code etc. submitted by M/s.A.B Traders appeared to be genuine as these have been issued by government agencies.; that there is no requirement for the appellant to visit the premises of the exporter and to verify the address. The CHA/Customs Broker has no control over the container on its’ way to the port and therefore the appellant cannot be found guilty of tampering the seal/lock of container or substituting the export cargo with red sanders.
10. It is submitted by the Ld. Counsel that contraventions, if any, committed by the appellant would fall under Customs Broker Licensing Regulations (CBLR), 2013 only. Without any evidence to establish the abetment for attempt of illegal export, the appellants cannot be penalized under Section 114 of the Customs Act, 1962. The Ld. Counsel adverted to relevant finding of the adjudicating authority in para-52 which is reproduced as under :
“52. Coming to the role played by the Customs Broker, its Partner Smt.R.A.Vijayalakshmi, I find that the Customs Broker M/s.R.S.Arunachalam, had lent their digital user-id and password to M/s.Bro Logistics to file shipping bills for a monetary consideration. Shri R.A.Vijayalakshmi, Partner of M/s.R.S.Arunachalam had given a statement that they knew about M/s.A.B.Traders only after the seizure of the consignment by DRI and the entire customs clearance relating to this consignment of red sanders was carried out by Shri P.Suresh of M/s.Bro Logistics; that they obtained Customs Card for persons who are not their employees that she signed the blank annexures and handed over to M/s.Bro Logistics. In their reply to the show cause notice and during the personal hearing, the Customs broker had contended that the KYC documents of M/s.AB Traders are genuine and there is no reason to suspect as they had been issued by the Government agencies and that there is no mechanism to verify the availability of exporter and their premises; that the container was tampered with and substitution of export cargo with red sanders took place enroute to Port on which they have no control as a CHA. They have cited various case laws in support of their contention regarding non-leviability of penalty on the Customs Broker. I have considered all the arguments put forth on behalf of the Customs Broker and I find that as admitted by them, they had rent the user id and password to M/s.Bro Logistis for a monetary consideration and allowed Shri P Suresh to mis-use the same to facilitate the red sander export in this case. Customs Broker Licensing Regulations 2013 does not permit transfer Customs Broker Licence and knowing this fully the Customs Broker had violated the provisions of the said Regulations by allowing M/s. Bro Logistics to utilise such a facility extended only to the Customs Broker. The Customs Broker have thus failed in verifying the antecedents of the exporter and failed to discharge the responsibility case on them under the Customs Broker Licensing Regulations 2013, I find that there is no evidence to prove that the Customs Broker had actively abetted the exporter in their illegal export of red sanders. In fact, the Customs Broker did not know the exporter till the seizure of the red sanders by DRI. This aspect of ignorance on the part of Customs Broker did not mean abetment and at the best can be termed as negligence to carry out the statutory responsibility. I accept the contention of the counsel for the Customs Broker that they had not abetted but hold them responsible for failure to discharge the functions of a Customs Broker as provided in the Customs Broker Licensing Regulations, 2013. I observe that the Hon’ble Tribunal in the case of Commr of Customs (Exports) Vs. I.Sahaya Edin Praby – 2015 (320) ELT 264 (Mad.) held that for failure to discharge duties as a Customs House Agent penalties are provided in the Customs House Agents Licencing Regulations and imposing of penalty under Sec.114 of the Customs Act, 1962 is not warranted. The said decision of the Hon’ble CESTAT was also upheld by the Hon’ble High Court of Madras by its Order dated 8.1.2015. Applying the ratio, I hold that the Customs Broker M/s.R.S.Arunachalam is not liable for penalty under Sec.114 of the Customs Act, 1962. In view of this finding, penalty is also not imposable on Smt.R.A.Vijayalakshmi, Partner, M/s.R.S.Arunachalam under Sec.114 of the Customs Act, 1962. However, the Customs Broker and its Partner are liable for penal action, to be decided by the competent authority, under the Customs Broker Licensing Regulations 2013 for their failure to discharge the duties as a Customs Broker under the provisions of the said Regulations.”
11. To support the above arguments, Ld. Counsel relied upon the decision of the Tribunal in the case of Kailash Bahiru Jadhav Vs CC (Export) – 2019 (7) TMI 1061- CESTAT Mumbai as well as the decision in the case of Calimaa World Logistics Pvt. Ltd. Vs CC Tuticorin – 2019 (9) TMI 1220 – CESTAT Chennai. He prayed that the appeals may be allowed.
12. A.R Shri R. Rajaraman appeared and argued for the department. He adverted to the discussions made in para-7 of the order passed by the Commissioner (Appeals). It is submitted by him, that the appellant, Smt. R.A. Vijayalakshmi has admitted that she has lent digital ID and password of their customs broker firm to M/s. Bro Logistics for filing shipping bill for monthly monetary consideration of Rs.10,000/-. M/s.Bro Logistics were using the digital key of the appellants herein for handling customs clearance of various clients. It is also brought out from evidence that one Shri P. Suresh who was employee of Bro Logistics was doing customs clearance work without having a Customs card. The appellant Smt. R.A. Vijayalakshmi has signed blank annexures and handed over to Bro Logistics for filing before Customs. All these would indicate that the appellants have played a major role in the smuggling activity. By merely pleading ignorance, appellants cannot escape their liability under the Customs Act, 1962. He argued that the order passed by the adjudicating authority is factually and legally incorrect. It is established from the statement recorded under Section 108 of the Customs Act that she has lent digital ID and password to M/s.Bro Logistics. This facilitated in filing the shipping bill. The contention of the Ld. Counsel that these violations would fall only under CBLR, 2013 and not under Customs Act, 1962 cannot be accepted. The Customs Broker Regulations have been framed under the Customs Act, 1962. Further, sub-section (2) of Section 50 states that the exporter has to file a declaration as to the truth of contents along with shipping bill. The appellant who is the customs broker has filed false declaration of the exporter. If the D.R.I. had not intercepted the consignment, the prohibited goods would have been exported out of the country.
13. The Commissioner (Appeals) has relied upon the decision of Hon’ble jurisdictional High Court in the case of V. Prabhakaran Vs CC Chennai – 2019 (365) ELT 877 (Mad.) wherein it was held that misuse of CHA license by lending it to unscrupulous persons for facilitating smuggling activities has to be viewed seriously. The penalty imposed in that case was upheld by the Hon’ble High Court.
14. The Ld. A.R has placed reliance on the recent decision of the Hon’ble jurisdictional High Court in the case of Shri Rama Thenna Thayalan – 2021 (12) TMI 47 – MADRAS HIGH COURT in which the decision in the case of V. Prabhakaran Vs CC Chennai (supra) was also relied. The Hon’ble High Court held that the Customs House Agent who is party to the misdeclaration is liable to penalty. Further, it was held that it is incorrect to say that the Customs House Agent is liable only under the Regulations for any violation or contravention. He prayed that the appeals may be dismissed.
15. Heard both sides.
16. At the outset, it has to be stated that on perusal of the order passed by the adjudicating authority, it is seen that the adjudicating authority has taken the view that leasing the User ID and Password of a Customs Broker can be considered as violation under CBLR, 2013 only. It is held that for such violation the Customs Broker cannot be held to have abetted in the attempt to smuggle red sanders. The relevant para-52 of the order of the adjudicating authority has already been reproduced above.
17. Against this, the department filed appeal before the Commissioner (Appeals). The decision in the case of K.V. Prabhakaran Vs CC Chennai (supra) has been relied by the Commissioner (Appeals) to arrive at the conclusion that the matter has to be remanded to the original authority for reconsidering the issue of imposing penalty under Section 114 of the Act ibid. The Section 114 reads as under :
“SECTION 114. Penalty for attempt to export goods improperly, etc.
— Any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, shall be liable, –
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty [not exceeding three times the value of the goods as declared by the exporter or the value as determined under this Act], whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher :
Provided that where such duty as determined under subsection (8) of section 28 and the interest payable thereon under section 28AA is paid within thirty days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the penalty so determined;
(iii) in the case of any other goods, to a penalty not exceeding the value of the goods, as declared by the exporter or the value as determined under this Act, whichever is the greater.”
(emphasis supplied)
As seen from the above section, an attempt to export prohibited goods is liable for penalty and whoever abets the doing or omission of such act is also liable for penalty under the said provision. An attempt is an effort or endeavour to accomplish a crime, which amounts to more than mere preparation or planning for it, which, if not prevented, would have resulted in the full consummation of the act attempted. In order to constitute an act of attempt, the act must possess four characteristics. Firstly, it must be a step towards a punishable offence; secondly, it must be apparently adapted to the purpose intended; thirdly, it must come dangerously near to success; fourthly, it must not succeed.
18. Filing of a Shipping Bill is a major step in export of goods. A shipping bill has to be in the prescribed form. It should contain the details like, name of exporter, consignee, Invoice number, details of packing, description of goods quantity, FOB value etc. The exporter has to submit declaration in the prescribed form along with shipping bill. To complete the customs formalities like filing of shipping bill along with declaration and necessary documents, the exporter usually engages a Customs Broker. The officers of the Customs place much trust on the Customs Brokers. In the present case, as per records, though the Shipping Bill is seen to have been filed by the appellants, they plead ignorance of the entire transaction. The appellants have lent their Customs Broker’s Digital ID and Password to M/s.Bro Logistics for filing the shipping bill. It has also come out from the voluntary statement given by Smt. R.A. Vijayalakshmi that they have lent out their Customs Broker digital ID and password for a monetary consideration of Rs.10,000/- per month.
19. A Custom Broker is supposed to safeguard the interests of both exporters and the Customs. It is not possible to manage the huge volume of transactions in each port without some trust on the Customs Broker by the officers of Customs. Any act facilitating an attempt for export of prohibited goods would fall under Section 114 of the Act, ibid. The Ld. Counsel for appellants has relied upon the decision in the case of Kailash Bahiru Jadhav Vs CC (Export) (supra) to argue that the violation if any would fall only under CBLR, 2013 and not under Section 114 of Customs Act, 1962. The facts in the said case are that appellant therein had filed export documents and later revealed that there was overvaluation of goods which facilitated the exporter in claiming excess drawback. In para-6 of the said decision, the Tribunal held that for all contraventions in every case, the customs broker cannot be proceeded against under Section 114 of the Act, merely because he acted as an agent. The said para reads as under :
“6. The Customs House Agents Licensing Regulations, 2004 which is a comprehensive self-contained scheme for licensing, operations, monitoring and regulation, is a standalone provision. Indeed it is a special provision in the Customs Act, 1962 by which, a whole range of activities in connection with which proceedings may be initiated for breach thereof. Implicitly, every agent who has a license has to be connected with import or export of goods and if an agent could be proceeded against under Section 114 of the Customs Act, 1962 merely because of being an agent, it would necessarily follow that every agent must be made a notice in all proceeding under Sections 111 and 113 of Customs Act, 1962 which does not appear to be the intent of the legislation. It is seen from the impugned order that it is the role of the appellant herein as a ‘custom house’ agent that was found sufficient to invoke the penal provision. As separate provisions exist in the Customs House Agents Licensing Regulations, 2004, the invoking of such for violations for imposing of penalty under Section 114 of Customs Act, 1962 is patently incorrect.”
20. The facts in the above case reveal that the allegation therein was of filing export documents in which the goods were overvalued. Needless to say that value of the goods are entered in the shipping documents as provided by exporter and the Customs Broker / CHA would have minimal or negligible role to play in the valuation of goods. The facts of the said case being entirely different, I find it not applicable to the present situation wherein the allegation is lending of Customs Broker Digital ID and password to unauthorised person for monetary consideration.
21. The decision in the case of Calimaa World Logistics Pvt. Ltd. (supra) was also relied by the appellant. The allegation against the customs broker in the said case was that Bill of Entry was filed without obtaining the authorization or documents directly from the importer. The facts reveal that on examination of the consignment, it was noticed that there were goods which did not fit in the description of the declared goods. The Customs Broker cannot be said to be aware of the kind of goods shipped by the foreign supplier. The facts are not similar to the situation in the present case and therefore the said decision is of no support to the appellants.
22. A.R has relied upon the recent judgment of Hon’ble Jurisdictional High Court in the case of Rama Thenna Thaylan (supra). The very same issue on identical set of facts had come up before the Hon’ble jurisdictional High Court. From Para-4 of the said judgment, the facts reveal that Customs House Agent had handed over blank annexures to be used for filing the shipping bill. The Hon’ble High Court held that mere admission itself is sufficient to hold that the Customs Broker was reckless and negligent in using his license. The substantial question of law framed and considered by the Hon’ble Court in C.M.As (MD) No. 917 of 2014 which is seen filed by the Customs broker is reproduced as under :
“3. Whether the first respondent Tribunal was correct in upholding/enhance the penalty imposed on the appellant under Section 114 (i) of the Customs Act, 1962 for the alleged contravention of Customs House Agents Licensing Regulations,2004 when the said Regulations is a code by itself and therefore, for the violations and contraventions of the Regulations, the appellant can be proceeded only under the said Regulations and not under the Customs Act, 1962”.
In para-16 of the said judgment, it is noted that the CHA in the said case was not a bonafide person and was just collecting rental income by leasing the license; there is positive finding and there is no illegality or perversity in the penalty imposed. In para-15 of the judgment, it was observed that in a scheme of conspiracy, the Customs House Agent cannot escape from liability pleading ignorance of the transaction. The Hon’ble High Court upheld the penalty imposed on the CHA. The relevant paragraphs are reproduced as under :
“17. The plea that action against the erring Customs House Agent can be initiated only as per the procedure under CHALR 2004 and not under Section 114 (i) of the Customs Act is baseless argument.
18. Regulation No.12 of CHALR 2004 says that the licence is not transferable or sold. Thus, while granting licence, it is very clear that the licensee cannot allow the third party to misuse the licence. Regulation No.13 of CHALR imposed certain obligations on the Customs House Agent and one such obligation is to exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage and yet another obligation is to verify antecedent, correctness of Importer Exporter Code (IEC) Number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information.
19. From the records and the own admission of the appellant, it is clear that the appellant had not discharged these obligations, which cast on It is a case where under the guise of Coco Peats, prohibited goods namely, Red Sanders weighing 10.760 MTs. has been transported. The DRI based on the intelligence gathered, had rescue the goods and found the Cargo was transported based on the Annexure – A containing the signature of the appellant Customs House Agent. Customs House Agent is governed by the Regulations framed by the Government in exercise of the powers conferred under the Customs Act, 1962. Therefore, misdeclaration of goods and attempt to export such goods is punishable under Section 114 of the Customs Act. A Customs House Agent, who is a party to the mis-declaration, is liable to pay penalty not exceeding three times of the value of the goods mis-declared. The first respondent Tribunal is empowered to enhance the penalty imposed, if the penalty imposed is not adequate. Further, the provisions under the Regulations to punish the Customs House Agent for violation and contravention of the Regulations is in addition to the penal provisions prescribed under the parent act, namely, the Customs Act. It is incorrect to say that the Customs House Agent is liable only under the Regulations for any violation and contravention.
The licence issued to the Customs House Agent under conditions not to commit any grave offence. If action under the Regulations not sufficient for the grave offence, the Customs House Agent is liable also to be proceeded under the Customs Act. There is no legal impediment to proceed against the Customs House Agent under the Customs Act besides action under the Regulations.”
23. After appreciating the facts and evidence placed before me, I am of the view that the decision of the jurisdictional High Court in the case of Shri Rama Thenna Thayalan (supra) is squarely applicable to the facts of this case. I do not find any merit in the appeals of the appellant. The impugned orders do not call for interference. The same are upheld. The appeals are dismissed.
(Pronounced in court on 04.03.2022)
