Case Law Details
K. Natarajan Vs Commissioner of Customs (CESTAT Chennai)
The Customs Excise and Service Tax Appellate Tribunal (CESTAT) Chennai recently addressed a case involving the imposition of a penalty under Section 112(a) of the Customs Act, 1962. The case, “K. Natarajan vs. Commissioner of Customs,” pertained to the import of Chinese mobile phones.
1. Background of the Case: The case revolves around the penalty proceedings initiated against the appellant under Section 112(a) of the Customs Act, 1962. The penalty in question amounted to Rs. 50,000.
2. Suspected Mis-Declaration of Goods: The case was initiated based on information suggesting that Chinese-made mobile phones were being imported by mis-declaring them as branded items. The consignments were examined at the Air Cargo Complex in Meenambakkam, Chennai, and discrepancies were found.
3. Allegations and Investigation: The investigation revealed that the consignment was declared to contain 116 packages with 6,475 pieces of Chinese mobile phones, imported by M/s V J Enterprises, Chennai, and sold by M/s. UNI Trade, Hong Kong. The bills of entry were filed by the appellant, who was a Customs House Agent (CHA) operating under the name M/s. Accurate Clearing and Shipping Agencies.
4. Penalty Initiation: The violation primarily related to the failure to verify the antecedents of the importer, as required under Regulation 13 of the Customs House Agent Licensing Regulations (CHALR) 2004. The penalty proceedings under Section 112(a) of the Customs Act were initiated against the appellant.
5. Appellant’s Defense: The appellant, Shri K. Natarajan, presented his case and argued that the penalty imposed under Section 112(a) was unjustified. He emphasized that there was no evidence to establish mens rea or guilty intent on his part. The sole allegation against him was his failure to exercise due diligence in checking the importer’s background.
6. Department’s Position: The department, represented by Shri Sathyanarayanan, supported the findings in the impugned order and argued in favor of upholding the penalty.
7. Tribunal’s Decision: Upon careful examination of the case, the CESTAT Chennai observed that the penalty under Section 112(a) was imposed on the appellant for violating Regulation 13 of CHALR 2004. However, there was no evidence to suggest that the appellant had abetted the importer or the illegal importation of goods. The appellant’s role was that of assisting in filing the required documents on behalf of the importer as a CHA firm, and not in his individual capacity.
8. Penalty Quashed: Based on the findings, the tribunal concluded that the department had not established sufficient grounds to impose a penalty under Section 112(a) of the Customs Act, 1962. The penalty was deemed unwarranted and unjustified. As a result, the impugned order was modified to set aside the penalty of Rs. 50,000 imposed on the appellant.
9. Conclusion: The case of K. Natarajan vs. Commissioner of Customs before CESTAT Chennai underscores the importance of establishing valid grounds for the imposition of penalties, particularly under Section 112(a) of the Customs Act. The tribunal emphasized that penalties should only be imposed when mens rea or guilty intent is established, and the alleged violator is directly involved in acts supporting illegal imports. In this case, the penalty was quashed as the appellant’s role was limited to that of a Customs House Agent, and there was no evidence of his involvement in the illegal importation of goods.
FULL TEXT OF THE CESTAT CHENNAI ORDER
1. Brief facts are that, based on information that Chinese made mobile phones are being imported by mis-declaring the goods as branded items, the consignments covered under bill of entry dated 6/11//2012 consisting of 160 packages were taken up for examination at the Air Cargo complex Meenambakkam, Chennai on 12/11/2012. On verification of the documents, it was seen that the consignment was declared to contain 116 packages consisting of 6475 pieces of China mobile phones imported by M/s V J Enterprises, Chennai and sold by M/s. UNI Trade, Hongkong. The bills of entry was filed by the appellant, Customs House Agent (CHA) namely M/s. Accurate Clearing and Shipping Agencies. On examination of the packages, the officers found it to contain 6475 pieces of assorted China mobile phones which tallied with the description in invoice and packing list; 300 phones in 6 packages did not tally with the inventory terms of the model. Further, 872 numbers of unbranded Chinese mobile phones were found with the markings “Galaxy” printed on each of the boxes and in the transparent remarkable sticker pasted upon each Chinese mobile phones. In one cotton box 50 number of Chinese mobile phones model no. V55 were found along with 4 bundles of stickers for mobile phone battery and 4 bundles of stickers bearing the name “Samsung”. It appeared that there is IPR violation in respect of the goods imported. Investigation was conducted and statements were recorded. Show Cause Notice were issued to various persons including the importer and the appellant herein. After due process of law, the original authority imposed a penalty of Rs.50,000/- on the appellant herein. Aggrieved by such order the appellant is before the Tribunal.
2. The appellant Shri K Natarajan appeared and argued in person. Being an aged person with slight hearing impediment, the Bench requested Ms. V. Pramila to assist the appellant as Amicus Curie. It is pointed out by Ld. counsel the penalty has been imposed on the appellant for violation of Regulations 13 of the Customs House Agent Regulation (CHALR) 2004 and section 146 (2) of Customs Act 1962. It is submitted by the Ld. counsel that the penalty imposed under Section 112 (a) of the Customs Act is not sustainable as the department has not been able to establish any mens rea for abetment in the illegal import of the goods. The only allegation raised against the appellant is that, the appellant did not observe due diligence to check the antecedents of the importer as required under Regulation 13 of CHALR, 2004. It is pointed out that for such violation, the proceedings under CHALR, 2004 ought to have been initiated by the department. When there is no evidence that appellant has involved in the act of illegal import the penalty under Section 11 2 (a) ought not to have been imposed. Ld. counsel prayed that appeal may be allowed.
3. The Ld. AR Shri Sathyanarayanan appeared for the department and supported the findings in the impugned order.
4. Heard both sides.
5. On Perusal of the impugned order it is seen that the penalty under Section 112 (a) of the Customs Act 1962 has been imposed on the appellant for violation of Regulation 13 of CHALR 2004. It is alleged that the appellant did not verify the antecedents of the importer. There is nothing brought out from the records that the appellant had in any manner abetted the importer or the import of impugned goods. In para 53 it is clearly stated that the appellant has only assisted to file the documents on behalf of importer as required of a CHA Firm. It is not done in his individual capacity. There is no allegation that the appellant committed any act helping the import of the illegal goods. For this reason, we find that the department has not been able to establish sufficient grounds for imposing penalty under section 112 (a) of Customs Act 1962. The penalty imposed is not warranted and not justified.
6. In the result, the impugned order is modified to the extend of setting aside the penalty of Rs.50,000/- imposed on the appellant herein. The appeal is allowed in above terms with consequential reliefs if any.
7. The assistance of the Ld. Counsel Ms. V. Pramila is appreciated.
(dictated and pronounced in Court)
