2016 (3) TMI 556 - AT - Customs

Customs Agent penalized for aiding duty evasion through misclassification of goods

The appellate tribunal upheld penalties imposed on a Customs House Agent (CHA) under Sec 112 (a) of the Customs Act '62 for aiding duty evasion through ... Imposition of penalty under Section 112(a) of the Customs Act, 1962 - Aware CHA not intimated the department about correct classification of goods imported i.e Paraquat Dichloride - Held that:- appellant admitted that as per the direction of the importer it had filed bills of entry claiming classification of the same goods under CTH 3808 before budget but under CTH 2933 after the Budget 2007-8. It was the responsibility of the CHA to not only guide the importer properly but also bring to the notice of the assessing officers any change in the classification claimed by the importer, which appellant was aware of. By keeping the eyes closed appellant knowingly allowed the importer to pay lower duty. Therefore, penalty under Section 112(a) ibid has to be imposed on CHA. - Decided against the appellant Issues: Liability of CHA for penalty under Sec 112 (a) of the Customs Act 1962 for not informing the department about correct classification of imported goods.Analysis:The case involved two appeals filed by an appellant against penalties imposed under Sec 112 (a) of the Customs Act 1962. The appellant, a Customs House Agent (CHA), failed to appear during the hearing, and no adjournment request was made. The Revenue argued that the appellant was aware of the correct classification of goods but did not inform the department. The importer had paid penalties, and the Revenue contended that the appellant knowingly allowed the importer to pay lower duty. The issue was whether the appellant, as the CHA, was liable for penalty for not disclosing the correct classification of the imported goods. The appellant admitted to filing bills of entry with different classifications before and after the budget, as directed by the importer. The Adjudicating authority found the appellant liable for penalty under section 112 (a) of the Customs Act '62 for evasion of duty due to mis-declaration and wrong classification of goods. The authority noted that the appellant should have informed the Customs department about the change in classification, which was not done. The penalties imposed on the appellant were upheld as legally justified and following natural justice principles.The Adjudicating authority highlighted that the CHA was liable for penalty under section 112 (a) of the Customs Act '62 for acts leading to duty evasion by the importer. The authority emphasized that the CHA abetted the importer by declaring different classifications for the same goods, resulting in duty evasion. The CHA's role in misclassification and evasion was considered deliberate, leading to penalties. The authority clarified that reduced penalties under Section 114 A could only apply to the importer, not the CHA. The importer had already paid sums towards duty, fine, and penalty, covering both the importer and the CHA. The penalties imposed on the CHA were deemed appropriate and could be adjusted from the sums paid by the importer. The Adjudicating authority's findings regarding the deliberate evasion of duty through misclassification and the CHA's role in aiding such evasion were crucial in upholding the penalties imposed on the CHA.The appellate tribunal dismissed the appeals filed by the appellant, affirming the correctness of the penalties imposed. The tribunal concurred with the Adjudicating authority's reasoning, stating that the penalties were well-founded, legal, and in line with natural justice principles. The tribunal found no grounds for interference with the orders-in-original, emphasizing the importance of compliance with customs regulations and the duty of CHAs to ensure accurate classification and declaration of imported goods. The dismissal of the appeals signified the tribunal's agreement with the penalties imposed on the appellant for non-disclosure of correct classification, underscoring the significance of transparency and compliance in customs matters.