2017 (6) TMI 1012 - AT - Customs

Customs Penalties Upheld for Diverting Export Goods

Hansraj Pragji & Sons, Shamlal Biharilal Bajaj Atul Shah Versus Commissioner of Customs (Export), Mumbai

The adjudicating authority confirmed penalties of Rs. 10 lakhs each on a Customs House Agent (CHA), a partner in the CHA firm, and a buyer of imported ... Customs House Agent - penalty - Held that: - Investigation proved its case very successfully when the origin and termination of the goods were traced. Learned adjudicating authority has also brought out from the oral evidence of the appellant that based on the instructions of the proprietor of MPC, goods came to his godown and that was delivered from the warehouse where that was stored. There is no scope to intervene with the order of adjudication in view of the aforesaid materials, evidence surfaced when that remained unrebutted - penalty upheld - appeal dismissed - decided against appellant. Issues Involved:1. Allegation of connivance by a Customs House Agent (CHA) with an importer to divert imported goods.2. Imposition of penalties on the CHA, a partner in the CHA firm, and a buyer of the imported goods.3. Confirmation of penalties by the adjudicating authority and dismissal of appeals.Issue 1: Allegation of Connivance by a Customs House Agent (CHA)The Customs alleged that the CHA, involved in the case, conspired with the importer to divert imported goods to the domestic market without being used for the intended purpose. The investigation revealed that instead of reaching the importer's factory, the goods were diverted to the CHA's godown. The CHA was aware of the nature of the goods and their intended use under an advance license scheme. Evidence from buyers confirmed the nature of the goods and their origin. The failure to fulfill export obligations was also established by the Directorate General of Foreign Trade (DGFT). The adjudicating authority confirmed the penalty of Rs. 10 lakhs on the CHA, as the evidence remained unrebutted, leading to the dismissal of the appeal.Issue 2: Imposition of PenaltiesIn the case of a partner in the CHA firm, a penalty of Rs. 10 lakhs was imposed due to the involvement in storing the offending goods. The partner's association with the firm's offense was deemed undeniable, leading to the confirmation of the penalty. Granting any concession would be seen as encouraging evasion, resulting in the dismissal of the partner's appeal.For a buyer of the imported goods, a penalty of Rs. 10 lakhs was imposed for being in possession of the offending goods. The Customs established the buyer's role in the transaction, and the buyer failed to prove innocence or detach from the dealing of the goods. Consequently, the penalty was confirmed, and the appeal was dismissed.Issue 3: Confirmation of Penalties and Dismissal of AppealsThe adjudicating authority confirmed the penalties imposed on the CHA, the partner in the CHA firm, and the buyer of the imported goods. All three appeals were dismissed based on the evidence presented, lack of rebuttal, and the established roles of the parties involved in the diversion and possession of the imported goods.This judgment highlights the serious consequences of connivance in diverting imported goods, the liability of partners in a firm for offenses committed by the firm, and the responsibility of buyers in possession of offending goods. The confirmation of penalties and dismissal of appeals underscore the importance of upholding legal obligations and responsibilities in customs-related matters.