2017 (10) TMI 1264 - AT - Customs

Transporters, CHA, and Company Director Penalties Overturned in Customs Fraud Case

M/s. Panjrath Road Carriers, M/s. Gill Randhawa Roadlines, M/s. Akal Transport Company, M/s. DD Khosla Transport Pvt Limited, M/s. Arisudana Industries Limited and M/s. Karam Freight Movers Versus Commissioner of Customs, Ludhiana

The penalties imposed on transporters under Section 112(b) of the Customs Act, a Custom House Agent (CHA), and a director of a company were set aside in a ... Penalty u/s 112(b) of the CA - High Seas Sale - penalty on transporters - Held that: - there is no evidence on record to show that the transporters were aware of the fraud if any, committed by importers - The transporters cannot be expected to know as to what fraud is going to be committed subsequently by the said recipient of the goods. As such, the imposition of penalties upon them, on the ground that they had transported the tainted goods, cannot be justified. Penalty on CHA - Held that: - there are no evidence to show that they aided and abetted the fraud - the filing of bills of entries by M/s. Canon Industries Pvt. Limited under Target Plus scheme by the present CHA is in accordance with law and the fraud stands committed only after the clearance of the goods - penalty on CHA set aside. Penalty on purchaser - Held that: - Any purchaser in the ordinary course of business, cannot be held liable to penal action on the ground that the goods involved were tainted and cleared by the original importer with a malafide intention - penalty set aside. Appeal allowed - decided in favor of penalty. Issues:Penalty imposed on transporters under Section 112(b) of the Customs ActInvolvement of CHA in aiding and abetting fraudSale of goods to a third party without knowledge of fraudAnalysis:The judgment deals with multiple appeals arising from a common impugned order passed by the Commissioner imposing penalties. Most of the appellants are transporters penalized under Section 112(b) of the Customs Act. However, one appellant is a Custom House Agent (CHA) and another is a director of a company that purchased imported material. The goods in question were initially purchased by a different company on a high-sea sale basis and cleared under the Target Plus scheme. Subsequently, the goods were sold to the director of the appellant company.Under the Target Plus scheme, imported goods are required to be used by the same importer on an actual user condition. An investigation revealed that the goods were not used as per the scheme, leading to proceedings against all involved parties. Notably, the original importers and the company that initially purchased the goods did not challenge the order.The judgment focuses on the lack of evidence to show that the transporters were aware of any fraud committed by the importers. The transporters were merely engaged to transport the goods and cannot be held responsible for any subsequent fraudulent activities. Therefore, the penalties imposed on the transporters were set aside. Similarly, the CHA's involvement in the fraud was not substantiated, as the filing of bills of entries was lawful, and the fraud occurred after the goods were cleared. Hence, the penalty on the CHA was also revoked.Regarding the sale of goods to a third party, the court found no evidence to suggest that the purchaser was aware of any wrongdoing related to the clearance of goods under the Target Plus scheme. In the absence of malafide intentions on the part of the purchaser, the penalty imposed on them was deemed unjustified and subsequently set aside.In conclusion, all the appeals were allowed, and the penalties imposed on the transporters, CHA, and the purchaser were overturned due to insufficient evidence linking them to the fraudulent import of goods.