2018 (6) TMI 82 - AT - Customs

Customs House Agent penalized Rs. 10,00,000 for fraudulent export activities

The appellate tribunal upheld the penalty of Rs. 10,00,000 imposed on a Customs House Agent (CHA) for his involvement in fraudulent export activities, ... Fraudulent export of low quality goods - Penalty on CHA u/s 114 of CA - gross overvaluation of exports to avail higher / undue and ineligible drawback benefits - role of exporter in the said blunder - Held that:- CHA is duty-bound to advise the client to comply with the provisons of the Act and the regulations diligently ensuring the imparting of correct/relevant information to the client for clearance of cargo or baggage. If there is any non compliance by the client, it is the duty of CHA, the appellant herein, that he must bring it to the attention of the Deputy or Assistant Commissioner. It is his fiscal accountability that he must promptly pay the Government all moneys received from the client for duties and taxes. The appellant’s plea that he was never concerned with the goods illegally exported, being merely an agent of the exporter is nothing but an eye-wash Keeping in view the obligations of the CHA as enshrined in Rule 11 of the Regulations 13 of the Regulations’ 2013, it is crystal clear that no inferior quality goods can be exported and imported, that too, for a period of more than two years continuously without the knowledge of the CHA. The defence of the appellant also stands vitiated from his own admission that he used to receive a percentage of the duty drawbacks and other benefits apart from the normal charges - it is held that the Commissioner (Appeals) has rightly held the appellant to be equally responsible for the fraudulent export of low quality goods with the sole aim of claiming the undue benefits duty drawback from Customs Department. Appeal dismissed - decided against appellant. Issues:- Dispute over penalty imposition by Commissioner (Appeals) on a Customs House Agent (CHA) for alleged involvement in fraudulent export activities to claim undue benefits.Analysis:1. The case involved the imposition of a penalty of Rs. 10,00,000 on a CHA for his alleged involvement in a syndicate engaged in overvaluation of exports to avail ineligible benefits. The CHA handled the customs clearance of a container stacked with goods meant for export, and investigations revealed financial transactions indicating complicity in fraudulent activities.2. The Additional Commissioner ordered the confiscation of goods with a declared value of Rs. 5,98,24,458, allowing redemption on payment of Rs. 10 lakhs. The drawback claim was restricted, and penalties were imposed under Sections 114 and 114(A)(a) of the Customs Act on the CHA and other involved parties.3. The Commissioner (Appeals) upheld the penalty, holding the CHA equally responsible for fraudulent exports. The CHA argued that he was not involved in the conspiracy and merely performed his duties as required. However, the department highlighted the CHA's admission of receiving duty drawbacks and knowledge of irregular export practices.4. The appellate tribunal analyzed the case, emphasizing the CHA's obligations under Customs Brokers Licensing Regulations. It noted that the CHA's responsibilities extend until goods are sealed for export, and any involvement in irregular practices violates regulatory requirements.5. The tribunal rejected the CHA's defense, citing his admission of receiving additional benefits and awareness of improper export procedures. It concurred with the Commissioner (Appeals) that the CHA was complicit in the fraudulent export scheme to claim undue benefits. The tribunal upheld the penalty and dismissed the appeal.This detailed analysis highlights the legal proceedings, arguments presented, regulatory obligations, and the tribunal's decision in the case involving the penalty imposition on the CHA for his alleged role in fraudulent export activities.