2019 (1) TMI 1288 - AT - Customs

Customs House Agent penalized for abetting illegal exports; penalty reduced on appeal

The Tribunal allowed the Revenue's appeal, upholding the penalty on the Customs House Agent (CHA) for abetting the offense of exporting prohibited goods. ... Penalty on CHA - failure on the part of CHA to discharge his duties - export of goods without receiving authority from his client - Export of prohibited item - Smuggling - Red sanders wrapped in plastic sacks - misdeclaration of imported goods - Held that:- In the instant case the CHA M/s. Evershine Customs (C&F) Pvt. Ltd. has failed to ascertain the identity of the exporter as per provisions of Regulation 11 (n) of Customs Brokers Licensing Regulations, 2013 in as much as proprietor of the exporter M/s. Arihant Logistics is not traceable - Further, the CHA acted on behalf of M/s. Arihant Logistics in customs clearance without having any authorization from his client. Further, they received payment in cash - the CHA having no contract/agreement with the client and without verifying the antecedents and identity of his client provided the services for export of prohibited goods namely Red Sanders. Accordingly, the penalty imposed by the Adjudicating Authority on the CHA (respondent assessee) is upheld - however, the quantum of penalty reduced. Appeal allowed in part. Issues: Customs Act 1962 - Seizure and confiscation of prohibited goods, Imposition of penalty on CHA for abatement.Analysis:1. Seizure and Confiscation of Prohibited Goods: The case involved the interception of a truck carrying wood logs believed to be Red Sanders, a prohibited item for export. The goods and the truck were seized under Section 110 of the Customs Act 1962. Samples were tested, confirming the goods to be Red Sanders. The Adjudicating Authority ordered absolute confiscation of the seized goods and the vehicle under Sections 113(d) and 115(2) of the Act, respectively, due to the prohibited nature of the goods and lack of legitimate ownership claim.2. Imposition of Penalty on CHA for Abatement: The Commissioner (Appeals) allowed the appeal filed by the CHA, M/s. Evershine Customs (C&F) Pvt. Ltd., by setting aside the penalty. However, the Revenue appealed before the Tribunal. The Tribunal noted that the CHA failed to verify the identity of the exporter, acted without proper authorization, and received payment in cash for customs clearance of the prohibited goods. The Tribunal upheld the penalty on the CHA for their involvement in the abatement of the offense. The quantum of penalty imposed was considered excessive and thus reduced from Rs. 30,00,000 to Rs. 15,00,000.3. Conclusion: The Tribunal set aside the impugned order and allowed the appeal filed by the Revenue subject to the reduction in the quantum of penalty imposed on the CHA. The judgment emphasized the importance of due diligence and compliance by Customs House Agents in verifying the legitimacy of transactions and clients to prevent involvement in illegal activities such as the export of prohibited goods.