Tribunal overturns penalty on agent for export overvaluation, stresses need for direct link to penal provisions

Kailash Bahiru Jadhav Versus Commissioner of Customs (Export)

Kailash Bahiru Jadhav Versus Commissioner of Customs (Export) - 2019 (370) E.L.T. 1138 (Tri. - Mumbai) Issues:
1. Alleged overvaluation of export goods with intention to avail excess drawback.
2. Violation of regulation 13(b) of Customs House Agents Licensing Regulation, 2004.
3. Imposition of penalty under section 114 of Customs Act, 1962 on a custom house agent.

Issue 1: Alleged overvaluation of export goods with intention to avail excess drawback

The appeal arose from an order-in-appeal against the imposition of a penalty on the appellant for alleged overvaluation of export goods to avail excess drawback. The appellant denied involvement in the fraud and argued lack of evidence linking them to the exporter. The Tribunal considered the appellant's claim and the circumstances leading to the penalty imposition.

Issue 2: Violation of regulation 13(b) of Customs House Agents Licensing Regulation, 2004

The appellant, a Director of a clearing and forwarding services company, allowed another person to file export documents on their behalf, potentially violating regulation 13(b) of the Customs House Agents Licensing Regulation, 2004. The original authority held this violation as evidence of active abetment to fraud, invoking penalties under section 114 of the Customs Act, 1962. The Tribunal analyzed the legal implications of this violation in relation to the penal action taken against the appellant.

Issue 3: Imposition of penalty under section 114 of Customs Act, 1962 on a custom house agent

The Tribunal deliberated on the applicability of section 114 of the Customs Act, 1962 to a custom house agent. It examined whether a custom house agent could be penalized under section 114 solely based on their association with the goods, especially when the goods were confiscated under sections 113 and 111 of the Customs Act, 1962. The Tribunal emphasized the need for a direct connection between the agent's actions and the penal provisions invoked, highlighting the regulatory framework under the Customs House Agents Licensing Regulation, 2004.

In its detailed analysis, the Tribunal found that the penal action taken against the appellant solely based on their role as a custom house agent was incorrect. The Tribunal highlighted that the Customs House Agents Licensing Regulation, 2004 is a comprehensive provision governing licensing and operations, and penalizing an agent under section 114 of the Customs Act, 1962 for violations under the Regulation was legally flawed. The Tribunal emphasized the need for a direct link between the agent's actions and the specific penal provisions invoked, ensuring a proper legal basis for imposing penalties. Consequently, the Tribunal set aside the impugned order and allowed the appeal, emphasizing the importance of legal clarity and adherence to statutory provisions in such cases.