2019 (8) TMI 1007 - HC - Customs

Customs Tribunal Upholds Penalty for Customs House Agent; Fails KYC Norms; Penalty Reduced

Gunjan Sharma Versus Commissioner of Customs (Preventive)

The Court upheld the penalty imposed by the Customs, Excise and Service Tax Appellate Tribunal under the Customs Act on the appellant, a Customs House ... Reduced penalty - Appellant was not involved in the clearance of the impugned offending consignment of M/s Planet Overseas - It is the case of the Appellant that despite there being no material to connect the Appellant with the consignment containing offending goods, the Appellant was served a SCN proposing penalty under Section 114AA and 117 of the Customs Act, 1962 - HELD THAT:- This Court is of the view that a Customs House Agent’s duty is that of a mere agent rather than as a Revenue officer who is empowered to investigate and enquire into the veracity of documents. As to whether in reality, such an exporter in a given case exists can hardly be the subject matter of “due diligence” expected of a Customs House Agent unless there are factors which ought to have alerted him/her to make a further inquiry. In other words, in the absence of any indication that the Customs House Agent concerned was complicit in the facts of a particular case, it cannot ordinarily be held liable. However, in the present case, in view of the statement given by the Appellant under Section 108 of the Customs Act, which has not been retracted till date, this Court is of the view that the Appellant has admitted his lapse in not verifying essential facts - Keeping in view the aforesaid, this Court is of the view that the end of justice would be met if a penalty equivalent to the duty involved in the present case is imposed upon the Appellant, that is ₹ 1,77,401/-. Appeal disposed off. Issues:Challenge to the penalty imposed by the Customs, Excise and Service Tax Appellate Tribunal under the Customs Act.Analysis:The appellant challenged the penalty imposed by the Customs, Excise and Service Tax Appellate Tribunal under the Customs Act. The Tribunal directed the appellant, a Customs House Agent, to pay a reduced penalty of Rs. 15,00,000. The main issues raised in the appeal were whether the Tribunal was justified in imposing the penalty despite the appellant not being involved in the clearance of the offending consignment and whether the Tribunal's order was contrary to the facts on record and the original order.The relevant facts of the case involved the examination of a container containing firecrackers at the Inland Container Depot, Tughlakabad, New Delhi. The container belonged to an importer, M/s Planet Overseas, whose premises were found to be non-existent. The appellant had previously handled a consignment for the same importer but was not connected to the offending goods. Despite this, a penalty of Rs. 30,00,000 was imposed on the appellant under the Customs Act.The Tribunal, in its order, noted that the appellant had cleared a previous consignment for M/s Planet Overseas without proper documents, indicating a failure to verify KYC norms. However, the appellant did not submit any documents for the container in question. The Tribunal, considering the lack of involvement of the appellant in the present case, reduced the penalty to Rs. 15,00,000 based on the principles of equality, justice, and good conscience.The appellant argued that there was no connection to the container with firecrackers and highlighted the steps taken to verify the importer's credentials. The appellant's Customs House Broker License was also suspended but later restored by the Tribunal. On the other hand, the respondent contended that the importer was a bogus company, emphasizing the need for proper precautions by the Customs House Agent.The Court considered the appellant's admission of lapse in not verifying essential facts under Section 108 of the Customs Act. Despite the general duty of a Customs House Agent as a mere agent, the appellant's admission led the Court to impose a penalty equivalent to the duty involved in the case, amounting to Rs. 1,77,401. The Court directed the appellant to deposit this amount within four weeks, thereby disposing of the appeal.