2021 (6) TMI 61 - AT - Customs

Customs Act penalty overturned due to lack of evidence

M/s. OTA Falloons Forwarders Pvt Ltd. Versus Commissioner of Customs, Ludhiana

The penalty imposed on the Customs House Agent under section 114(1) of the Customs Act, 1962 for alleged involvement in the export of Red Sander was set ... Imposition of Penalty u/s 114(1) of Customs Act, 1962 - Smuggling - Red Sanders - HELD THAT:- The documents filed by Shri Ankit Sharma, the representative of the exporter, the documents were found in order and the goods examined by the examiner. In that circumstance, after examination of the goods and shipping bill, the role of the appellant comes to an end. There is no evidence placed on record with regard to any investigation done with the transporter while transportation of the goods from CFS, Dappar to port of export. As the appellant has no role to play regarding change of goods or export of Red Sandal. Investigation to this effect is silent. In that circumstance, the benefit of doubt goes in favour of the appellant. Therefore, no penalty can be imposed on the appellant without bringing any evidence on record. Appeal allowed - decided in favor of appellant. Issues: Penalty imposed under section 114(1) of Customs Act, 1962 on the Customs House Agent for alleged involvement in the export of Red Sander without evidence.Analysis:1. The appellant, a Customs House Agent, appealed against the penalty imposed under section 114(1) of the Customs Act, 1962, for their alleged involvement in the export of Red Sander. The case involved the filing of a shipping bill on behalf of a manufacturer for scaffolding items at CFS, Dappar, which were later found to be in order upon examination at 5% as per norms. However, an intelligence report suggested the presence of Red Sander in the container, leading to a detailed investigation by DRI.2. The investigation included recording statements from the exporter, the appellant, and the officer involved in the consignment's clearance. The exporter denied exporting the consignment, attributing the filing of papers to another individual. The Customs House Agent stated they filed the documents after verification, and the examining officer confirmed the goods were as declared. Despite no action against the exporter or the officer, a show cause notice was issued to the appellant, resulting in the imposition of a penalty of Rs. one lakh.3. The appellant's counsel argued that they had no role beyond filing the papers and that without concrete evidence, the penalty should not stand. Conversely, the respondent's representative contended that the appellant's failure to verify the authenticity of the individual submitting the papers amounted to a violation of the law, implicating them in the Red Sander export.4. After hearing both parties and examining the records and arguments, the Member (Judicial) found that the appellant's role ceased after filing the papers and that no evidence implicated them in the export of Red Sander. Notably, there was a lack of investigation into the transporter's involvement in transporting the goods. As a result, the benefit of doubt favored the appellant, leading to the setting aside of the penalty imposed under section 114(1) of the Customs Act, 1962.5. In conclusion, the impugned order imposing the penalty on the appellant was overturned, and the appeal was allowed with any consequential relief. The judgment highlighted the importance of substantial evidence before penalizing an individual under the Customs Act, 1962, emphasizing the need for a clear nexus between the alleged offense and the party facing penalties.