2022 (2) TMI 210 - AT - Customs

Customs broker penalized for facilitating export of prohibited goods, despite minimal profit, stresses compliance and due diligence

M/s Cargo Specialist Inc. Versus Commissioner of Customs, New Delhi

The Member (Judicial) dismissed the rectification of mistake application, upholding the penalty of Rs. 80,000 imposed on the appellant-customs broker for ... Rectification of mistake - error apparent on the face of record - Levy of penalty - export of red sanders - prohibited goods or not - HELD THAT:- It has been recorded in the final order that the appellant – Custom Broker inspite of having already handled eight export consignment in the past, till the inspection of the 9th consignment, has never met the exporter or the owner of M/s Fashion World, nor he had met any of the relevant person(s) namely Reyaz Ahmed @Rajbir @ Dharmender, who represented M/s Fashion World. In the final order it has been also observed that this appellant have placed great reliance on the freight forwarders through whom he had received the work as well as the documents for KYC. At no stage, the appellant CHA received the documents directly from the office of the exporter. It has been rightly concluded in the final order that though this appellant and others have not made any big gain, in the attempted export of the prohibited goods, by the exporter. However, there has been element of negligence and/or vigilance on their part which has facilitated attempted exported of prohibited goods. There is no error in the final order - there is no merit in the RoM application, the same is dismissed. Issues Involved:Rectification of mistake application regarding penalty imposed on appellant-customs broker for facilitating export of prohibited goods.Analysis:1. The appellant, a Customs House Agent (CHA), filed an airway shipping bill on behalf of an exporter, declaring clutch plates for vehicles. However, upon examination, prohibited goods (red sanders) were found instead of the declared items. Subsequently, a penalty of Rs. 8 lakhs was imposed on the appellant under section 114 of the Act.2. The appellant and co-noticees appealed against the penalty, leading to a final order reducing the penalty to Rs. 80,000. The Tribunal observed that the appellants were not involved in making profits from the export of prohibited goods but were working on a normal remuneration basis. The appeal was partially allowed based on this finding.3. The appellant challenged certain observations in the final order, claiming that there were no allegations regarding earlier consignments with prohibited goods. The appellant argued that they had followed KYC norms, submitted correct documents, and had no requirement to physically verify goods. The appellant also cited a precedent where knowledge of offending goods was deemed necessary for penalty imposition.4. The Authorized Representative for the Revenue opposed the rectification application, stating that it was an attempt for a review or rehearing of the appeal, which was not permissible.5. Upon review, the Member (Judicial) found that the appellant had not met the exporter or relevant persons involved in the transactions, relying heavily on freight forwarders for documentation. It was noted that while the appellant did not gain significantly from the attempted export of prohibited goods, negligence or lack of vigilance on their part facilitated the export.6. The Member concluded that there was no error in the final order, dismissing the rectification of mistake application. The decision was based on the finding that despite not benefiting greatly from the prohibited export, the appellant's actions contributed to the facilitation of the illegal transaction.In conclusion, the judgment upheld the penalty imposed on the appellant-customs broker, emphasizing the importance of due diligence and vigilance in handling export transactions to prevent the facilitation of prohibited goods.