2024 (2) TMI 575 - AT - Customs

Customs Broker not vicariously liable for employee's fraudulent use of credentials without knowledge

M/s CONCORD MARITIME AND LOGISTICS PVT LTD Versus COMMISSIONER OF CUSTOMS NCH -NEW DELHI

The CESTAT New Delhi held that a Customs Broker was not vicariously liable for penalties under sections 114 or 117 of the Customs Act when an employee ... Levy of penalty under section 114 or under section 117 of Customs Act - appellant as the Customs Broker was vicariously responsible for the actions of his employees or not - export consignment was highly overvalued - mis-declarations in the shipping bill regarding the port of discharge and country of destination in order to avoid examination of the export goods - HELD THAT:- It is an unusual case where the investigation by the department itself proved that the shipping bills were incorrectly filed by Shri Virender Singh Rawat misusing the credentials of the appellant Customs Broker without its knowledge for monetary gain for himself. Therefore, the undisputed fact is that the appellant had neither any role in filing the incorrect/ manipulated shipping bills nor did the appellant have any knowledge of the shipping bill being filed with its name as the Customs Broker. Penalty u/s 114 of CA - HELD THAT:- The penalty can be imposed only on the person who in relation to the export goods which were rendered liable to confiscation under section 113, does or omits or abets the doing or omission of an act, shall be liable for penalty - In this case the facts has narrated in the show cause notice itself shows that the appellant neither filed the shipping bill nor committed any act or abetted the commission or omission of any act which rendered the goods liable for confiscation under section 113. In view of above, no penalty whatsoever is imposable under section 114 on the appellant. Penalty u/s 117 of CA - HELD THAT:- Penalty can be imposed on any person for contravention of any provision of the Act or abetting any such contravention or failing to comply with any provision of the Act with which it was his duty to comply for which no express penalty is provided. In this case, records do not show that the appellant had contravened any provision of the Act or Rules or abetted such contravention or had failed in any of its duties which it was bound to comply. In view of above, the penalty under section 117 also cannot be sustained. The impugned order is set aside - Appeal allowed. Issues involved: Appeal against penalty imposed on Customs Broker for misdeclaration in shipping bill.Summary:The appellant, a Customs Broker, challenged the penalty imposed by the Commissioner of Customs for misdeclaration in a shipping bill. Investigations revealed that the export consignment was overvalued and mis-declared to avoid examination of goods. The appellant was penalized along with the G-card holder for the misdeeds. The first appeal was dismissed due to delay, but on further appeal, the Tribunal remanded the matter for a decision on merits. The Commissioner upheld the penalties imposed on the appellant under sections 114 and 117 of the Customs Act, 1962.Section 114 Penalty Analysis:The investigation confirmed that the misdeclaration was done by the G-card holder without the appellant's knowledge for personal gain. As per Section 114 of the Customs Act, penalties can only be imposed on those directly involved in acts rendering goods liable for confiscation. Since the appellant had no role in the misdeclaration, no penalty could be imposed under this section.Section 117 Penalty Analysis:Section 117 allows penalties for contravention of Act provisions or failure to comply with duties. However, there was no evidence of the appellant contravening any provision, abetting a contravention, or failing in its duties. Therefore, the penalty under this section was also deemed unsustainable.Judgment:Considering the appellant's lack of involvement in the misdeclaration and no breach of duties, the Tribunal allowed the appeal and set aside the penalties imposed on the appellant. The impugned order was overturned in relation to the penalty on the appellant.[Order pronounced on 09/02/2024]