CESTAT revokes penalty for aiding duty evasion under DEEC Scheme

The Appellate Tribunal CESTAT, Mumbai set aside the penalty imposed on the appellant, an employee of different Customs House Agents, accused of aiding in the diversion of goods imported under the DEEC Scheme. The Tribunal found that the appellant's actions did not constitute a violation of Customs laws during clearance, and there was no evidence of conscious knowledge of the diversion of goods. As a result, the penalty for aiding and abetting duty evasion was revoked, and the appeals were allowed.

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Issues:
1. Liability of a Customs House Agent (CHA) in aiding duty evasion and diversion of goods under DEEC Scheme.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Mumbai involved a case where the appellant, an employee of different CHAs, was accused of aiding in the diversion of goods imported under the DEEC Scheme. The officers of D.R.I., Mumbai conducted an inquiry and issued Show Cause Notices alleging that the appellant was knowingly involved in diverting raw materials imported under the DEEC Scheme from a godown at Bhiwandi, resulting in duty evasion. The appellant was found to have handled imported consignments without proper authorization and was imposed a penalty under Section 112(a) of the Customs Act, 1962 for aiding and abetting duty evasion.

Upon considering the materials and arguments from both sides, the Tribunal made several key findings. Firstly, the liability of a CHA regarding goods under clearance ends once the goods are cleared from the Custom House, and there was no evidence of any wrongdoing during the clearance process. Secondly, the post-import association of the goods with Anil Chopra did not automatically constitute a violation of the DEEC Scheme conditions. Thirdly, the appellant was not found to have conscious knowledge of the diversion of goods from Bhiwandi by the DEEC license holder, and the presumption of such knowledge was not supported by evidence. The Tribunal concluded that the penalty imposed on the appellant could not be sustained based on the findings and allowed the appeals.

In summary, the Tribunal set aside the penalty imposed on the appellant, emphasizing that the employee's actions, if in contravention of Customs laws during clearance, should have been addressed under CHA regulations. The charge of aiding and abetting duty evasion was not upheld based on the specific circumstances of the case, leading to the appeals being allowed and the penalty being revoked.

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