2024 (9) TMI 1258 - AT - Customs

Tribunal Overturns Penalty: Customs Agent Not Liable for Misdeclaration Without Concrete Evidence of Misconduct.

The Tribunal set aside the penalty imposed on the Customs House Agent (CHA) under Section 112(a) of the Customs Act 1962, concluding that the appellant ... Imposition of penalty under section 112 (a) of the Customs Act 1962 - misdeclaration of the goods - Vicarious responsibility - HELD THAT:- For imposing penalty under Section 112(a) of the Customs Act, there must be a positive act or omission on the part of the appellant which should render the goods liable for confiscation. In the present case, it is found that the misdeclaration of the goods is mainly due to the offence committed by the importer for which the CHA cannot be held responsible. Accordingly, the vicarious responsibility cannot be cast on the appellant and hence the penalty imposed on the appellant on this ground is not sustainable. The decision of the Tribunal in the case of RAJESH MAIKHURI, CUSTOM BROKER, RAJESH KUMAR TIWARI, EMPLOYEE VERSUS CC, NEW DELHI [2017 (9) TMI 1015 - CESTAT NEW DELHI] supports the above view where it was held that 'In the present case, the appellants, being authorized employees of the CHA, are apparently penalized for their act of abetting such violations by the importer. As already noted, we find that the evidences available in this case do not indicate to any such illegal act on the part of the CHA.' The penalty imposed on the appellant is not sustainable and accordingly, the penalty imposed is set aside - Appeal allowed. Issues:Imposition of penalty under section 112(a) of the Customs Act 1962 on a Customs House Agent (CHA) for misdeclaration of goods.Detailed Analysis:1. Facts of the Case:The appellant, a CHA, filed an appeal against the penalty imposed under section 112(a) of the Customs Act 1962 for misdeclaration of goods in Bills of Entry filed by the importer. The adjudicating authority ordered confiscation of goods and imposed a penalty of Rs. 80,000, later reduced to Rs. 40,000 by the Commissioner (Appeals).2. Appellant's Submission:The appellant argued that the misdeclaration was due to the Manager of the CHA misusing the digital signature of the authorized representative, leading to separate police action. The appellant contended that he should not be held responsible for the misdeclaration and cited relevant case laws to support his argument.3. Respondent's Argument:The Authorized Representative (AR) contended that the CHA is accountable for misdeclaration of goods and supported the penalty imposed on the appellant.4. Tribunal's Decision:After hearing both sides and examining the appeal documents, the Tribunal found that the misdeclaration of goods was noticed in the Bills of Entry filed by the appellant. The Ld. Commissioner (Appeals) upheld the penalty of Rs. 40,000, holding the appellant vicariously responsible for abetting the offense.5. Legal Analysis:The Tribunal observed that the Manager of the CHA played a role in the offense by misusing the digital signature. However, it noted that the misdeclaration was mainly due to the importer's actions, not the CHA's. For imposing penalty under Section 112(a), a positive act or omission by the appellant rendering goods liable for confiscation is required. The Tribunal found that vicarious responsibility cannot be imposed on the appellant in this case, citing precedents and emphasizing the need for tangible evidence to establish penal actions.6. Precedent Analysis:The Tribunal referred to the case of Rajesh Maikhuri Vs Commissioner of Customs, New Delhi, highlighting that lack of due diligence and failure to take precautions do not automatically warrant penalties under Section 112(a). It emphasized the necessity of proving a positive act or omission for penalty imposition and the insufficiency of assumptions or presumptions for penal actions on abettors.7. Conclusion:Relying on the cited precedent and the legal analysis, the Tribunal set aside the penalty imposed on the appellant, allowing the appeal. It concluded that the appellant should not be held liable under Section 112(a) of the Customs Act 1962 for the misdeclaration of goods.This detailed analysis of the judgment highlights the key arguments, legal reasoning, and precedents considered by the Tribunal in deciding the appeal against the imposition of penalty on the Customs House Agent for misdeclaration of goods.