Customs Broker Liability limited where no causative act; penalty under Section 114(iii) set aside on appeal.

Whether a customs broker can be penalised under Section 114(iii) of the Customs Act for facilitating overvaluation of exports was examined; the tribunal found no specific finding that the broker's act or omission caused liability to confiscation or materially contributed to the alleged offence, noting that descriptions and quantities matched shipping bills and valuation differences arose from a market enquiry and exporter-provided documents; applying precedents that valuation correctness rests with the exporter and that a CHA is punishable under Section 114 only when causation or material contribution is established, the penalty was set aside and the appeal allowed.

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Issues: Whether the penalty imposed on the customs broker under Section 114(iii) of the Customs Act, 1962 for alleged facilitation of overvaluation of export consignments to obtain excess drawback is sustainable.

Analysis: The Tribunal examined whether the appellant (customs broker) had any role in valuation of goods or whether there was a specific finding that any omission or commission by the broker rendered the goods liable to confiscation. The records showed that description and quantity in the shipping bills matched the physical goods and that valuation differences arose from a market enquiry re calculating FOB by revenue. The appellant acted on documents/instructions provided by the exporter and no evidence or adjudicatory finding identified a specific wrongful act by the broker affecting valuation. The Tribunal applied established precedents holding that the burden of correctness of export declarations, including valuation, lies on the exporter and that a CHA/ customs broker can be penalised under Section 114 only if there is a finding that its act or omission caused liability to confiscation or otherwise materially contributed to the offence.

Conclusion: The penalty imposed on the appellant under Section 114(iii) of the Customs Act, 1962 is not sustainable and is set aside; appeal allowed in favour of the assessee.

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