2010 (4) TMI 661 - AT - Customs

Penalty on CHA Abetment to overvaluation of export garments No material on record to conclude that appellant facilitated misdeclaration of value of export so as to enable the exporter to avail undue drawback - Penalty under Section 117 of the Customs Act 1962 can be imposed only if abetment on the part of the appellant brought out which means that the appellant have knowledge or reason to believe that the provisions of the Customs Act relating to correct valuation of the goods were being contravened - No such evidence found penalty set aside Appeal allowed

Summary

Issues: Imposition of penalty on CHA for abetting over-valuation of export garments

Issue 1: Imposition of penalty on CHA
The appellant, a Customs House Agent (CHA), was penalized Rs. 10,000 for allegedly abetting the over-valuation of export garments by a firm. The adjudicating authority held the CHA liable based on the argument that he facilitated the export of offending goods by acting on instructions from an unauthorized person, failing to exercise due diligence, and not complying with CHA regulations. The authority also invoked Section 147 of the Customs Act, 1962, which deems actions by the exporter as actions by the agent unless proven otherwise. The judgment emphasized the CHA's obligation to ensure compliance with customs regulations and the correctness of information provided to clients.

Issue 2: Lack of evidence of abetment
The appellate tribunal analyzed the evidence and found that the CHA had processed documents through a representative of the exporter, who was not proven to be involved in misdeclaration of export goods' value. The tribunal highlighted that for penalty under Section 117 of the Customs Act, 1962 to be imposed, there must be evidence of abetment, indicating the CHA's knowledge or belief that customs provisions on correct valuation were being violated. Since no such evidence was presented, the tribunal concluded that the penalty on the CHA could not be sustained. Consequently, the tribunal set aside the penalty and allowed the appeal, ruling in favor of the appellant.

This judgment underscores the importance of CHAs complying with regulations, exercising due diligence, and ensuring the accuracy of information provided to clients in customs transactions. It clarifies the legal standard for imposing penalties on CHAs under the Customs Act, emphasizing the requirement of evidence demonstrating abetment in customs violations. The decision serves as a precedent for cases involving CHAs' liability in facilitating customs offenses and highlights the significance of proving knowledge or belief on the part of the agent in such matters.