2023 (7) TMI 390 - AT - Customs

Levy of penalty on Custom House agent and its partner u/s 112(a) of Customs Act 1962 - aiding and abetting the importer in the importation of three consignments of misdeclared goods including shoes alkaline batteries and wooden strips/beads - HELD THAT - From the findings of the adjudicating authority it is observed that the CHA partnership firm and its Partner both have been penalized for the alleged offence committed. The Tribunal Order in KRISHNA SHIPPING AGENCY 2016 (9) TMI 1120 - CESTAT KOLKATA while setting aside the order revocating their license of the CHA has categorically held that they have not violated any of the provisions of Regulation 13 of CHALR 2004 - thus the penalty cannot be imposed on the CHA Firm as well as its Partner under Section 112(a) of the Customs Act 1962. It is a settled proposition of law that once a partnership is penalized its partners cannot be penalized separately for the same offence - the penalty imposed on the Appellant 2 is not sustainable and liable to be set aside. The Gujarat High Court in the case of PRAVIN N. SHAH VERSUS CESTAT 2012 (7) TMI 850 - GUJARAT HIGH COURT wherein it clearly states that once a Firm is penalized separate penalty not imposable on the partner. The penalties imposed on the CHA Firm as well as its Partner Vivek Banka under Section 112(a) of the Customs Act 1962 not sustainable - Appeal allowed.

Summary

Issues Involved:
1. Imposition of penalty on the Custom House Agent (CHA) and its partner under Section 112(a) of the Customs Act, 1962.
2. Legitimacy of penalizing both the partnership firm and its partner for the same offense.

Summary:

Issue 1: Imposition of penalty on the Custom House Agent (CHA) and its partner under Section 112(a) of the Customs Act, 1962:

The Appellant 1, M/s Krishna Shipping Agency, and its partner, Appellant 2, were penalized Rs. 5,00,000/- under Section 112(a) of the Customs Act, 1962, by the Commissioner of Customs (Port) for allegedly aiding and abetting the importer M/s Prince International in importing misdeclared goods. The CHA's license was initially suspended and later revoked for failing to verify the antecedents and identity of the client under Regulation 13(a), (d), and (o) of the CHALR, 2004. However, the Tribunal, Kolkata, set aside the revocation but did not address the penalty.

The Appellants argued that the Tribunal had already determined that they had not violated Regulation 13 of the CHALR, 2004, and thus, the penalty under Section 112(a) was not sustainable. The adjudicating authority's findings were based on the misconception that the Appellants deliberately dealt with fraudulent documents on behalf of the importer. However, the Tribunal's previous order indicated that the CHA had taken reasonable steps to comply with the regulations and had no knowledge of any irregularities in the consignments.

Issue 2: Legitimacy of penalizing both the partnership firm and its partner for the same offense:

The Appellant 2 contended that a partnership firm is inseparable from its partners, and once the firm is penalized, its partners cannot be penalized separately for the same offense. This position was supported by the Gujarat High Court's decision in Pravin.N.Shah Vs CESTAT, which held that a partner cannot be penalized separately if the firm has already been penalized.

The Tribunal observed that the CHA firm and its partner were penalized for the same alleged offense. The Tribunal's previous order had exonerated the CHA from violating Regulation 13, thus invalidating the basis for the penalty. Consequently, the penalties imposed on both the CHA firm and its partner under Section 112(a) were deemed unsustainable.

Conclusion:

The Tribunal allowed the appeals filed by both Appellants 1 and 2, setting aside the penalties imposed under Section 112(a) of the Customs Act, 1962, on the grounds that the CHA firm had not violated Regulation 13 of the CHALR, 2004, and that a partner cannot be penalized separately once the firm is penalized.