2025 (5) TMI 2013 - AT - Customs

Imposition of penalty on customs broker - confiscation - redemption - abetment in mis-declaration of transaction value - scope and authority of the Proper Officer - HELD THAT - The Proper Officer is the only one who will have access to data of contemporaneous imports by others based on which he can reject the transaction value and also re-determine the value through other methods. Neither the importer nor the customs broker has the authority under the Valuation Rules to re-determine the assessable value after rejecting the transaction value. The importer is expected to correctly declare the transaction value as per the documents and the customs broker is required to file the Bill of Entry accordingly. The appellant had done so. Neither the appellant (customs broker) nor the importer is expected to anticipate if Proper Officer would reject the transaction value and if he so rejects what value the Proper Officer would fix as the assessable value. They are also not expected to anticipate any show cause notice may be issued in future or the decision in adjudication of the proceedings in pursuance of the show cause notice. Thus we find that the appellant did not commit any error whatsoever in filing the Bills of Entry as per the transaction value and in not anticipating what value the Proper Officer may determine at the time of assessment or the adjudicating authority in any future proceedings. The penalty imposed on the appellant under section 112 therefore cannot be sustained and it is liable to be set aside and is set aside. The appeal is allowed and the impugned order is set aside with consequential relief to the appellant.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal include:

- Whether the customs broker (appellant) can be held liable for penalty under section 112 of the Customs Act, 1962 for abetment in mis-declaration of transaction value by the importer.

- Whether the customs broker had any role or negligence in filing the Bill of Entry with incorrect transaction value.

- The scope and authority of the Proper Officer under section 14 of the Customs Act and Rule 12 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 in rejecting the declared transaction value and re-determining assessable value.

- Whether the customs broker is expected or required to anticipate the rejection of declared transaction value by the Proper Officer or subsequent penalty proceedings.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Liability of Customs Broker for Penalty under Section 112 for Abetment

Relevant Legal Framework and Precedents: Section 112 of the Customs Act empowers imposition of penalty on persons abetting customs offences. Section 114AA and 114A relate to penalties on importers for mis-declaration. The Customs Valuation Rules regulate determination of assessable value, with Rule 12 permitting rejection of declared transaction value by the Proper Officer.

Court's Interpretation and Reasoning: The Tribunal noted that the Principal Commissioner himself recorded that the appellant's role was limited to "unknowingly abetting" or being instrumental by negligence in not advising the importer about RSP based assessment. The Commissioner imposed a token penalty under section 112 on the customs broker despite no direct involvement or role in mis-declaration.

Key Evidence and Findings: The appellant filed the Bill of Entry declaring the transaction value as provided by the importer. There was no evidence that the appellant knowingly or willfully abetted the mis-declaration. The appellant did not advise or influence the importer to mis-declare.

Application of Law to Facts: The Tribunal emphasized that penalty under section 112 requires some culpability or abetment beyond mere negligence or inadvertence. Since the appellant acted on the importer's declared value and did not have authority or knowledge to alter or challenge the value, imposition of penalty was not justified.

Treatment of Competing Arguments: The Revenue supported the penalty, relying on the Commissioner's order. The Tribunal rejected this, holding that mere negligence or unknowing involvement does not suffice for penalty under section 112.

Conclusion: The penalty imposed on the customs broker under section 112 was unsustainable and liable to be set aside.

Issue 2: Authority and Role of Proper Officer under Section 14 and Rule 12 of Valuation Rules

Relevant Legal Framework: Section 14 of the Customs Act mandates that assessable value shall be the transaction value unless exceptions apply. Rule 12 of the Customs Valuation Rules empowers the Proper Officer to reject the transaction value if it is not acceptable and to re-determine the value applying Rules 4 to 9 sequentially.

Court's Interpretation and Reasoning: The Tribunal clarified that the authority to reject the declared transaction value and re-determine assessable value lies solely with the Proper Officer. Neither the importer nor the customs broker has any authority or role in this valuation exercise.

Key Findings: The Proper Officer has access to contemporaneous import data and other relevant information enabling rejection of declared value. The importer and customs broker are expected only to declare the transaction value accurately as per documents and file the Bill of Entry accordingly.

Application of Law to Facts: The appellant customs broker filed the Bill of Entry based on the importer's declared transaction value. The appellant was not expected to anticipate rejection of the declared value by the Proper Officer or any subsequent show cause notice or penalty proceedings.

Treatment of Arguments: The Tribunal rejected any implied expectation that the customs broker should foresee or predict the Proper Officer's valuation decision or adjudication outcomes.

Conclusion: The customs broker complied with his statutory and procedural obligations by filing the Bill of Entry as per declared transaction value. No fault or penalty could be attributed on this basis.

3. SIGNIFICANT HOLDINGS

- The Tribunal held that "the authority to reject the transaction value as assessable value rests only with the 'Proper Officer' and not with the importer or with customs broker."

- It was emphasized that "Neither the importer nor the customs broker is expected to anticipate if 'Proper Officer' would reject the transaction value and if he so rejects what value the Proper Officer would fix as the assessable value."

- The Tribunal accepted the Principal Commissioner's own finding that the appellant's involvement was at most "unknowingly abetting or being instrumental... by way of negligence" and accordingly held that "the penalty under Section 114AA... is not imposable and only a token penalty under Section 112 would be sufficient."

- Ultimately, the Tribunal concluded that "the penalty imposed on the appellant under section 112... cannot be sustained and it is liable to be set aside."

- The principle established is that mere negligence or inadvertent involvement by a customs broker in filing Bills of Entry based on importer's declared transaction value does not attract penalty under section 112 for abetment in mis-declaration. The statutory valuation process and authority rests exclusively with the Proper Officer.

- The appeal was allowed, and the impugned penalty order against the customs broker was set aside with consequential relief.