The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench has quashed the penalty on Customs Broker as revenue failed to establish goods mentioned in shipping bills did not reflect truth of consignment sought to be exported.
The assessee, B. Dhananjayan in this case is a Customs Broker. There was an attempt to export red sanders illegally in the guise of “Polished Granite Slab”; that the Directorate of Revenue Intelligence (DRI), based on the specific intelligence, seized 13.700 MTs of red sanders valued at Rs.5.48 crores from container and based on investigations conducted, they found an elaborate conspiracy in an attempt to smuggle red sanders logs.
Show Cause Notices were issued to seven persons connected with this case. The Adjudicating Authority, while passing the Order-in-Original, has imposed penalty of Rs.10,00,000/- each under Sections 114 and 114AA of the Customs Act, 1962 on the assessee-respondent for not verifying the antecedents of the overseas buyers, correctness of the IE Code and identities of their clients or the functioning of their clients at the declared address by using reliable, independent, authentic documents, data or information, thereby turning a blind eye towards blatant misuse of the Customs Brokers Licensing Regulations, 2013. The assessee-respondent herein preferred an appeal before the First Appellate Authority, who vide impugned order allowed the appeal, thereby deleting the penalties imposed, inter alia holding that the Revenue had not established mens rea to prove that the assessee- respondent herein had directly or indirectly facilitated the smuggling of red sanders; that the Revenue’s investigation had not established that the assessee- respondent herein had created false / incorrect documents for smuggling of red sanders and that there was no evidence to prove that the assessee-respondent herein was involved in the smuggling of red sanders.
The Judicial Member, P. Dinesha held that there was nothing on record to show that the appellant therein had knowledge that the goods mentioned in the shipping bills did not reflect the truth of the consignment sought to be exported and in the absence of such knowledge, there cannot be any mens rea attributed to the appellant or its proprietor.
“The Revenue has not made any attempt to attribute the prior knowledge as to the involvement of the assessee-respondent right from the beginning in the alleged illegal import of red sanders. Further, the Revenue has also not established as to which act or omission on the part of the assessee-respondent herein that rendered the goods in question liable for confiscation, because such act or omission would have to be a deliberate act or omission,” the CESTAT said.
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