The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), deleted penalty under Section 114 of the Customs Act and observed that Customs House Agent (CHA) cannot be expected to examine and ensure nature of goods in consignment.
Based on the intelligence that “Muriate of Potash”, a restricted item for export, is smuggled out of India in the guise of Industrial Salt, the Officers of Custom House, Chennai detained an export consignment of 150 MTs of cargo declared as Industrial Salt.
The goods were examined in the presence of two independent witnesses, CHA, representative of exporter and the representative of CFS. On a reasonable belief that the consignment is misdeclared, samples were drawn for the purpose of chemical examination.
After chemical examination, it was found that the consignment was “Muriate Potash” (Potassium Chloride). Based on the investigation, show-cause notices were issued to the exporter and various other persons including M/s.Chakiat Agencies, who is the CHA, and Soji Kuriakose who is the Manager(Exports) of the CHA firm (the appellants).
Advocate S. Sankaravadivelu appeared on behalf of the appellant. The Counsel argued that as a CHA, they had merely filed documents based on the details and the test report furnished by the exporter and had no opportunity to handle or examine the goods and therefore cannot be held responsible for any violation in respect of the value or misdeclaration of the goods. The provisions invoked for imposing penalty against these appellants do not sustain for the reason that they had no role in the attempt to export the restricted goods.
The Counsel for the Department argued that the CHA ought to have taken note of the fact mentioned in test report that the samples are naturally occurring Potassium Chloride and therefore argued that by incorrect classification the appellants have abetted in the attempt to export the restricted goods.
The Coram of Sulekha Beevi C.S, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “Be that as it may, the appellant as a CHA cannot be expected to examine and ensure the nature of the goods in the consignment. There is no allegation or evidence to establish that the appellant had indulged in any overt act or played any role in any manner so to assist the exporter in his attempt to export the goods.”
“After appreciating the evidence and following the decision of the Tribunal in the above case, we are of the view that the penalty imposed on the appellants under Section 114 of the Customs Act is not warranted” the Tribunal noted.
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