Customs Broker cannot be penalised u/s 114AA of Customs Act for Mere Failure to Physically Verify Importer's Premises: CESTAT [Read Order]

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that a customs broker cannot be penalized under Section 114AA of the Customs Act for simply neglecting to physically inspect the importer's residence.

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The assessee/appellant, HIM Logistics Private Limited, is a customs broker. The assessee is involved in the import and export consignment clearance business. M/s. Jagdamba Enterprises requested the assessee's assistance in order to clear the import shipment. Before the contested consignment, the assessee cleared eleven consignments from M/s Jagdamba Enterprises.

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In accordance with the import paperwork, the assessee declared the goods on the Bill of Entry, which was lodged on behalf of the importer, M/s. Jagdamba Enterprises. But upon closer inspection, it was discovered that several of the claimed commodities were present in different amounts, along with some that had not been disclosed. As a result, the container was taken into custody.

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According to Customs Act of 1962 Sections 112(a) and 114AA, the assessee was designated as a co-noticee to the show cause notice for the imposition of a penalty. The adjudicating authority levied a fine in accordance with both Section 114AA and Section 112(a) of the Customs Act of 1962.

Disappointed with the Adjudicating Authority's ruling, the assessee appealed to the Commissioner of Customs (Appeals), but it was denied. The Tribunal has heard a challenge from the assessee to the Commissioner of Customs' (Appeals) ruling.

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The assessee argued that the adjudicating authority had overlooked the fact that even the penalty under Section 112(a) of the Customs Act, 1962, could not have been applied in the absence of an aiding and abetting charge. According to the department, the appellant/assessee, who was licensed and approved under the Custom Broker Licensing Regulation of 2018, had to clear shipments on behalf of his clients, who were importers and exporters, in the way specified.

The Tribunal noted that the appellant/assessee had only assisted the importer/exporter with the customs process, and Revenue had not presented any proof that he was directly responsible for any misconduct pertaining to the contested shipment. As a result, Section 112(a) punishment cannot be enforced.

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According to the bench, in order to impose a punishment under section 114A, there must be clear proof of cooperation, deliberate misrepresentation, or deliberate suppression of information by the appellant.

While allowing the appeal, the two member bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has held  that the allegations that the appellant did not physically verify the premises of the importer, are not sufficient to fasten the appellant with the penalty. It has not been established that the appellant handled this consignment with any malafide motive. It is essential to establish an intentional or deliberate act or omission and to the act of abetment for imposition of penalty under Section 114AA of the Customs Act.

To Read the full text of the Order CLICK HERE

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