Customs Broker responsible for Act of Employee who is Misrepresenting CHB before Customs Authorities: CESTAT [Read Order]

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the Customs Broker is responsible for the act of an employee who is misrepresenting Customs House Brokerage (CHB) before the Customs Authorities.

M/s Rupesh Xerox imported a consignment of goods declared as photocopy machine spares. However, on opening the container in the presence of an employee of the customs broker and importer they found certain discrepancies in respect of the description of the goods and the description given in the invoice and packing list.

With regard to the role of the customs broker, the Original Authority held that the appellant Shakelly Venkat Chand, business partner of the customs broker firm, has not carried out the required due diligence and in fact, despite not having seen or met the importer, accepted and proceeded with the documents given by the person who later on turned out to be a person impersonating the actual importer.

In this case, a person impersonating an actual importer was not pointed out by the customs broker or their employee even though they were aware of his not coming out clean with regard to his actual identity. The Original Authority upheld that this was tantamount to the appellant giving false information and therefore, liable for penalty under Section 114AA of the Customs Act.

The appellant submitted that the facts of the case do not warrant a levy of penalty under Section 114AA of the Customs Act against him as there is no evidence that he was aware of misdeclaration on the part of the importer. They further pointed out that they had obtained KYC documents and then only based on import documents, filed the Bill of Entry and they had no reason, prima facie, for any suspicion in that situation.

A Single-member Bench of the Tribunal comprising AK Jyotishi, Judicial Member observed that “The employee of the Customs Broker in the instant case has in fact noted and admitted that there was some kind of impersonation and that should have alerted him and he should have brought to the notice of the Customs Authority immediately, instead, he remained silent. He is responsible for the actions of his employee also who is misrepresenting the CHB before the Customs Authorities.”

To Read the full text of the Order CLICK HERE

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