Failure to Detect Commercial Goods Disguised as Gifts: Delhi HC Upholds Rs. 50,000 Penalty under Courier Imports & Exports Regulations for Dart Air Services [Read Order]
The Commissioner had refrained from revoking the registration or forfeiting security but imposed the fine, which the Court held was within jurisdiction.
The High Court of Delhi, in a case involving Dart Air Services Pvt. Ltd.,upheld a penalty of Rs. 50,000 under Courier Imports & Exports Regulations,2010 for failing to detect commercial goods disguised as gifts in courier shipments.
Dart Air Services Pvt.Ltd.,petitioner-assessee,was engaged in courier services and held registration under the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010. On 28th December 2018, certain parcels addressed to Smt. Sayra Ansari was reported for verification.
The Special Intelligence & InvestigationBranch (SIIB) alleged that these parcels, sent from London, contained cut cloth pieces for stitching in India, which were then returned as commercial goods disguised as gifts.
Based on the SIIB report, the Customs Department issued a Show Cause Notice on 1st March 2019, suspending the petitioner’s registration. The petitioner submitted replies, representations, and an appeal seeking revocation of the suspension. The inquiry officer’s report dated 24th May 2019 found no violation of Regulations 12(1)(iii), (v), and (vii).
However, a disagreement note issued on 31st May 2019 concluded that the petitioner had failed to detect the commercial nature of the shipments and appeared to have violated the Regulations. The petitioner was given 60 days to respond, failing which the case could be decided ex-parte.
During the pendency of the writ petition, an order dated 26th August 2019 refrained from revoking the registration or forfeiting the security but imposed a penalty of Rs. 50,000 and cautioned the petitioner to comply with the Regulations. This order was also challenged in the amended writ petition.
Justice Prathiba M Singh and Justice Shail Jain heard the submissions, perused the material on record, and examined the relevant provisions of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010.
The Court noted that Regulation 12 imposed various obligations on an authorised courier, including filing electronic declarations, advising consignors and consignees on compliance, verifying client details, exercising due diligence, disclosing information to Customs, maintaining records, and refraining from undue influence.
Regulation 13 allowed revocation of registration for non-compliance or misconduct, while Regulation 13A empowered the Commissioner to consider the inquiry report and pass appropriate orders. Regulation 14 provided for a penalty of up to Rs. 50,000 for contraventions.
The bench observed that, in the present case, the petitioner failed to exercise due diligence in detecting commercial goods disguised as gifts, as revealed by the SIIB investigation. While the inquiry report did not find violations of Regulations 12(1)(iii) and 12(1)(vii), the petitioner had not complied with Regulation 12(1)(v), justifying the imposition of a penalty.
The Court noted that the Commissioner, in the order dated 26th August 2019, had refrained from revoking the petitioner’s registration or forfeiting its security but had imposed a penalty of Rs. 50,000, which was within the Commissioner’s jurisdiction under the Regulations. The bench further stated that courier agencies must exercise due diligence and report suspicious consignments.
The Court concluded that the writ petition challenging the order dated 26th August 2019 was without merit, dismissed it, and directed the petitioner to deposit the penalty of Rs. 50,000 within four weeks.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
