Misuse of Signed Blank Annexure-A by Third Party cannot attract Liability without Evidence: CESTAT Quashes Penalty against CHA Manager [Read Order]
The Tribunal set aside penalties on a CHA manager, finding no evidence of knowledge or involvement in fraudulent drawback claims and held that penalties under Sections 114(iii) and 114AA cannot be imposed without proof of wrongful intent.
The Chennai Bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that a CHA Manager cannot be penalized merely because signed blank Annexure-A forms were misused by a third party and emphasized that liability cannot be imposed solely on assumptions. Accordingly, the penalties under Sections 114(iii) and 114AA of the Customs Act were quashed.
The Tribunal held that there was no evidence of his knowledge, intent, or active involvement in the mis-declaration of goods, nor any monetary benefit received.
The Appellant, M.K. Raja Mohammed, Manager of a CHA firm, known as M/s Anisha Overseas, filed a Customs Appeal no. C/41683/2015 to condemn the Order-in-Appeal No. 28/2015 dated 06.05.2015 passed by the Commissioner of Customs & Central Excise (Appeals-II), Tiruchirappalli, setting aside the penalties imposed upon him under Sections 114(iii) and 114AA of the Customs Act, 1962.
The Section 114AA of the Customs Act, 1962, explained that: Penalty for use of false and incorrect material
“If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods.”
The Appellant upheld the Order-in-Original No. 64/2014 dated 23.12.2014, which had imposed penalties of Rs. 2,00,000/- and Rs. 20,000/- respectively. The penalties stemmed from the appellant's act of issuing blank signed Annexure-A forms of M/s Anisha Overseas to one Shri Mathan, an employee of another CHA firm.
Subsequently, Mathan provided these forms to other individuals, Pauldurai and Vadivel Jeyamani Kumar, who used them to file shipping bills for three exporters (M/s Green Baby Exports, M/s Velmurugan Tex, and M/s Vetrivel Apparels).
The goods exported by these firms were later found liable for confiscation under Sections 113(i) and 113(iii) of the Customs Act, 1962, due to mis-declaration of quantity and value, leading to claims of ineligible drawback.
The Counsel for the Petitioner, B. Satish Sundar, argued that it is a common industry practice to provide blank signed Annexure Forms to auxiliary service providers for genuine exporters to cover operational overheads. He stated that the forms were intended for a regular exporter, M/s. A.K.R. Textiles, and were misused by Shri Mathan.
The Counsel also asserted that there was no allegation in the Order-in-Original that he was monetarily benefited from the ineligible drawback claims or that he had any knowledge or wrongful intent regarding the fraudulent mis-declaration.
The Counsel further relied on judicial precedents, including Ace Global Logistics Versus Commissioner of Customs, Chennai-III [2018 (364) E.L.T. 841 (Tri. – Chennai)] to argue that handing over blank signed forms was a bonafide mistake. He further cited Commissioner of Customs, Mumbai v. M. Vasi [2003 (151) E.L.T. 312 (Tri.-Mum.)] to establish that abetment requires knowledge of the offence, which was absent in his case. Additionally, reliance was placed on Lohia Travels & Cargo Versus Commissioner of Cus., New Delhi (Prev.) [2015 (330) E.L.T. 689 (Tri. – Del.)], which held that penalties were not justified without evidence of prior knowledge or wrongful intent.
On the other hand, the Counsel for the Respondent, Anandalakshmi Ganeshram, Authorized Representative, supported the impugned order and argued that as a CHA, the appellant held a responsible position and was obligated to ensure correct details in export documents.
The Counsel further stated that merely issuing blank signed Annexure-A forms for use by another person constituted an offence and that the appellant had knowingly contravened Customs Broker Licensing Regulations for monetary benefit, citing Shri Mathan's statement dated 03.08.2012, which indicated a payment of Rs. 300/- for each blank Annexure-A form.
Read More: Sharing of Costs with Overseas Group Companies Not a Taxable Service: CESTAT Deletes Demand
The Tribunal consisted of Technical Member, Vasa Seshagiri Rao, heard and reviewed the matter filed by the Appellant.
The Tribunal, after hearing both the Counsels and materials on records, focused on whether the imposition of penalties was legally justified. It observed that the extract from the Order-in-Original did not indicate any active role played by the appellant in the mis-declaration of goods, claim of ineligible drawback, or knowingly making false declarations.
The Tribunal held that neither the penalty under Section 114(iii) nor under Section 114AA of the Customs Act, 1962, could be sustained against the appellant. Thus, the impugned Order-in-Appeal No. 28/2015 dated 06.05.2015 was set aside, and the appeal was allowed with consequential reliefs as per law. The Order was pronounced in open court on 11.11.2025.
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