No Penalty on Custom House Agent Employee for Communicating with Exporter of Impugned Goods: Delhi HC [Read Order]

The Delhi HighCourt recently held that mere communication between the employee of a CustomHouse Agent (CHA) and an exporter of impugned goods cannot, by itself, form basis for imposition of penalty under the Customs Act, 1962.

The observation was made by the High Court while adjudicating a Customs Act Appeal filed by Nawal Kishore Singh against the Commissioner Of Customs (Export).

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The facts follow the imposition of a ₹3 Crore penalty in connection with export of certain impugned goods. Customs had thus invoked penal provisions against individuals associated with the transaction, including a Custom House Agent, whose license had been suspended.

When the matter was instituted before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), the Tribunal had considered the role of the CHA and examined whether there was sufficient material to sustain the penalty imposed under Sections 112(a) and 114AA of the Customs Act.

CESTAT noted that the allegation against the employee was primarily based on phone call records indicating communication between the employee and another individual connected with the export transaction during a period surrounding the shipment date. CESTAT held that even if the CHA had knowledge of the import of the impugned goods, no penalty could be sustained against him due to his license as a Custom House Agent being suspended.

In the present appeal, the appellant who was admittedly an employee of the CHA challenged the findings linking such communication to culpability under the Customs law.

Reena Rawat appeared for the appellant while R. Ramachandran, Senior Standing Counsel, represented the Revenue.

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The Division Bench comprising Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul noted that the CESTAT had not discussed any evidence as to why the present appellant is being implicated when the penalty against his supposed employer was set aside.

The Court noted that even if the appellant had assisted in the export of the impugned goods, the same act was pursuant to his status as that of employee of the CHA and once the employer-CHA has been exonerated, there stood no reason to maintain the order against the appellant.

Since the Revenue had not appealed against the order exonerating the CHA from penalty, the same was said to have attained finality. Accordingly, the High Court partly allowed the appeal, granting relief to the appellant.

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