The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the penalty on the Customs House Agent (CHA) under Customs Act can be imposed only if some positive Act of his involvement in fraudulent import/export is found with credible evidence.
The bench of Somesh Arora (Judicial Member) and Satendra Vikram Singh (Technical Member) has observed that If there is failure on his part to fulfill the obligation cast upon him under CBLR, 2018, appropriate action needs to be taken under those regulations. As discussed, the department has not adduced any evidence in both the cases showing abetment by the CHA in alleged fraudulent activity of the exporter. They have also not brought forward any evidence to show that the CHA has used false and incorrect material in the cases.
The bench observed that the CHA has received KYC documents, export invoices, packing lists, etc. of the exporter through some other agency and filed the shipping bills with the Customs. As held in the above cases, CHA cannot be penalised under Section 114(iii) and 114AA of the Customs Act, 1962. For violation of CBLR, action could have been taken by the department.
The department issued show cause notice to M/s K R International proposing rejection of FOB value, confiscation of the seized goods under section 113(h) and 113(i) besides penal action against the exporter, M/s Mass Shipping Agencies, Delhi and M/s. Dhanlabh Logistics under Section 114 (iii) and Section 114AA of the Customs Act, 1962.
The appellant is alleged to have failed to fulfill obligation cast on him as per Rule 13(d) and Rule 13(n) of the CHA Licensing Regulations, 2013.
The appellant contended that the adjudicating authority as well as the Appellate authority have passed the order without considering the fact that the exporters(M/s K R International & M/s. Fusion Overseas) have mis-declared the value and the quantity of the goods and the CHA has no role in that as made out against him as he has filed the documents with customs on the basis of exporter’s invoices and packing list. The appellant has not even been interrogated by the department. The charges made against the appellant are not tenable and therefore, these be set aside.
The department reiterated the findings of the lower authorities and tried to justify imposition of penalty on the Appellant in both the cases under Section 114(iii) and Section 114AA of the Customs Act, 1962. Due diligence was not done by the CHA in both the cases before filing the export documents with customs as they did not verify the existence of the exporter at the given address. The CHA has failed to discharge the burden cast upon him under Regulation 10(d) and Regulation 10(n) of the Customs Broker License Regulations, 2018.
The tribunal held that the department has not brought out anything in either of the cases to sustain its allegation against the appellant. We further find that the penalty has been imposed on the appellant without credible evidence and therefore, it is held as unsustainable. The appeals are allowed and both the orders are set aside to the extent of upholding penalty upon the Appellant under Section 114(iii) and 114AA of the Customs Act, 1962.
Case Details
Case Title: M/s Dhanlabh Logistics LLP Versus Commissioner of Customs –Ahmedabad
Case No.: Customs Appeal No. 10217 of 2024
Date: 11.04.2025
Counsel For Appellant: N K Tiwari
Counsel For Respondent: Sanjay Kumar
Read More: No Service Tax On Technical Know-How Service Prior To This Date: CESTAT
