Customs Tribunal Overturns Penalties on Broker and Employee Over Misdeclaration Allegations

The CESTAT Kolkata Bench finds no evidence of connivance or intentional misdeclaration, setting aside substantial penalties imposed under the Customs Act, 1962.

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Eastern Zonal Bench in Kolkata has overturned penalties amounting to Rs. 90 lakh imposed on a Customs Broker firm, M/s. Sri Durga Impex and Logistics, and its employee, Shri Srimanta Rakshit. The tribunal found that the penalties levied under Sections 112(a)(i) and 114AA of the Customs Act, 1962, were not sustainable due to a lack of evidence proving connivance or intentional misdeclaration.

The case centered around allegations that the broker and employee failed in their duties, leading to the misdeclaration of goods imported by M/s. Shree Laxmi Narayan Enterprises. The goods, declared as mining tyres, were found to include a larger quantity of tyres suitable for motor cars, buses, and trucks, only discovered after a thorough examination.

The tribunal, comprising Shri R. Muralidhar, Member (Judicial), and Shri K. Anpazhakan, Member (Technical), noted that the misdeclaration was detected only after 100% examination of the goods. It concluded that there was no evidence suggesting that the Customs Broker and its employee had intentionally made false statements or submitted incorrect documents.

Further, the tribunal observed that any alleged violation of the Customs Broker Licensing Regulations, 2018, should be addressed separately under those regulations. The CESTAT had previously set aside an order suspending the broker's license under these regulations, further supporting the tribunal's decision that the penalties under the Customs Act were unjustified.

Both the Customs Broker and Shri Srimanta Rakshit argued that they had diligently verified all import documents, including GST certificates, Aadhar cards, and authorization letters, before the filing of the Bills of Entry. They contended that the misdeclaration was beyond their capacity to detect prior to the investigation's findings.

The tribunal's order provides relief to the appellants, emphasizing the necessity of concrete evidence in imposing penalties for alleged infractions under the Customs Act. This decision underscores the tribunal's role in ensuring fair adjudication in customs-related disputes, particularly where procedural violations are alleged without substantive proof.

Bottom Line:

Penalties imposed under Sections 112(a)(i) and 114AA of the Customs Act, 1962, are not sustainable where no evidence of connivance or intentional misdeclaration is established against the Customs Broker (CB) and its employee, and the misdeclaration was detected only after 100% examination of goods.

Statutory provision(s): Sections 112(a)(i), 114AA, and 124 of the Customs Act, 1962; Customs Broker Licensing Regulations, 2018.

Shri Srimanta Rakshit and Ors. v. Commissioner of Customs (Port), (CESTAT)(Eastern Zonal Bench: Kolkata) : Law Finder Doc Id # 2820222