Assessee cannot be penalised if department was also equally negligent.

PJ/Case Law/2014-15/2145

Case:-TRANS GLOBAL LOGISTICS Vs COMMISSIONER OF CUSTOMS (SEAPORT-IMPORT), CHENNAI

Citation:-2014-TIOL-459-CESTAT-MAD

Brief facts:-The appellant is a Custom House Agent. One of their employees, who was issued a photo ID Card in Form H as per Regulation 19 (6) of Custom House Agents Licensing Regulations, 2004, was found to be not possessing the minimum educational qualification as prescribed under Regulation 19. In fact, from the investigation done, it was seen that the concerned employee by name Shri Deepak Kumar Sharma was having a certificate of having completed 12th class from the Board of Secondary Sanskrit Education, Lucknow. On enquiries made by the Customs House officers, it was found that the Board was not recognized by University Grants Commission. Therefore, a case was made out against the appellant of not having exercised due care while employing the said Mr. Deepak Kumar Sharma and, on adjudication, a penalty of Rs.50,000/- has been imposed on him under Section 158 (2) of the Customs Act, 1962. Aggrieved by the order, the appellant has filed this appeal. The appellant submits that they were not aware that this particular Board was not recognized by UGC. As soon as the matter was pointed out, his service was terminated. He draws attention to Regulation 19 (1) and Regulation (2) which reads as under:-

“(1) A Custom House Agent may, having regard to the volume of business transacted by him, employ any number of persons to assist him. The minimum educational qualification of such persons shall be 10+2, or equivalent.

(2) Appointment of a person referred to in sub-regulation (1) shall be made only after obtaining the approval of the Deputy Commissioner of Customs or Assistant Commissioner of Customs designed by the Commissioner of Customs for this purpose and in the matter of granting approval, he shall take into consideration the antecedents and any other information pertaining to the character of such person.”

Appellant’s contentions:-The appellant submits that appointment of employees of CHA has to be approved by the Deputy Commissioner or Asst. Commissioner of Customs designated by the Commissioner of Customs. In the case of Mr. Deepak Kumar Sharma also, such approval was obtained. The Customs officers also were not aware that the Board in question was not recognized by UGC. This shows that there was no mens rea on the part of the appellant while employing the person. Further, he draws my attention to the finding in Order-in-Original at para-5 wherein it is recorded that there is no allegation that CHA or his employee viz. Sri Deepak Sharma have been involved in any activity which has caused revenue leakage. In the circumstances, he submits that penalty imposed is not warranted and the same should be set aside.

Respondent’s contentions:- Ld. AR for Revenue submits that it is the basic duty of the CHA to ensure that all the clauses of regulations are complied with. He should have verified that the persons employed by him are possessing the requisite qualification as recognized by the UGC. Since appellant has not complied with this requirement, penalty is to be imposed irrespective of the fact whether they were aware that the Board was recognized or not. He submits that under Section 158(2), there is no requirement of any mens rea and penalty should be imposed once violation of regulation is established.

Reasoning of judgment:- It was found that, in this case, the appellant as well as approving Asst. Commissioner or Deputy Commissioner of Customs have missed to ascertain whether the Board in question was recognized by UGC. Thus, once there is negligence on the part of department also, it is not fair to impose any penalty on the appellant. No other facts leading to revenue leakage or any loss to the State has been pointed out. Therefore, in the overall facts and circumstance of the case, it was felt that penalty imposed is not warranted. So the impugned order set aside and the appeal is allowed.

Decision:- The appeal is allowed.

Comment:- The analogy of the case is that no penalty can be imposed on the assessee if the revenue department was also equally negligent in following the prescribed procedure. Moreover, no other reason leading to revenue leakage or any loss to the state has been pointed out and so penalty imposed was held to be not warranted.

Comments

PJ/Case Law/2014-15/2145

Post a Comment

Query