Whether CHA is liable for penalty for misdeclaration of imported products?

PJ/CASE LAW/2014-15/2314

Case:- INDO FOREIGN (AGENTS) PVT. LTD. Versus COMMR. OF CUS. (AP & ADMN.), KOLKATA

Citation:- 2012 (279) E.L.T. 258 (Tri.- Kolkata)

Brief facts:- Brief facts of the case are that one M/s. Shiv Shakti Enterprises had imported a consignment of 800 pieces of Decoder PCB for CD Player (unbranded) on 26-2-2004 through ACC, Kolkata. The consignment was intercepted after clearance by DRI on the ground that the goods were actually MPEC cards and that the ores described in the Bill of Entry. Investigation was conducted subsequently and it revealed that the real importer was not the proprietor of M/s. Shiv Shakti Enterprises but one Shri Arsh Kumar who is concerned with the import, has not filed appeal before Tribunal. There are two appellants, one is CHA firm and another an employee, Shri Biswajit Bhowmick (second appellant). Penalties have been imposed on CHA firm and on the second appellant under Section 112(a) of the Customs Act, 1962 on the ground that they had abetted for the importation, misdeclaration of the goods and clearance of the same through Customs.

Appellant’s contention:- The learned Advocate for the CHA Firm submitted that the Director of CHA had fairly stated in reply to the show cause notice and in response to summons to which he had relied upon that the CHA firm had only done the work of clearing of goods and neither he nor his employee was aware of the fact that what was being imported was MPEG card.
The ld. Counsel for Shri Bhowmick relied upon the decisions in the cases of A.P. Sales v. Commissioner of Customs, Hyderabad reported in 2006 (198) E.L.T. 309 (Tri.-Bang.) and Commissioner of Customs, Mumbai v. M. Vasi reported in 2003 (151) E.L.T. 312 (Tri.-Mumbai.) to submit that awareness about the improper importation and the benefits arrived therefrom should be there. In this case, immediately at the time of investigation, Shri Bhowmick has submitted that he was not aware about any deliberate mis-declaration. He has said so. But the subsequent statement also does not reveal what was extra benefit derived for the risk taken by CHA and Shri Biswajit Bhowmick and further there is no corroboration by the importer, Shri Arsh Kumar. Further, the ld. Counsel for Shri Bhowmick also relied upon the decision of the Hon'ble High Court of Gujarat in the case of Motilal Lalchand Shah v. L.M. Kaul and another reported in 1984 (17) E.L.T. 294 (Guj.) to submit that an improved statement recorded subsequently cannot be relied upon.

Respondent’s contention:- The respondent reiterated the findings of the lower authorities.

Reasoning of judgment:- After hearing both the sides in details and perusing the records submitted the Tribunal had explained that the whole case of the Revenue was based on the statement of Shri Biswajit Bhowmick. Shri Arsh Kumar who imported the goods in the name of M/s. Shiv Shakti Enterprises was not asked whether CHA Firm or Shri Biswajit Bhowmick had been aware of the fact that what was being imported was MPEC card or not and whether he had given them any specific instructions to ensure that the goods are improperly declared and cleared without any problem by the Customs. The Tribunal had also added that one of Directors was summoned but the he had not participated in the investigation at all. Hence, they did not have any statement or submissions during the investigation by the Director of CHA.
Further the Tribunal also stated that the statement of Shri Biswajit Bhowmick was recorded on two occasions. The first statement was recorded immediately when the goods were intercepted on 27-2-2004. In this statement, there is no admission at all by Shri Bhowmick. He stated that he was simply an employee performing clerical work relating to import and he was not a technical person and therefore, was not in a position to recognize the fact that what was being imported was MPEG card and not being decoder. However, in the subsequent statement recorded after four months, he admitted that he was aware that what was being imported was MPEG card and he was aware of it. Thus, the only issue before them was that whether the penalty can be imposed on CHA firm and Shri Biswajit Bhowmick on the basis of single statement that too the second statement recorded in New Delhi as per the appellants.
In that case, the statement had been improved as submitted but in the absence of any corroboration by the importer himself or any facts and circumstances of the case which are needed to reach such conclusion, they had to hold that the decision of the Hon'ble High Court of Gujarat would be applicable to the present case.
Similarly, as regards abatement, the decisions of the Tribunal relied by the ld. Advocate were also applicable. Under those circumstances, they found that no case had been made out against the appellants by the Revenue. They allowed the appeals themselves by setting aside the impugned order and set aside the penalties against both the appellants. Both the appeals were disposed of in the above terms. Stay petitions also gets disposed of.

Decision:- Appeal partly allowed.

Comment:- The gist of the case is that in order to impose penalty on CHA or its employees, it is necessary to prove with corroborative evidences that they were actively involved and actively participated in the mis-declaration of the goods imported by the importer.

Prepared by: Kushal Shah

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PJ/CASE LAW/2014-15/2314

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