CESTAT: Penalty on Customs Broker, sets aside, revenue futile to establish Goods in Shipping Bills, didn't reflect truth to be Exported

CESTAT: Penalty on Customs Broker, sets aside, revenue futile to establish Goods in Shipping Bills, didn't reflect truth to be Exported

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has supressed the penalty imposed on Customs Brokers. It was because Revenue did not establish the goods listed on shipping bills reflected the true nature of the consignment exported.

The assessee, B. Dhananjayan, works as a customs broker. In an attempt to smuggle red sander logs illegally to export the material under the guise of polished granite slabs. Based on intelligence, the Directorate of Revenue Intelligence (DRI) seized 13.700 MT of red sander valued at Rs. 5,48 crores from a container. Following investigations, the DRI discovered an elaborate conspiracy to smuggle the logs.

There have been seven show-cause notices issued in connection with this case. In the Order-in-Original, the Adjudicating Authority imposed a penalty of Rs. 10,000/- each under Sections 114 and 114AA of the Customs Act, 1962 on account of the assessee-respondent not verifying the antecedents of the overseas buyers. The validity of the IE Code and the identities of their clients, or whether they are operating at the declared address by using reliable, independent, authentic documents, statistics, or information, thereby turning a blind eye to blatant misuse of the Customs Brokers Licensing Regulations, 2013.

The assessee-respondent herein preferred an appeal before the First Appellate Authority, who vide the impugned order allowed the appeal. It resulted in the penalties being cancelled, inter alia holding that the revenue did not establish mens rea that the assessee-respondent herein had directly or indirectly facilitated smuggling of red sanders. The revenue's investigation has not established that the assessee-respondent here created false or incorrect documents for smuggling red sanders, nor has it established any evidence that the assessee-respondent was involved in smuggling of red sanders.

A Judicial Member, P. Dinesha, held that there was no evidence in record indicating the appellant had knowledge that the goods mentioned in the shipping bills did not represent the truth of the consignment sought to be exported. In the absence of such knowledge, there could be no mens rea attributed to the appellant or its proprietor.

Neither the Revenue nor the assessee-respondent have attempted to attribute prior knowledge to the assessee-respondent as to its involvement from the get-go in the alleged illegal import of red sanders. Moreover, the Revenue has not established the act or omission of the assesse-respondent herein that rendered the goods liable for confiscation, as that act or omission would need to be deliberate," the CESTAT said.