In Customs Appeal No. 41585 of 2013 -CESTAT- Deliberate actions or negligent omissions by CHAs must be dealt with sternly: CESTAT (Chennai)
Members Sulekha Beevi (Judicial) & Vasa Seshagiri Rao (Technical) [24-08-2023]

Read Order: V. Thiruvalagan v. Commissioner of Customs

Chahat Varma

New Delhi, September 11, 2023: The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal has upheld the penalty imposed on a Custom House Agent (CHA) for his role in an attempted illegal export of Red Sanders.

In the case at hand, V. Thiruvalagan (appellant), the Proprietor of M/s. Shalom Forwarders and a CHA, had filed the present appeal against the Order-in-Appeal issued by the Commissioner of Customs and Central Excise (Appeals). This appeal pertained to the penalty imposed on him under Sections 114(i) and 114AA of the Customs Act, 1962. Initially, the adjudicating authority had imposed a penalty of Rs. 2,00,000 on the appellant for his involvement in acts of omission and commission related to the attempted illegal export of Red Sanders by M/s. Artisan’s Welfare Society in Villupuram. Subsequently, the lower appellate authority had reduced this penalty to Rs. 1,00,000.

The two-member bench of Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) clarified that to qualify as an ‘attempt’, an act must meet four criteria: Firstly, it must represent a move towards a punishable offense. Secondly, it should seem apparently (but not necessarily in reality) adapted for the intended purpose. Thirdly, it should come very close to achieving its goal. Fourthly, it must ultimately fail in its objective.

The bench noted that in this particular case, there was clear and conclusive evidence that the exporter, M/s. Artisan’s Welfare Society, made an unsuccessful attempt to illegally export Red Sanders wood pillar tops/pillars. This act contravened the Customs Act, the Foreign Trade (Development and Regulation) Act, 1992, the ITC (HS) Schedule 2, and the provisions of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

The bench held that the appellant, as a CHA, had facilitated the unsuccessful attempt to export prohibited goods by accepting documents from a third party without verifying the genuineness of the exporter or the nature of the goods being exported. Whether these actions or omissions were intentional or not, it did not materially change the fact that the appellant acted as an abettor in making these goods liable for confiscation. Furthermore, it was noted that the CHA was also involved in filing documents related to the export of Red Sanders, including mis-declaration and over-valuation of goods.

“A Custom House Agent is an important link between the Customs administration and the importers / exporters. Deliberate actions or negligent omissions on the part of a CHA, to manipulate or exploit this connection, needs to be dealt with sternly,” said the Tribunal.

Thus, the bench held that the appellant had acted or omitted to do an act, which resulted in making the exported goods liable for confiscation, thereby attracting the provisions of Section 114(i) of the Customs Act. Consequently, a penalty was imposable for his acts of omission or commission, whether deliberate or negligent.

However, considering the totality of the circumstances in this case, the penalty, which was upheld at Rs. 1,00,000, was reduced to Rs. 50,000.