Legal principle

A Customs Broker's deficient KYC/antecedent verification, absent evidence of any act, omission or abetment having nexus with the prohibited goods, cannot sustain a penalty under Section 114(i), and the residuary Section 117 cannot independently sustain it without an identifiable contravention of the Customs Act.

Court decision

The Tribunal allowed the appeal and set aside the penalty of Rs.2,00,000 imposed on the Customs Broker under Section 114(i) read with Section 117, modifying the Order-in-Appeal to that extent and granting consequential relief; it held the Department had established, at the highest, a deficiency in KYC/antecedent verification but no act, omission or abetment with the requisite nexus to the prohibited goods.

Facts

The appellant, M/s PL Shipping and Logistics Ltd. (formerly Peirce Leslie Agencies Ltd.), a Customs Broker, handled Shipping Bill No. 7953846 dated 21.02.2015 filed by M/s Sam (CBE) Impex for export of 'Cotton Tufted Floor Mat' to UAE. After the container was granted Let Export Order and left the CFS, it was examined on 18.03.2015 and found to contain 4.030 MT of red sanders valued at about Rs.1.81 crore, allegedly substituted for the declared cargo. The adjudicating authority found inadequate verification of the exporter's antecedents/KYC and imposed a penalty of Rs.2,00,000 on the Customs Broker under Section 114(i) read with Section 117 of the Customs Act, 1962, which was upheld by the Commissioner of Customs (Appeals-II), Tiruchirappalli in Order-in-Appeal No.139/2016 dated 01.11.2016. The Customs Broker appealed to the Tribunal.

Key provisions

• Section 114(i), Customs Act, 1962 — Penalty for attempt to export goods improperly etc
• Section 117, Customs Act, 1962 — Penalties for contravention etc not expressly mentioned