Legal principle

Penalties under Sections 114(iii) and 114AA cannot be sustained on a retracted, uncorroborated admission alone; the department must independently prove the broker's knowledge of the falsity, and co-noticee statements bind only if tested under Section 138B.

Court decision

The Tribunal (Dr. Rachna Gupta, Member (Judicial)) set aside the imposition of both penalties of Rs. 1 lakh each under Sections 114(iii) and 114AA on the appellant CHA and allowed the appeal, holding the department failed to prove his guilt.

Facts

The appellant, proprietor/F-card holder of CHA firm M/s Brightline (C&F) Agency, acted as Customs House Agent for exporter M/s Agogo Overseas, whose consignment of 'LED Flash Light Torch' under Shipping Bill No. 3003627 dated 26.03.2019 was held up at Speedy CFS, Nhava Sheva on DRI intelligence of over-invoicing to earn higher export incentives (MEIS). DRI had the detained goods 100% examined vide Panchnama dated 09.05.2019 and valued by a Chartered Engineer. Based on statements (including of Shri Mali Ram Agarwal of the exporter and of the appellant), the department alleged gross over-valuation, mis-declaration, and that the CHA prepared and filed export documents knowing the goods were low-grade yet overvalued, violating CBLR regulation 10(e). SCN No. 12/2019/7387 dated 03.03.2020 culminated in OIO 49/2020 dated 13.09.2020 imposing Rs. 1 lakh each on the appellant under Sections 114(iii) and 114AA of the Customs Act, 1962, upheld by the Commissioner (Appeals).

Key provisions

• Section 108, Customs Act, 1962 — Power to summon persons to give evidence and produce documents
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 114(iii), Customs Act, 1962 — Penalty for attempt to export goods improperly etc
• Section 138B, Customs Act, 1962 — Relevancy of statements under certain circumstances
• Section 108A, Customs Act, 1962 — Obligation to furnish information