The customs broker was found not Guilty of Overvaluation of goods in attempted export.
Facts
On 10.06.2019 acting on specific intelligence that fake/ substandard “Air Inlet Automobile spare parts were being attempted to be exported by classifying the same under CTH 84212300 (as declared in shipping bill) and over invoicing the value as Rs. 3,46,95,519/- (declared value as FOB) by M/s Swiss Global, vikaspuri Delhi, the officers attached to Air Cargo Complex (ACC) and Air Intelligence unit, Airport Trichy, visited the premises at Airport and noted that the said exporter had filed five shipping bills dated 09.06.2019 as free shipping bills claiming MEIS benefits through the Customs Broker.
Examination was carried out in the presence of the representatives of the appellant and it revealed that the cargo proposed to be exported under the shipping bills were substandard materials.
It appeared that the exporter had intentionally inflated the actual value in order to claim ineligible MEIS benefits and undue benefit by way of IGST refund.
The export cargo was detained and investigation was initiated.
Submissions
Counsel Hari Radhakrishnan appeared and argued for the appellants submitted that the appellant firm is the authorized Customs Broker having the parent licence issued from Trivandrum Customs Commissionerate. As the work load at Cochin was more, the appellant shifted their administrative office to Cochin.
Authorized Representative Rudra Pratap Singh appearing for the department submitted that on careful study of the suppliers invoice it was seen that the goods were supplied to the exporter by M/s Moonlight International, Delhi.
Decision
The division bench of Sulekha Beevi C.S., Member (Judicial) and Vasa Seshagiri Rao, Member (Technical) observed that the penalties have been imposed on the appellants under section 114(iii) and 114AA of the Customs Act, 1962. Section 147(3) also has been invoked to hold that appellants have acted as agent of exporter and is therefore deemed to be the exporter of the goods.
The bench noted that the allegation is overvaluation of the goods. The department has obtained details as to the price at which the exporter purchased the goods from the supplier viz., M/s. Moonlight Industries. This invoice and other KYC documents were submitted by the appellant before the officers. The appellant being a Customs Broker is duty bound to exercise diligence while performing the duties.
The tribunal further noted that the appellant has obtained authorization from the exporter and all KYC documents. The IEC, PAN details, GST registration etc. have been obtained.
“In such circumstances, it cannot be said that the appellant has not acted diligently. Moreover, a Show Cause Notice was issued to the appellant under section 17 of CBLR, 2018 alleging violation of the provisions of the Regulations with regard to the above incident. The Tribunal vide Final Order has set aside the order of revocation. The jurisdictional High Court has modified the order by setting aside the observation made by the Tribunal that the appellant has to apply afresh”, the bench said.
The bench held that the department has failed to establish that the appellants have connived or abetted in the overvaluation of goods and attempted export of the same. There is no iota of evidence to establish that appellants had falsified any documents. The ingredients of section 114A stands un established. Moreover, the invocation of sub-section (3) of section 147 against these appellant is totally erroneous.
Case title: M/s. Cochin Air Cargo Clearing House v/s Commissioner of Customs (Preventive), Tiruchirappalli
Citation: Customs Appeal No. 40220 of 2021
