By TIOL News Service

NEW DELHI, JUNE 25, 2015: THE facts are that the appellant is a CHA and filed shipping bills in the name of one M/s. Sanjay Sales Corporation for export of various textile items which were allegedly highly overvalued. The quantum of drawback claimedis Rs.8,82,464/-.

The allegation against the appellant is: "…while filing shipping bill in respect of the said exporter failed to ascertain the genuineness of the said exporter, namely M/s. Sanjay Sales Corporation and filed the documents and handled customs clearance relating to the attempted export of the seized goods under said Shipping Bills and transacted business for non-existent / non-traceable exporter. They did not deal with the exporter directly but only through mediator and thus failed to take sufficient precautions before taking up customs clearance job on behalf of the said exporter. They also failed to obtain the authorization from the exporter as required under Regulation 13 of the CHA Licensing Regulations, 2004. They also failed to make available the exporter to join in customs investigation. Therefore, by his acts of omissions and commissions, …CHA appears to have facilitated / abetted the said exporter in the attempt to export poor quality sub-standard and highly overvalued goods under claim of undue drawback amount which appeared to be liable for confiscation under Section 113 (d) and 113 (i) of the Customs Act, 1962."

Penalty was imposed on the appellant CHA under Section 114 of the Customs Act 1962.

Aggrieved, the CHA is before the CESTAT.

It is submitted that the allegations are totally incorrect and the only fault of appellant is that they did not personally meet the exporter and same is not the requirement for a CHA to deal with the exporter of the goods; that the appellant acted under good faith and Revenue has not been able to bring out any evidence to show that appellant was aware that the exporter was fraudulent or that there was any undue claim of drawback by exporter.

The AR supported the order of the adjudicating authority and also sought to place reliance on the decisions in Jasjeet Singh Marwaha Vs. UOI - 2009-TIOL-87-HC-DEL-CUS and Sunil Shipping Agency.

The Bench while distinguishing the case laws cited inter alia observed -

++ I find that appellant has obtained proper authorization which is required under regulation 13 of the CHALR, 2004 from the exporter, also verified the details of the exporter and also verified the IEC obtained by the exporter from DGFT. These are the three primary documents which are supposed to be verified on 1st instance while dealing with the new client.

++ In the law it is nowhere required that before dealing with the new client the CHA is required to meet the client personally. But to verify the antecedents of the exporter which appellant has done in this case by verifying bank account, IEC and by obtaining proper authorization.

++ I hold that appellant has taken due care for knowing the antecedent of exporter.

++ Further, from the records it is not coming out that appellant was having any knowledge that the exporter was fraudulent and their shipping bill have been filed to claim undue drawback by overvalue of the exported goods.

Holding that the appellant has not violated the provisions of Customs Act or any other law for the time being in force and, therefore, is not liable to be penalized under section 114 of the Customs Act 1962, the Bench set aside the penalty imposed and allowed the appeal with consequential relief.

(See 2015-TIOL-1238-CESTAT-DEL)