2025-VIL-1089-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs Act, 1962 - Penalty on Clearing Agent; Knowledge of Overvaluation - The appellants, acting as clearing agents, filed manual shipping bills for the export of garments which were physically examined and allowed for export by the proper officer. Subsequently, the exporter was found to have fraudulently availed DEPB and Drawback benefits by grossly overvaluing substandard goods, with investigations revealing that the overseas consignee never received the goods - the Department imposed penalties on the clearing agents under Section 114 of the Customs Act, 1962, for their alleged role in the fraudulent export - Whether a penalty can be imposed on a clearing agent for fraudulent exports involving overvaluation and availment of undue benefits by the exporter, when the goods were physically examined and cleared for export by the proper officer and there is no evidence of the agent's knowledge of the fraud - HELD - In a scenario where self-assessment was not in force and shipping bills were filed manually, the role of the clearing agent is limited to the filing of export documents before the proper officer - Once the goods are physically examined and allowed for export by the customs authorities, the responsibility of the clearing agent concludes. The subsequent fraudulent availment of DEPB and Drawback benefits is an act attributable solely to the exporter, a process in which the clearing agent has no role. A penalty cannot be imposed on the clearing agent unless the Revenue can prove with evidence that the agent had knowledge of the overvaluation or the inferior quality of the goods - In the absence of any such evidence on record, the clearing agent cannot be held liable for the exporter's fraud. Accordingly, the imposition of a penalty is not sustainable and set aside - The appeal is allowed - Whether the extended period of limitation for issuing a show-cause notice can be invoked by the department when the export goods in question had been subjected to physical examination by the proper officer before being cleared for export - HELD - The extended period of limitation cannot be invoked when the Department had a clear opportunity to verify the particulars of the consignment, including its value and quality. Since the export goods were physically examined by the proper officer and subsequently allowed to be exported, the department is precluded from later alleging suppression or misstatement to justify invoking the extended limitation period. The act of examination by the proper officer negates the essential conditions required for such invocation. Therefore, a show-cause notice issued beyond the normal statutory period is time-barred and not legally tenable.
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