A customs broker cannot be penalized for abetment under the Customs Act unless the department proves the broker had prior knowledge or mens rea regarding the fraudulent nature of the documents filed; mere unintentional facilitation is insufficient to establish liability.

SANJIV SRIVASTAVA:

This appeal is directed against Order-in-Appeal No.NOI-EXCUS-000-APP-30-25-26 dated 25/04/2025 passed by Commissioner (Appeals) Customs, Noida. By the impugned order following has been held:-

“ORDER

I, hereby, reject the Appeal No. 146/CUS/NOIDA/APPL/NCUS/2024-25 dated 08.07.2024 filed by M/s Shri Balaji Logistics, S-35/5, DLF Phase-III, Gurgaon and uphold the impugned order to the extent of imposition of penalty of Rs. 50,000/- under Section 112 of the Customs Act, 1962 upon the appellant (M/s Shri Balaji Logistics) only and remaining part of the impugned order is out of the purview of this order.”

2.1 Appellant is a customs broker, who filed Bill of Entries for importation of goods by M/s Arjun Steel having IEC No.516940856 as detailed in table below:-

2.2 On the Bills of Entry exemption from payment of basic customs duty as per Sl. No.967-(I) of the Notification No.46/2011-Cus dated 01.06.2011, as amended from time to time under ASEAN-India Free Trade Agreement was claimed, on the basis of the country of origin certificate purported to be issued by the Secretary General, Ministry of International Trade and Industry Malaysia.

2.3 Verification of the Certificate of Origin was conducted. By the letter of OSD (FTA Cell), CBIC dated 07.10.2021 issued under F.No.466/11/2021-FTA-II, it was informed that the certificate of origin submitted by the importer was not authentic and had not been issued by the Ministry of International Trade and Industry of Malaysia.

2.4 A Show cause notice No.07/2022 dated 27.07.2022 was issued to the importer calling them to show cause as to why,-

a. The impugned goods having assessable value (in total) Rs 1,52,01,235/- imported vide Bills of Entry mentioned at para 1 should not be confiscated under Section 111(m) and 111(o) of the Customs Act, 1962.

b. The duty of Custom amounting to Rs 14,79,841/- should not be demanded and recovered from them along with applicable interest under sub-section (4) of Section 28 read along with Section 28A of the Customs Act, 1962.

c. A penalty should not be imposed upon them under Section 112 and/ or 114A of the Customs Act, 1962.

d. A penalty should not be imposed upon them under Section 114AA of the Customs Act, 1962.

2.5 Appellant was also called upon to show cause as to why,-

a. A penalty should not be imposed upon them under Section 112 of the Customs Act, 1962.

2.6 The show cause notice was adjudicated as per the Order-in-Original No.07/ADC/NOIDA-CUS/2024-25 dated 30.05.2024 holding as follows:

“ORDER

8. In view of the above discussion and findings, I pass the following Order: -

i. I hereby reject the Country of Origin Certificates as a valid document issued as per Notification No.46/2011-Cus Dated 01.06.2011 read with Notification No. 189/2009-Customs (N.T.), dated 31st December, 2009 submitted by the Importer/Custom Broker purposefully, knowingly or intentionally for fraudulently claiming and availing Customs duty benefit covered under Bills of Entry as detailed in Table 2 supra;

ii. I confirm demand of differential Customs duty amounting to Rs. 14,79,841/-(Rupees Fourteen Lach Seventy Nine Thousand Eight Hundred Forty One Only) under Section 28(4) of Customs Act 1962. However, as the duty of Rs.14,79,841/-has already been deposited by M/s Arjun Steel, therefore, the same is appropriated against the differential Customs duty;

iii. I hold that the proceedings for confirmation of Customs Duty amounting to Rs. 14,79,841/-(Rupees Fourteen Lakh Seventy Nine Thousand Eight Hundred Forty One Only) under Section 28(4) along with interest under Section 28AA and penalty under Section 112