P.N. Shipping Agency Vs. CC, Nhava Sheva-I - (Customs, Excise and Service Tax Appellate Tribunal) (07 May 2019)

Lack of due diligence and failure to take more precautions cannot by itself bring in penal consequences for imposition of penalty, a positive act or omission is to be established

MANU/CM/0129/2019

Customs

Present Appeal has been filed from the order passed by the Commissioner of Customs (Appeals) by which the Commissioner (Appeals) disposed of the Appeal filed by the Appellant and reduced the penalty under Section 112(a) of the Customs Act, 1962 to Rs. 5 lacs. The issue for determination is whether the Appellant, who is a CHA, is liable for penalty under Section 112(a). Present is a case of smuggling of cigarettes in the guise of trolley bags which were seized by the investigating agency.

For failure of fulfilling certain obligations, penalty under Section 112(a) has been imposed on the Appellant. Imposition of penalty on the Appellant i.e. CHA under Section 112(a) of the Customs Act, 1982 is the issue in the instant Appeal. The Section deals with the cases of confiscatory goods where abetment goes to the root of the matter. It stipulates that a person shall be liable to penalty, who, in relation to any goods does or omits to do any act, which act or omission would render such goods liable to confiscation under Section 111 or abets the doing or omission of such an act. There should be clear evidence to the conclusion that, the Appellants by their specific act or omission of any act, abetted the illegal importation of the offending goods. Cogent, tangible and reliable evidence is required for such penal actions.

As per the evidence on record, import of cigarettes under the guise of trolley bags was not within knowledge of the Appellant and this establishes that the CHA was not aware about the violations beforehand. No evidence has been brought out about the prior knowledge of the appellant regarding violation of the provisions of Customs Act. As per evidence brought on record, it is not a case that the Appellant had wrong intent. It is also not a case that, the Appellant worked as an accomplice.

It is settled principle that lack of due diligence and failure to take more precautions cannot, by itself bring in penal consequences under Section 112(a). For imposition of penalty under Section 112(a), a positive act or omission is to be established. Admittedly, negligence is there on the part of the Appellant and the Appellant admitted violation of CHA Regulations on his part. Such negligence/omission on the part of the Appellant may attract proceedings that are already pending against the Appellant.

When there is no evidence to establish that, the Appellant had prior knowledge of the illegal import of cigarettes and also when there is no evidence to establish any wrongful intent on the part of the appellant then, there is no justification to impose penalty under Section 112(a). The impugned order upholding imposition of penalty on the Appellant is set aside and the appeal filed by the Appellant is allowed.

Tags : PENALTY IMPOSITION LEGALITY