2002 (1) TMI 457 - AT - Customs

Summary

Issues:
- Imposition of penalty under Section 117 of the Customs Act on the CHA without a proposal in the show-cause notice.
- Applicability of penalty under Section 117 in the absence of specific contravention or failure to comply with legal requirements.
- Obligation of the CHA under the CHA Licensing Regulations 1984 regarding payment of differential duty without delay.

Analysis:

The case involved an appeal by M/s. Lee & Muirhead Ltd., referred to as the CHA, against a penalty of Rs. 10,000 imposed by the Commissioner of Customs under Section 117 of the Customs Act, 1962. The penalty was related to a discrepancy in the Bill of Entry for imported goods, which led to delayed payment of differential duty by the importers. The CHA contended that the penalty was unjustified as there was no proposal for it in the show-cause notice and no contravention of the Customs Act by them. The Commissioner had previously warned the CHA about the lapse and condoned it, making the penalty unwarranted.

The appellant's counsel argued that the penalty under Section 117 could not be sustained as the show-cause notice did not propose such a penalty, and there was no finding of contravention or failure to comply with legal requirements by the CHA. The delay in payment of duty was attributed to the CHA, but it had been previously addressed and warned by the Customs authorities. The counsel emphasized that the penalty was not justified under the Customs Act, especially considering the absence of any proposal for penalty under Section 117 in the notice.

The Judge noted that the show-cause notice had proposed penalties under different sections, but those proposals were dropped during adjudication. The Commissioner had already warned and exonerated the CHA for the lapse in question. The Judge agreed with the appellant's arguments, stating that there was no basis for imposing a penalty under Section 117 without evidence of contravention or failure to comply with legal requirements. The delay in duty payment had been addressed through interest charges, and penalizing the CHA for the importer's delay was unwarranted. Consequently, the penalty under Section 117 was set aside, and the appeal was allowed in favor of the CHA.