2006 (12) TMI 386 - AT - Customs

Summary

Issues involved:
The issues involved in the judgment are imposition of penalty on a Customs House Agent (CHA) for the act of forgery committed by his employee, and the applicability of Section 117 of the Customs Act for a violation of the Foreign Trade (Development and Regulation) Act.

Imposition of Penalty on CHA:
The appeal arose from the rejection of the CHA's appeal by the Commissioner (Appeals) and confirmation of the penalty imposed on him for his employee's forgery of shipping bills. The appellant argued that he had not instructed the employee, was out of the country at the time, and the penalty was imposed under the wrong statute. The appellant contended that he should not be held vicariously liable for the employee's actions as they were beyond the scope of employment and there was no evidence implicating him. The Tribunal noted that the appellant was unaware of the forgery, was not in India when it occurred, and there was no evidence linking him to the act. It was also observed that penalty under the Customs Act cannot be imposed for a violation of a separate statute like the Foreign Trade (Regulations) Rules. Citing the doctrine of vicarious liability, the Tribunal set aside the penalty, ruling in favor of the appellant.

Applicability of Section 117 of the Customs Act:
The learned JDR argued that the CHA is responsible for supervising employees and should bear liability for their actions. However, the Tribunal found that in this case, the appellant could not be held responsible for the employee's forgery as there was no evidence of authorization or collusion. Referring to a judgment of the Madras High Court, the Tribunal emphasized that vicarious liability applies only when the master has authorized or colluded with the servant. Consequently, the Tribunal concluded that Section 117 of the Customs Act could not be invoked for imposing a penalty related to a violation of the Foreign Trade (Regulations) Rules. The penalty imposed on the appellant was set aside based on this analysis and legal precedent.