2014 (5) TMI 601 - HC - Customs

Penalty u/s 112 - Did the Tribunal fall into error in sustaining the penalty to the tune of Rs.50,000/- on the appellant, the Customs House Agent (CHA) under Section 112(a) of the Customs Act, 1962 - Held that - It is evident that the appellant was saddled with the liability on a strict and technical interpretation of regulations. There is no finding either in the order-in-original or by the CESTAT with respect to malafide on the part of the appellant. Though the letter of the regulations might not have been complied with, and there was a technical violation of the law in hindsight side, the Tribunal in its opinion ought to have cancelled the penalty altogether in the peculiar facts of the case and in the absence of any evidence of contumacious conduct on its part. In these circumstances the impugned order is hereby set-aside - Decided in favour of assessee.

Summary

Issues:
1. Sustaining penalty on Customs House Agent (CHA) under Section 112(a) of the Customs Act, 1962.

Analysis:
The case involved the imposition of a penalty on a Customs House Agent (CHA) for assisting in the importation of goods without the necessary Wireless Protocol Certificate. The appellant, holding a CHA license, had filed bills of entry for the consignments on behalf of the importer. The Customs Authorities initially accepted the goods but later discovered the lack of the required license. The Commissioner imposed a penalty of Rs.2 lakhs under Section 112(a) and 117 of the Customs Act, 1962, which was later reduced to Rs.50,000/- by the Tribunal. The appellant argued no malafide intent and compliance with importer's instructions, citing Customs House Agents Licensing Regulations, 2004.

The revenue contended that the appellant should not be further aggrieved after the penalty reduction. The impugned order highlighted the failure of the CHA to fulfill obligations under CHALR regulations, making them liable for penal action under the Customs Act. Although no malafide was found, the absence of the required license for restricted goods made the goods liable for confiscation and penalty. The Tribunal reduced the penalty based on the absence of mens rea but maintained the liability. The appellant was held liable on a strict interpretation of regulations, despite no evidence of malafide intent. The Tribunal's decision to uphold a reduced penalty was challenged on the grounds that, given the circumstances and lack of contumacious conduct, the penalty should have been canceled entirely.

In conclusion, the High Court set aside the impugned order, ruling in favor of the appellant. The Court found that the penalty should have been canceled entirely due to the absence of malafide intent and technical non-compliance with regulations. The appellant's appeal was allowed, emphasizing the lack of evidence of contumacious conduct and the peculiar facts of the case.