2023 (7) TMI 1361 - AT - Customs

Levy of penalty under Section 114(i) of Customs Act - Smuggling - Red Sanders - vague SCN - HELD THAT - It is apparent that even show cause notice does not allege any active knowledge of the appellants nor does it point to any act or omission on the part of these appellants - A plain reading of Section 114(i) of Customs Act, 1962 clearly implies that there has to be active knowledge or any act or omission before penalty under Section 114(i) can be imposed. There are no merit in the impugned order in so far as it relates to imposition of penalty on these appellants. The appeals are allowed.

Summary

Issues involved:
The issues involved in this case are related to penalty imposed under Section 114(i) of the Customs Act, 1962 on individuals involved in a case of substitution of goods during transit, specifically focusing on the requirement of active knowledge or act/omission before imposing penalties.

Summary:
The appeal was filed by multiple individuals, including a merchant exporter, a PVC pipes manufacturer, partners of the companies, an accountant, and a shipping line agent. The goods were substituted with Red Sander Wood during transit by the transporter, leading to a penalty under Section 114(i) of the Customs Act, 1962. The appellants denied any role or knowledge in the substitution, with the transporter admitting connivance. The Shipping Line Agent highlighted his limited role in supplying the container and lack of knowledge regarding its use post-supply.

Upon considering the submissions, it was noted that the show cause notice did not allege active knowledge or acts/omissions by the appellants. Section 114(i) of the Customs Act, 1962 requires active knowledge or involvement before imposing penalties. The show cause notice mentioned the prohibition on exporting Red Sander Wood but did not establish the appellants' direct involvement. The appeals were allowed as the penalty imposition lacked merit due to the absence of active knowledge or involvement by the appellants.