2017 (8) TMI 1082 - HC - Customs

Penalty u/s 117 - export of contraband item - The stand of the appellant is that the appellant is a partnership concern and for the fault of the employee, the firm shall not be penalized and the appellant also has no animus and accordingly, sought to contend that the reduced amount of penalty viz., ₹ 1,00,000/- is also beyond the power vested as per the provisions of Section 117 of the Customs Act - Held that - smuggling was detected and therefore, the goods were confiscated under Section 113 of the Customs Act and penalty is imposed under Section 117 of the Customs Act. The appellant, a partnership firm, cannot plead that they do not have personal knowledge and individual liability cannot be fixed, when the banned drug viz., Ketamine Hydrochloride, to the tune of ₹ 70,00,000/- was found to have been concealed along with onion. The quantum of the contraband sought to be exported along with onion clearly reveals the animus to export the contraband by way of smuggling and it is a clear violation of Section 117 of the Customs Act. As such, we do not find any error committed by the respondent authorities in imposing the penalty - having regard to the provisions of the Customs Act, the Tribunal has rightly reduced the penalty to ₹ 1,00,000/- - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
- Appeal against Customs, Excise and Service Tax Appellate Tribunal (CESTAT) order reducing penalty under Section 117 of the Customs Act.
- Applicability of penalty on partnership firm for employee's fault.
- Interpretation of Section 117 of the Customs Act regarding penalties for contravention.

Analysis:
1. The Civil Miscellaneous Appeal was filed against the CESTAT order reducing the penalty imposed under Section 117 of the Customs Act. The penalty was initially &8377; 10,00,000 but was reduced to &8377; 1,00,000 in the appeal.

2. The case involved the export of Onion along with Ketamine Hydrochloride worth &8377; 70,00,000, which was confiscated by Customs authorities. A criminal case was filed under the Customs Act, and a penalty was imposed for contravention of Section 117, which was challenged in the appeal.

3. The appellant, a partnership firm, argued that the firm should not be penalized for the fault of an employee. They contended that the reduced penalty of &8377; 1,00,000 was beyond the power vested under Section 117 of the Customs Act.

4. Section 117 of the Customs Act states that a person contravening any provision shall be liable to a penalty not exceeding one lakh rupees. The penalty was imposed for smuggling Ketamine Hydrochloride along with onion, leading to confiscation under Section 113 of the Customs Act.

5. The court held that the firm cannot evade liability by claiming lack of personal knowledge, especially when a banned drug was concealed for export. The judgment cited a previous case to support the imposition of penalties under the Customs Act for failures to discharge functions.

6. The court found that the act of attempting to export contraband along with onion demonstrated an intent to smuggle, violating Section 117 of the Customs Act. The Tribunal's decision to reduce the penalty to &8377; 1,00,000 was deemed appropriate, and the appeal was dismissed without costs.