2017 (9) TMI 1015 - AT - Customs

Penalty u/s 112 (a) of the Customs Act, 1962 - case of Revenue is that the importer situated in Maharashtra has chosen to import the sensitive items through ICD Tughalakabad. The CHA having full knowledge of the provisions of Customs Act have not taken adequate and necessary precautions to avoid such imports in violation of various provisions of Customs Act - Held that - Section 112(a) stipulates that a person shall be liable to penalty, who, in relation to any goods does or omits to do any act, which act or omission would render such goods liable to confiscation under Section 111 or abets the doing or omission of such an act - in absence of prior knowledge of possible mis-match of the documents and the goods, the CHA has no way of knowing the violations before hand - in the proceedings before the Commissioner, no evidence has been brought out about the prior knowledge of the appellants regarding violation of the provisions of Customs Act. Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences under Section 112 (a). For imposition of penalty under Section 112 (a), a positive act or omission is to be established - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Penalties under Section 112(a) of the Customs Act, 1962 imposed on individuals involved in the importation of goods.

Analysis:
The case involved two appeals against an order by the Commissioner of Customs imposing penalties under Section 112(a) of the Customs Act, 1962. The penalties were imposed on individuals connected to the importation of a consignment of cosmetics due to violations such as misdeclaration of goods, value, packing, and IPR regulations. The appellants contested the penalties, arguing that as employees of a Customs House Agent (CHA), they acted in good faith based on the documentation provided by the importer and had no prior knowledge of the violations (para. 3).

The Authorized Representative (AR) strongly defended the penalties, stating that the CHA should have taken necessary precautions to prevent such violations by the importer and that Section 112(a) was rightly invoked (para. 4). After hearing both sides, the Tribunal analyzed the findings of the Original Authority regarding the liability of the appellants for penalties under Section 112(a. The Tribunal noted that the appellants, as authorized employees of the CHA, processed import consignments based on documents provided by the importer. The Tribunal found that there was no evidence of the appellants' prior knowledge of the violations and that lack of due diligence alone was insufficient for penal consequences under Section 112(a (para. 6).

The Tribunal emphasized that for penalties under Section 112(a), a positive act or omission must be established, and malafide intent is a requirement. The Tribunal cited a previous decision to highlight that penalties for abetting violations cannot be imposed based on assumptions and presumptions; tangible evidence is necessary (para. 6). Based on their analysis, the Tribunal concluded that the penalties imposed on the appellants were not sustainable as there was no evidence of their involvement in any illegal acts related to the violations. Therefore, the impugned order imposing penalties was set aside, and the appeals were allowed (para. 7).