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1. Quashing of penalty imposed under Section 116 of the Customs Act, 1962. Detailed Analysis: Issue 1: Quashing of Penalty The appeal challenged the penalty imposed under Section 116 of the Customs Act, 1962, which was made absolute by the rule quashing the penalty. The respondents, acting as Steamship Agents for a shipping company, were alleged to have accepted liability for duty and penalty due to a discrepancy in cargo manifested under the Customs Act. The Customs authorities issued notices for penalty in 1973, leading to a hearing in 1974 where the respondents were absent. Subsequently, the Assistant Collector imposed a penalty double the export duty payable. The respondents contended in their Writ petition that the delay in initiating action prevented them from providing a proper explanation, the notices were time-barred under Section 28 of the Customs Act, and the authorities should have proceeded against the principal. The appellants argued that the respondents' liability was established through a bond, a hearing was offered but the respondents failed to attend, and the orders could be appealed under the Customs Act. The Single Judge held that Sections 28 and 147 applied, the Customs authorities acted unjustly, and made the rule absolute. Issue 2: Compliance with Section 116 of Customs Act The High Court analyzed whether the Assistant Collector complied with the requirements of Section 116 of the Customs Act. Section 116 imposes liability if goods are not unloaded or the quantity is short, and the failure is not accounted for satisfactorily. The respondents explained their inability to account for the shortage due to documents lost in a fire at their principal's office. However, the Assistant Collector's order did not address this explanation, passing a mechanical order without proper consideration. The Court found that the Assistant Collector did not reach the satisfaction required by Section 116, as he failed to assess the reasons given by the respondents. Additionally, the Court noted the unjust conduct of the Customs authorities in not accommodating a reasonable adjournment request by the respondents. Due to the lack of proper consideration and unjust behavior, the Court held that the penalizing orders could not be sustained. Conclusion The High Court dismissed the appeal, upholding the rule quashing the penalty. The Court found no merit in the appeal and directed parties to bear their own costs. The judgment emphasized the importance of proper compliance with statutory requirements and fair conduct by the Customs authorities in penal proceedings under the Customs Act.
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