2016 (12) TMI 430 - AT - Customs

Revocation of CHA licence - forfeiture of security deposit - imposition of penalty under Section 158A(2)(2ii) of the Customs Act, 1962- certain allegations of filing Bills of Entry on behalf of importer client - Held that - the said Section empowers the Central Govt. to make any rule or regulation in terms of which a penalty to the extent of ₹ 50,000/- can be imposed on any person for contravention of the provisions of rule or regulation. As such, it is seen that the said section is empowering Section and cannot be adopted by itself for imposition of penalty. It does not stand to brought to our notice that any rule or regulation stand framed under this Section for imposition of penalty. Even if they stand framed the penalty has to be imposed in terms of such framed rules and regulations and not in terms of the empowering provisions. As such, we are of the view that penalty imposed under Section 158(2)(ii) cannot be sustained. Accordingly, the same is set aside - appeal allowed - decided in favor of CHA-appellant.

Summary

Issues: Imposition of penalty under Section 158A(2)(2i) of the Customs Act, 1962

In this case, the issue revolved around the imposition of a penalty of ?25,000 upon the appellant, who is a licensed Customs House Agent (CHA). The penalty was imposed under Section 158A(2)(2i) of the Customs Act, 1962. The appellant faced a Show Cause Notice due to allegations of filing Bills of Entry on behalf of their importer client, which could have led to the revocation or cancellation of the CHA license, forfeiture of the security amount, and imposition of a penalty under Section 158(2)(2ii) of the Act.

The Commissioner of Customs passed an order that did not revoke the appellant's license or order the forfeiture of the security amount. Instead, the Commissioner imposed a penalty of ?25,000 on the appellant. The relevant provision in question was Section 158(2)(ii) of the Customs Act, which empowers the Central Government to make rules or regulations that may impose a penalty of up to ?50,000 on individuals for contravening these rules or regulations.

Upon analysis, the Tribunal found that the penalty imposed under Section 158(2)(ii) could not be sustained in this case. The Tribunal noted that while the section empowers the imposition of penalties, it requires specific rules or regulations to be framed for the imposition of penalties. Since no such rules or regulations were brought to their attention, the penalty could not be upheld. Therefore, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellant.