2019 (5) TMI 78 - AT - Customs

Waiver of penalty u/s 112 of CA - contraventions of the provisions or not - HELD THAT - No penalty was imposed by the authorities below on the ground that respondent has not contravened the provisions of Section 112 of the Customs Act. Further, the Commissioner(Appeals) has categorically come to the conclusion that in this case, the importer has acted bona fidely and there is no negligence on his part. There is no infirmity in the impugned order dropping the penalty under Section 112 of the Customs Act, 1962 - appeal dismissed - decided against Revenue.

Summary

Issues:
- Imposition of penalty under Section 112 of the Customs Act, 1962.

Analysis:
The case involved an appeal by the Revenue against an order passed by the Commissioner(Appeals) upholding the Order-in-Original regarding the confiscation of 300 cartons of frozen mackerel imported by a company. The goods were rejected by the United States Food and Drug Administration due to decomposed fish. The Animal Quarantine and Certification Services (AQCS) proposed destruction or deportation of the goods as they posed a bio-security threat. The Additional Commissioner of Customs ordered absolute confiscation under relevant sections of various acts but did not impose a penalty. The Revenue appealed against the non-imposition of penalty under Section 112 of the Customs Act, 1962.

The Revenue contended that the failure to impose a penalty was contrary to the provisions of Section 112, which mandates a penalty when goods are liable for confiscation. The Revenue argued that the word 'shall' in Section 112 makes the imposition of penalty mandatory, leaving no discretion to the authorities. On the other hand, the appellant's counsel defended the decision, stating that penalties are typically imposed for deliberate defiance of the law, contumacious conduct, or conscious disregard of obligations, not for technical breaches or bona fide beliefs of non-liability.

After hearing both parties and examining the records, the Judicial Member found that no penalty was imposed by the authorities below because the importer did not contravene Section 112. The Commissioner(Appeals) concluded that the importer acted bona fidely without negligence. Consequently, the Judicial Member upheld the impugned order, dismissing the Revenue's appeal based on the finding that there was no infirmity in dropping the penalty under Section 112 of the Customs Act, 1962. The decision was pronounced in open court on 25/02/2019.