Pentagon Shipping Services Vs Additional Commissioner of Customs (Madras High Court)
The Madras High Court addressed a petition filed by Pentagon Shipping Services, a licensed Customs Broker, challenging a penalty levied against it under Section 112(a) of the Customs Act, 1962. The penalty was imposed because the importer, for whom the broker acted, allegedly misdeclared the value of goods and fraudulently used another person’s import code. The Customs Department contended the broker was liable for lack of vigilance, which allowed the fraud.
The petitioner argued that a penalty under Section 112(a) for mere failure to discharge duties was invalid, citing the Division Bench ruling in Commissioner of Customs (Exports), Chennai Vs. I. Sahaya Edin Prabhu (2015 (320) E.L.T. 264 (Mad.)).
Acknowledging that the penalty order involved other parties and that a joint hearing would be appropriate, the High Court directed the petitioner to file an appeal before the appellate authority. Crucially, given the “special facts and circumstances,” the Court granted exemption from the mandatory pre-deposit of 7.5% of the penalty amount required under Section 129E of the Act. The Court also waived the limitation period, allowing the appeal to be entertained if filed within two weeks. The Court explicitly stated it was not ruling on the merits of the penalty itself, leaving all contentions open for the appellate authority.
