Case Law Details
Satheesan B Menon Vs Principal Commissioner of Customs (CESTAT Chennai)
These appeals arose from Order-in-Original No. 266/2016-AIR dated 30.03.2016 passed by the Principal Commissioner of Customs, Chennai-VII, pursuant to a Show Cause Notice dated 18.10.2013. The notice alleged that raw materials imported for pharmaceutical manufacturing were brought in without an import license or Assistant Drug Controller (ADC) clearance, in violation of the Drugs and Cosmetics Act, 1940. While the allegations covered 31 past consignments, confiscation was proposed only for two live consignments dated 02.04.2013 and 03.04.2013 under Section 111(d) of the Customs Act, 1962, along with penalties under Section 112(a) on co-noticees. The adjudicating authority confirmed these proposals. Among all noticees, only the present appellants filed appeals.
The Tribunal identified the sole issue as whether the imposition of penalty under Section 112(a) on the appellants was justified. The appellants contended that the allegations primarily related to violation of the Customs House Agents Licensing Regulations (CHALR), 2004, and no specific role or conduct attributable to them was established to attract penalty under Section 112. It was argued that even if CHALR violations existed, they would not automatically justify penalty under the Customs Act without evidence of involvement as required under the provision.
The Tribunal examined the Show Cause Notice and the impugned order and observed that while the Revenue alleged import without required licenses for past consignments, there was no material placed on record regarding those past imports, such as separate notices or orders. With respect to the live consignments, the order stated that an “attempt” was made to clear the goods by filing Bills of Entry after receiving documents from the importer. It further suggested that one individual had rendered himself liable for penalty. However, the Tribunal noted that the exact role of the appellants in such alleged “attempt” was unclear. There was no clear finding of any act of omission, commission, or abetment by the appellants in relation to the goods.
The Tribunal also noted that other co-noticees had actively participated in the clearance of consignments, as reflected in specific paragraphs of the impugned order. In contrast, no such active or direct involvement was established against the appellants. The Tribunal relied on an earlier decision of the same Bench in Final Order Nos. 40722-40723/2017 dated 19.05.2017, involving similar circumstances and the same appellant, wherein it was held that a Customs House Agent (CHA) cannot be penalized under the Customs Act in the absence of positive evidence demonstrating mala fide intention or abetment.
Applying the same reasoning, the Tribunal held that the Revenue failed to establish a clear case for penalty under Section 112(a). Mere allegations or indirect involvement, without specific evidence of abetment or intent, were held insufficient to sustain penalty. Consequently, the Tribunal concluded that the imposition of penalty on the appellants was not justified and was legally unsustainable.
Accordingly, the impugned order to the extent of penalty was set aside, and the appeals were allowed.
FULL TEXT OF THE CESTAT CHENNAI ORDER
These Appeals arise out of the common impugned Order-in-Original No.266/2016-AIR dated 30.03.2016 passed by the Principal Commissioner of Customs, Chennai-VII. In the common Show Cause Notice dated 18.10.2013, it is inter a/ia alleged that the consignments of raw materials imported by M/s.Antoine & Becouerel Organic Chemical Co. which were used in the manufacture of pharmaceuticals, covered under the past 31 Bills of Entry were made without import license / Assistant Drug Clearance (ADC clearance), but, however, restricts to the confiscation in respect of the two live consignments covered under Bills of Entry dt. 02.04.2013 & 03.04.2013. The SCN thus proposes to confiscate the goods covered under the above 2 Bills of Entry within the meaning of Section 111 (d) of the Customs Act, 1962 read with provisions of Drugs and Cosmetics Act, 1940, apart from levy of penalty under Section 112 (a) ibid on all co-noticees. It appears that some of the co-noticees filed their reply which were considered during adjudication and vide impugned Order-in Original dt. 30.03.2016 the Principal Commissioner confirmed the proposals made in the SCN. It is ascertained during the course of hearing that none of the other co-noticees has filed any Appeal against the respective charges confirmed/penalties levied vide impugned order, other than the present Appellants.
2. Heard Shri G. Madan, Ld. Advocate for the Appellant and Shri Vineet Goyal, Id. Superintendent for the Respondent-Principal Commissioner, perused the documents placed on record and also the decisions relied in support during the course of arguments. After hearing both the sides, I find that the only issue to be decided is, ‘whether the levy of penalty under Section 112 (a) of the Customs Act, 1962 on these Appellants is proper and justified ?’
3. Advocate would contend, at the outset, that the only allegation in the SCN as well as the impugned order is the violation of CHALR, 2004 but no specific role has been attributed to bring the alleged guilt within the meaning of Section 112 of the Customs Act and hence, without admitting, even if the case is made out for violation of CHALR, the same is not sufficient to levy penalty under the Customs Act.
4. Ld. Per contra, Shri Vineet Goyal, Id. A.R. supported the findings of the Principal Commissioner in the impugned order.
5. I find from a perusal of the impugned order as well as the SCN that the Revenue has alleged that there was import of raw materials used for manufacture of pharmaceuticals which were made without import license / ADC clearance as per the provisions of Drugs and Cosmetics Act, 1940, which are all past consignments. Insofar as the live consignments are concerned, the reason given in the impugned order is that ‘attempt was made by them to clear the consignments by way of receiving all relevant import documents from the importer and filing Bs/E for the same. By the above mentioned act, Shri R. Souri Rajan has rendered himself liable for penal Action under Section 112 (a) of the Customs Act, 1962’. What emerges from the above finding is that the 1st Appellant has abetted one Souri Rajan and the cause was ‘attempt’ made by him. It is not clear as to the exact role of the present Appellants in the alleged ‘attempt’. Further, what is relevant act is an act of omission or commission or abetment in relation to any goods, which is not the case here. It is, however, clear that nothing is placed on record regarding past imports, like SCNs or orders, but the allegation is held to be sufficient to impose penalty in respect of live consignments, which are the matter of present dispute.
6. Further, even from a perusal of the impugned order, particularly paragraphs 54, 55 & 56, I find that some other persons who are the co-noticees actually actively participated in the clearance of both the past consignments as well as live consignments. In this regard, I find that this Bench in similar circumstances and in respect of the 1st Appellant, has vide Final Order Nos.40722-40723/2017 dated 19.05.2017 clearly held that a CHA cannot be penalized under the Customs Act, 1962 in the absence of any positive evidence on record to show mala fide intention on his part or to establish him as an abettor. Facts being more or less similar, I am of the view that the ratio in the above Final Order squarely applies to these Appeals as well.
7. In view of the above, I am of the view that the Revenue has not made out a clear case for levy of penalty under Section 112 (a) of the Customs Act, 1962 on the Appellants and hence, such levy is unsustainable, for which reason the impugned order which becomes liable to be set aside, stands set aside.
Resultantly, the Appeals are allowed.
(Order pronounced in open court on 21.04.2026)
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