Court holds that mere filing of shipping bills and arranging containers does not prove abetment without material showing knowledge, collusion or conscious involvement
The Madras High Court has set aside a Rs.20 lakh penalty imposed on a Customs Broker in a case involving the attempted export of prohibited bull/ox meat falsely declared as buffalo meat. The Court ruled that the Customs authorities had failed to produce any material showing that the broker had knowledge of the true nature of the goods or had consciously aided or abetted the exporter.
Justice Hemant Chandangoudar delivered the order in a writ petition filed by M/s. Newport Shipping and Logistics, which challenged both the original adjudication order and the appellate order confirming the penalty under Section 114 of the Customs Act, 1962.
According to the Customs Department, the exporter had declared the consignment as buffalo meat, but on inspection the goods were found to be bull/ox meat, which was prohibited and liable for absolute confiscation under Sections 113(d) and 113(i) of the Act. A show cause notice was issued to both the exporter and the Customs Broker, alleging that the broker had aided and abetted the attempted illegal export.
The authorities relied on the fact that the broker had filed shipping bills, processed documents, booked containers, and handed over container-related papers to the transporter. They also faulted the broker for not verifying the source of the meat or questioning the movement of the container from Chennai to Hyderabad.
However, the High Court held that these circumstances, by themselves, were insufficient to establish abetment. The Court observed that there was no material to show that the Customs Broker knew the actual nature of the goods or had colluded with the exporter. Mere processing of export documents furnished by the exporter, the Court said, could not automatically amount to conscious involvement in the illegal attempt.
The Court further noted that while a Customs Broker is expected to exercise due diligence, penalty under Section 114 can be sustained only when there is evidence of knowing participation or collusion. In the present case, the finding of abetment was based essentially on an alleged failure to verify the source of procurement of the meat, which was not enough to justify punishment.
On the issue of maintainability, the respondents argued that the petitioner should have pursued the statutory appeal before the Customs, Excise and Service Tax Appellate Tribunal under Section 129A of the Customs Act. The Court rejected this objection, stating that the existence of an alternative remedy does not bar writ jurisdiction in an appropriate case, especially where the impugned finding is unsupported by material evidence.
Allowing the writ petition, the Court quashed the original and appellate orders insofar as they related to the Customs Broker. The connected miscellaneous petitions were also closed, with no order as to costs.
Bottom Line :
Customs - Penalty on Customs Broker under Section 114 of Customs Act cannot be sustained in absence of material showing knowledge, conscious involvement or collusion in attempted export of prohibited goods - Mere filing of shipping bills, arranging containers and processing documents furnished by exporter does not by itself amount to abetment - Existence of alternative remedy under Section 129A does not bar writ jurisdiction in appropriate case.
Statutory provision(s): Section 114, Section 113(d), Section 113(i), Section 124, Section 128(1), Section 129A of the Customs Act, 1962, Article 226 of the Constitution of India, 1950
