Pre-deposit waiver for customs penalty followed where a CHA regulatory lapse was used as the basis for penal recovery.

A customs house agent's alleged failure to discharge obligations under Regulation 14 of the CHA Regulations, 1984 was treated as the basis for penalty under Section 114 of the Customs Act, even though no departmental action under the regulatory mechanism was shown. On that record, the applicants made out a strong prima facie case that the lapse, at best, called for action under the CHA Regulations rather than immediate penal recovery under the Customs Act. Relief under Section 129E was therefore justified, and the departmental action did not appear prima facie bona fide. The applicants were entitled to waiver of pre-deposit and stay of recovery of the penalty.

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Issues: Whether the applicants were entitled to waiver of pre-deposit and stay of recovery of the penalty imposed under Section 114 of the Customs Act, on the basis that the alleged lapse was, at best, a matter for action under the CHA Regulations, 1984.

Analysis: The impugned penalty was founded on the finding that the CHA had failed to discharge obligations under Regulation 14 of the CHA Regulations, 1984. No departmental action had been shown as having been taken against the CHA under the regulatory mechanism contemplated by the CHA Regulations, 1984. On the available record, the omission under the Regulations had been directly treated as the basis for penalty under Section 114 of the Customs Act. In these circumstances, the applicants established a strong prima facie case for relief under Section 129E of the Customs Act, and the departmental action did not appear prima facie bona fide.

Conclusion: The applicants were entitled to waiver of pre-deposit and stay of recovery of the penalty amount.

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