Customs penalty under Section 112(b) requires knowledge or abetment; mere licensing lapse by a customs house agent is insufficient.

Penalty under Section 112(b) of the Customs Act, 1962 requires proof that a person rendered goods liable to confiscation, abetted that conduct, or dealt with the goods knowing or having reason to believe they were liable to confiscation. The finding of knowledge that the goods were being diverted was not established, and the customs house agent's alleged lapses under Regulations 14(d), 14(e) and 14(f) of the Customs House Agents Licensing Regulations, 1984, by themselves, did not satisfy the statutory ingredients for penalty. Penalty was held not sustainable against the appellant, and the impugned order was set aside insofar as the appellant was concerned.

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Issues: Whether penalty under Section 112(b) of the Customs Act, 1962 was sustainable against a customs house agent for alleged lapse in carrying out his obligations, when the finding of knowledge that the goods were being diverted was not established.

Analysis: Liability under Section 112 arises only where a person renders goods liable to confiscation, abets such conduct, or deals with goods knowing or having reason to believe that they are liable to confiscation. The order under challenge itself recorded that the investigation failed to establish that the appellant knew the goods were being diverted to Delhi. The references to the customs house agent's duties under Regulations 14(d), 14(e) and 14(f) of the Customs House Agents Licensing Regulations, 1984 concerned alleged lack of diligence and non-compliance with licensing obligations, but such lapse by itself did not satisfy the statutory ingredients for penalty under Section 112(b).

Conclusion: Penalty under Section 112(b) of the Customs Act, 1962 was not sustainable against the appellant. The appeal was allowed and the impugned order was set aside insofar as the appellant was concerned.

Final Conclusion: The decision confined the penalty provisions to cases of actual abetment or knowledge of confiscability and held that a mere breach of customs house agent obligations, without proof of the necessary mental element, could not attract Section 112(b).

Ratio Decidendi: Penalty under Section 112(b) of the Customs Act, 1962 cannot be imposed unless the person has abetted the rendering of goods liable to confiscation or dealt with them knowing or having reason to believe that they were liable to confiscation.

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