Penalty under customs law needs a specific statutory breach; circular breach alone is insufficient to sustain action.

A modification of the stay order was not maintainable because no mistake apparent on record was shown in the earlier finding that no specific statutory provision had been identified as contravened; an alleged breach of a circular did not cure that defect. Penalty under Section 117 of the Customs Act was unsustainable because the record did not establish removal of imported goods without written permission under Section 45(2)(b), nor any recorded violation of the Cargo Handling Regulations. In the absence of a clearly identified statutory breach, the penalty was set aside.

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Issues: (i) Whether the application for modification of the stay order disclosed any mistake apparent on record in the earlier finding that no specific statutory provision had been shown to have been contravened. (ii) Whether penalty under Section 117 of the Customs Act, 1962 was sustainable for the alleged subletting of space and alleged contravention of Section 45(2)(b) of the Customs Act, 1962, the CBEC circular and the Handling of Cargo in Customs Areas Regulations, 2009.

Issue (i): Whether the application for modification of the stay order disclosed any mistake apparent on record in the earlier finding that no specific statutory provision had been shown to have been contravened.

Analysis: The earlier order proceeded on the basis that the adjudicating authority had not identified the precise provision of the Act said to have been violated. The modification request only pointed to an alleged breach of a circular, but no apparent error was shown in the earlier conclusion that a circular breach, by itself, did not cure the absence of a stated statutory contravention.

Conclusion: The request for modification was rightly rejected and was not maintainable.

Issue (ii): Whether penalty under Section 117 of the Customs Act, 1962 was sustainable for the alleged subletting of space and alleged contravention of Section 45(2)(b) of the Customs Act, 1962, the CBEC circular and the Handling of Cargo in Customs Areas Regulations, 2009.

Analysis: Section 45(2)(b) restricts removal or other dealing with imported goods without the written permission of the proper officer. On the facts recorded, there was no finding that goods had been removed without such permission. The order also did not record a finding of violation of the Cargo Handling Regulations. In the absence of a clearly identified contravention of the Act, penalty under Section 117 could not be sustained merely on the basis of the alleged misuse of the customs facility or alleged breach of the circular.

Conclusion: The penalty was unsustainable and was set aside in favour of the assessee.

Final Conclusion: The adjudication did not establish a specific statutory breach justifying penal action, and the penalty imposed under the Customs Act could not stand.

Ratio Decidendi: Penalty under Section 117 of the Customs Act, 1962 requires proof of a specific contravention of the Act or Rules, and cannot be sustained on a mere alleged violation of a circular or on conduct not shown to fall within the statutory prohibition.

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