2015 (2) TMI 956 - AT - Customs

Limitation of Penalties under Customs Act Regulations: Appeal Result

Central Warehousing Corporation Versus Commissioner of Customs (Export) Nhava Sheva

The appeal challenged penalties imposed under Regulation 12(8) and Section 117 of the Customs Act for contraventions of various Regulations. The judge ... Imposition of penalty under Regulation 12(8) of the Handling of Cargo in Customs Area Regulation, 2009 - contravention of Regulations 6(2), 6(1)(k) and 6(1)(q) read with Section 141 (2) of the Customs Act, 1962 - Held that:- Regulation 12(8) providing for penalty does not say that penalty is imposable on each of the contraventions. It merely says that if the Customs cargo services provider contravenes any of the provisions of the Regulations, he is liable to penalty to the extent of ₹ 50,000/-. If the intention of the legislature was to provide for imposition of penalty for each of the contravention, the legislature would have said so specifically. In the absence of any such specification in the provisions, the contention of the Revenue in this regard cannot be accepted and would amount to adding words which the legislature has not done. As per the principles of statutory interpretation, addition or deletion of words to the language employed by the legislature is not permissible. Therefore, imposition of penalty of more than ₹ 50,000/- is not permitted under the law. As regards the penalty imposed under Section 117, the said provision would apply only if there is no other penalty provide for violations of the provisions of the Handling of Cargo in Customs Area Regulations. Penalty is specified under Regulation 12(8). That being the position, the question of imposition of penalty under Section 117 would not arise at all. Therefore, the penalty imposed under Section 117 is clearly unsustainable in law. Maximum penalty that can be imposed for contravention of the Handling of Cargo in Customs Area Regulation is only ₹ 50,000/-. In the present case, the gravity of the offence committed is serious i.e. mis-use of the container for smuggling of red sanders and the facts of the case are not in dispute. In the facts and circumstances of the case, the maximum, penalty of ₹ 50,000/- is justifiable. Accordingly, I reduce the penalty imposed on the appellant from ₹ 1.5 lakhs to ₹ 50,000/- in terms of the provisions of the Handling of Cargo in Customs Area Regulations, 2009 and set aside the penalty of ₹ 1 lakh imposed under Section 117 of the Customs Act, 1962. - Decided partly in favour of assessee. Issues:Penalty imposed under Regulation 12(8) of the Handling of Cargo in Customs Area Regulation, 2009 and under Section 117 of the Customs Act for contravention of Regulations 6(2), 6(1)(k), and 6(1)(q) of the said Regulations.Analysis:The appeal challenged penalties imposed under Regulation 12(8) and Section 117 of the Customs Act for contraventions of various Regulations. The appellant was accused of availing services without prior permission, failing to ensure secure transit of goods, and misusing containers for smuggling. The appellant argued that the penalties were unsustainable, as Regulation 12(8) only allowed for a maximum penalty of Rs. 50,000 for contraventions, not for each violation. The appellant also contended that since penalties were specified under Regulation 12(8), Section 117 penalties were not applicable. The Revenue argued for upholding the penalties due to serious offenses committed.The judge analyzed the provisions and held that Regulation 12(8) did not permit penalties for each contravention, limiting the penalty to Rs. 50,000. The judge emphasized that statutory interpretation principles did not allow adding words not specified by the legislature. Therefore, penalties exceeding Rs. 50,000 were not permissible. Regarding penalties under Section 117, the judge ruled that since penalties were specified under Regulation 12(8), penalties under Section 117 were not applicable. The judge found the penalty of Rs. 1.5 lakhs unsustainable and reduced it to Rs. 50,000, considering the seriousness of the offense. The penalty of Rs. 1 lakh under Section 117 was set aside as it was not legally justified.In conclusion, the judge partially allowed the appeal, reducing the penalty under Regulation 12(8) to Rs. 50,000 and setting aside the penalty under Section 117. The judgment clarified the maximum penalty applicable and the inapplicability of additional penalties under Section 117 when penalties were specified under specific regulations.