Abetment penalty on customs broker set aside where no concrete evidence showed connivance in EPCG misuse or diversion.

Penalty on a customs broker and its director under Section 112(b)(ii) of the Customs Act, 1962 was found unsustainable because the record did not show concrete evidence of connivance, active assistance, or abetment in the importer's alleged misuse of EPCG authorisation or diversion of duty-free capital goods. The broker's role was limited to facilitating clearance of import consignments at the port, and it was not responsible for post-clearance installation or end-use monitoring. In the absence of material showing mala fides or active participation, the statutory requirements for penalty were not met, and the penalty was set aside.

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Issues: Whether penalty imposed on the customs broker and its director under Section 112(b)(ii) of the Customs Act, 1962 for alleged abetment in over-utilisation of EPCG licence value and diversion of duty-free imported capital goods was sustainable.

Analysis: The record did not contain concrete evidence to show that the appellants had assisted, connived with, or abetted the importer in diversion of the goods or in misuse of the EPCG authorisation. The role of a customs broker was confined to facilitating clearance of import consignments at the port, and the broker could not be fastened with responsibility for monitoring post-clearance installation or end-use of the goods. The authority responsible for debit and control of EPCG licence value was the customs administration, and in the absence of material showing mala fides or active participation by the appellants, the statutory requirement for imposing penalty was not satisfied.

Conclusion: The penalty was not sustainable and was set aside; the appeals were allowed.

Ratio Decidendi: Penalty for abetment under Section 112(b)(ii) of the Customs Act, 1962 cannot be imposed on a customs broker without concrete evidence of connivance, active assistance, or mala fide participation in the alleged misuse or diversion.

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