Cargo security and secure transit obligations justified a reduced regulatory penalty, but Section 117 penalty failed without a specific Customs Act breach.

Cargo service providers under the Handling of Cargo in Customs Areas Regulations, 2009 must maintain access control, protect export cargo in custody, and ensure secure transit from the customs area to the port. On the facts, unauthorized access was accepted due to lack of corroboration for the access register, while unsecured movement of cargo, substitution during transit, and incomplete Form-13 particulars established regulatory breaches. The regulatory penalty was therefore sustained but reduced. A separate penalty under Section 117 of the Customs Act, 1962 could not be sustained because no specific violation of that Act had been identified, so that penalty was set aside.

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Issues: (i) Whether the appellant contravened the Handling of Cargo in Customs Areas Regulations, 2009 by permitting unauthorized access, failing to ensure safety and security of export cargo, failing to ensure secure transit of goods, and filing Form-13 improperly; (ii) Whether penalty under Section 117 of the Customs Act, 1962 could be sustained in the absence of a specific violation of that Act.

Issue (i): Whether the appellant contravened the Handling of Cargo in Customs Areas Regulations, 2009 by permitting unauthorized access, failing to ensure safety and security of export cargo, failing to ensure secure transit of goods, and filing Form-13 improperly.

Analysis: The regulations required the customs cargo service provider to maintain security and access control, ensure safety and security of goods in custody, and secure transit of goods from the customs area to the port. The record did not support the appellant's claim regarding the access register, and the absence of corroboration justified the finding on unauthorized access. The objection based on non-destuffing did not establish breach of the safety-and-security obligation. However, the facts showed that the cargo was allowed to move in an unsecured manner and was substituted during transit, and the Form-13 particulars were incomplete and misleading.

Conclusion: The contraventions were established on three counts, and the penalty under the Regulations was reduced from Rs. 2 lakhs to Rs. 1.5 lakhs.

Issue (ii): Whether penalty under Section 117 of the Customs Act, 1962 could be sustained in the absence of a specific violation of that Act.

Analysis: No specific breach of the Customs Act, 1962 had been identified by the lower authorities to support invocation of Section 117. In the absence of an identified statutory violation under that Act, the penalty could not be sustained.

Conclusion: The penalty under Section 117 of the Customs Act, 1962 was set aside.

Final Conclusion: The appeal succeeded in part: the regulatory penalty was sustained only to a reduced extent, while the penalty under Section 117 was annulled.

Ratio Decidendi: Penalty cannot be sustained under Section 117 of the Customs Act, 1962 unless a specific violation of that Act is established; where the evidence shows breach of cargo security and secure transit obligations, regulatory penalty may be upheld though reduced on the facts.

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