Customs penalty requires proof of knowledge or conscious involvement; mere verification lapses cannot sustain liability.

Penalty under the Customs Act could not be sustained against a shipping-line agent that had not issued the bill of lading and was shown only as a pure agent, because no evidence established collusion, active participation, or any act causing the alleged misdeclaration. Penalty against the sub-agent also failed because the only basis was a lapse in verifying the identity of the person collecting delivery documents, and a mere procedural omission was insufficient without tangible material showing knowledge of, or conscious involvement in, the illegal import or misdeclaration. The penalties were set aside and the appeals were allowed.

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Issues: Whether penalty under the Customs Act was sustainable against the shipping-line agent and its sub-agent for alleged misdeclaration of goods and for not verifying the identity of the person receiving the delivery order.

Analysis: The penalty against the first appellant was founded on an allegation that it had issued the bill of lading with a wrong description of goods, but the record showed that it had not issued the bill of lading and had only acted as a pure agent of the actual shipping line. No evidence established collusion, active participation, or any act or omission by it that caused the alleged misdeclaration. The penalty against the second appellant was based mainly on the absence of identity proof of the person who collected the documents. Following the principle that penalty requires tangible material showing knowledge of the illegal import or conscious involvement, a mere procedural lapse in verification was held insufficient.

Conclusion: Penalty was not sustainable against either appellant.

Final Conclusion: The penalties were set aside and the appeals were allowed with consequential relief.

Ratio Decidendi: Penalty under the Customs Act cannot be imposed in the absence of evidence of knowledge, collusion, or conscious involvement in the illegal import or misdeclaration; a mere procedural lapse or failure in verification is insufficient.

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