Customs broker penalty risk for knowingly facilitating clearance of unsafe imported goods under food safety law

Where a customs broker or CHA, as an independent legal entity, knowingly facilitates clearance of imported goods found unsafe and mis-branded under the Food Safety and Standards Act, penalty under Section 112A of the Customs Act can be attracted for failure to ensure customs compliance. The consignment had been tested by the FSSAI laboratory and treated as prohibited goods liable to confiscation, and the record indicated the CHA firm had knowledge of the violations. On that basis, the omission to impose penalty was found unsustainable and the penalty issue was remanded for fresh adjudication.

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Issues: Whether penalty under Section 112A of the Customs Act, 1962 was liable to be imposed on the CHA firm for facilitating clearance of imported dietary supplements found to be unsafe and mis-branded under the Food Safety and Standards Act, 2006.

Analysis: The imported consignment had been tested by the FSSAI laboratory and was found unsafe for human consumption and mis-branded under the Food Safety and Standards Act, 2006. On that basis, the goods were treated as prohibited goods and liable to confiscation under the Customs Act, 1962. The record also showed that the CHA firm, being an independent legal entity responsible for customs compliance, had knowledge of the statutory violations and failed to ensure compliance with the requirements governing clearance of the goods. In those circumstances, the omission to impose penalty on the CHA firm was found unsustainable and the issue required reconsideration by the adjudicating authority.

Conclusion: Penalty under Section 112A of the Customs Act, 1962 was held to be exigible against the CHA firm, and the matter was remanded for fresh adjudication on that issue.

Final Conclusion: The department's challenge succeeded to the extent that the non-imposition of penalty on the CHA firm was set aside for reconsideration, while the adjudicating authority was directed to decide the penalty issue afresh.

Ratio Decidendi: Where a customs broker or CHA, as an independent legal entity, knowingly facilitates clearance of goods that are liable to confiscation for violation of food safety requirements, penalty can be attracted for failure to ensure customs compliance.

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