Customs Tribunal waives penalty due to lack of evidence of intent, jurisdictional issues raised

The Tribunal allowed the appeal, waiving the penalty imposed under Section 112(a) of the Customs Act, 1962, due to the lack of evidence of mens rea and jurisdictional issues raised by the appellant. The penalty was imposed for negligence in issuing incorrect Pre-Shipment Inspection Certificates, but the Tribunal found no evidence of intention to violate Customs law. Therefore, the penalty under Section 112(a) was deemed unsustainable, and the appeal was allowed with consequential relief of waiver of penalty.

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Issues Involved:
1. Liability for penalty under Section 112 of the Customs Act, 1962.
2. Jurisdiction of the Customs Act, 1962 for acts committed outside India.
3. Requirement of mens rea for imposing penalties under Section 112(a) of the Customs Act, 1962.

Summary of Judgment:

1. Liability for penalty under Section 112 of the Customs Act, 1962:
The appellant, a Pre-Shipment Inspection Agency, was penalized under Section 112(a) of the Customs Act, 1962, for negligence in issuing incorrect Pre-Shipment Inspection Certificates, which led to the import of consignments containing bomb shells. The lower authorities dropped the penalty under Section 114AA but upheld the penalty under Section 112(a) to the extent of Rs. 10 Lakhs. The Tribunal noted that the penalty was imposed for lack of diligence or negligence by the appellant's employee, Mr. Bob Rushton, who inspected the cargo in the UK.

2. Jurisdiction of the Customs Act, 1962 for acts committed outside India:
The appellant argued that the act of omission occurred outside India, and the jurisdiction of the Customs Act, 1962, was extended to offenses committed outside India only by the Finance Act, 2018, effective from 01.04.2018. Since the offense occurred in 2011, the Show Cause Notice was without jurisdiction. The Tribunal acknowledged that the inspection and issuance of certificates took place outside India and noted that the Customs Act, 1962, did not extend to acts committed outside India during the relevant period.

3. Requirement of mens rea for imposing penalties under Section 112(a) of the Customs Act, 1962:
The Tribunal referenced several decisions where penalties under Section 112(a) required proof of intention to violate Customs law. It was held that lack of due diligence or negligence alone could not bring in penal consequences under Section 112(a) unless there was an intention to violate Customs law. The Tribunal emphasized that the concept of vicarious liability in penal proceedings is not completely unknown in Customs Act proceedings but requires mens rea to be established. The Tribunal found no evidence of knowledge or intention on the part of the appellant to issue incorrect certificates and concluded that the penalty under Section 112(a) was not sustainable.

Conclusion:
The Tribunal allowed the appeal, waiving the penalty imposed under Section 112(a) of the Customs Act, 1962, due to the lack of evidence of mens rea and the jurisdictional issues raised by the appellant. The appeal was allowed with consequential relief of waiver of penalty.

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