Customs penalty needs culpable knowledge, not mere negligence, where agent lacked awareness of fraudulent export activity.

Penalty under Section 114(i) and 114(iii) of the Customs Act was found unsustainable against a Customs House Agent where the employee who processed the shipping documents had no knowledge of the fraudulent export. The goods had already been stuffed, sealed and cleared under customs supervision, and the later replacement of goods could not be attributed to the agent on those facts. The text states that these provisions require more than mere negligence and call for culpable negligence or some degree of knowledge of the contravention. In the absence of participation or knowledge, the penalty order was treated as improper.

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Issues: Whether penalty under Section 114(i) and 114(iii) of the Customs Act, 1962 was sustainable against the Customs House Agent for misdeclaration and fraudulent export when the employee who processed the shipping documents was found to have no knowledge of the fraud.

Analysis: The penalty could not be sustained because the employee of the Customs House Agent who processed and submitted the shipping bill was found to be unaware of the fraudulent export and no penalty was imposed on him. The goods had already been stuffed, sealed and cleared under customs supervision, and the later replacement of goods could not, on these facts, be attributed to the Customs House Agent. Penalty under the cited provisions required more than mere negligence and demanded culpable negligence or some degree of knowledge of the contravention. In the absence of such knowledge or participation, and in view of the bona fide nature of the agent's conduct, the order imposing penalty was held to be improper.

Conclusion: The penalty on the Customs House Agent was set aside and the appeal was allowed.

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