Strict proof for customs and excise penalty bars liability for a broker absent knowledge of fake licences or confiscable goods.

Penalty under customs and excise law requires strict proof of the statutory ingredients, including knowing involvement in prohibited conduct. A licence broker who merely facilitated purchase and sale of advance licences and AROs could not be penalised under Section 112(b) of the Customs Act, 1962 or Rule 209A/Rule 26 of the Central Excise Rules unless there was clear evidence that he knew the licences were fake or that he knowingly dealt with excisable goods liable to confiscation. Suspicion from surrounding circumstances was insufficient. On the material recorded, the Tribunal found no clinching proof of such knowledge or direct participation.

---

---

Issues: Whether penalty under Section 112(b) of the Customs Act, 1962 and Rule 209A of the Central Excise Rules, 1944 corresponding to Rule 26 of the Central Excise Rules, 2002 could be sustained against a licence broker who only facilitated purchase and sale of advance licences and AROs, without proof of knowledge that the licences were fake or that he dealt with the goods.

Analysis: The Tribunal found no direct clinching evidence showing awareness on the part of the appellant that the licences were fake, forged or fictitious. The material on record showed, at most, suspicion arising from surrounding circumstances, but not proof on the required standard that the appellant knew of the fraud. It was also found that the appellant had acted only as an intermediary in the purchase and sale of advance licences and AROs, and there was no evidence that he dealt with excisable goods in any manner. Applying strict interpretation of penal provisions, the Tribunal held that penalty under the cited provisions could be imposed only where the person concerned knowingly dealt with goods liable to confiscation or otherwise satisfied the statutory ingredients of penal liability.

Conclusion: The appellant was not liable to penalty under the cited provisions.

Ratio Decidendi: Penalty provisions of customs and excise law require strict construction, and liability cannot be fastened on a person who merely intermediates documents unless the person is proved to have knowingly dealt with confiscable goods or knowingly participated in the prohibited conduct.

---