Customs House Agent penalty under export misdeclaration provisions set aside for lack of proven lapse or positive role.

Penalty on a Customs House Agent under Section 114(iii) of the Customs Act, 1962 was held unsustainable where the record did not prove any positive lapse or role in the export misdeclaration. The allegation was failure to obtain separate authorisation and to verify Shipping Bill particulars, but the exporter's signature on the Shipping Bills was treated as sufficient compliance in the absence of any prescribed separate proforma at the relevant time, and the goods had been examined and cleared by Customs officers. On those facts, no justification existed to impose penalty, and the levy was set aside.

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Issues: Whether the penalty imposed on the Customs House Agent under Section 114(iii) of the Customs Act, 1962 was justified.

Analysis: The allegation against the Customs House Agent was that he had failed to obtain the exporter's authorization and had not exercised due diligence in verifying the particulars declared in the Shipping Bills. The record, however, did not establish any proven lapse on the part of the Customs House Agent. The goods were examined by the Customs officers and allowed for export, and the exporter's signature on the Shipping Bills was treated as sufficient compliance for authorization in the absence of any prescribed separate proforma at the relevant time. The reasoning adopted also accords with the view that a penalty under Section 114 of the Customs Act, 1962 is not warranted where the case concerns, at best, alleged failure in discharge of CHA functions and no positive role in the export misdeclaration is proved.

Conclusion: The penalty under Section 114(iii) of the Customs Act, 1962 was not sustainable and was set aside in favour of the assessee.

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