Customs House Agent penalty under Section 114(iii) fails where authorisation and shipping bill verification were substantially complied with.

Penalty under Section 114(iii) of the Customs Act, 1962 was considered in the context of a Customs House Agent's alleged failure to obtain exporter authorisation and verify shipping bill particulars. The stated reasoning is that no specific lapse by the agent was proved, the goods had been examined by Customs before export, no independent defect in the shipping bills was established, and no prescribed authorisation proforma existed at the relevant time. The exporter's signature on the shipping bills was treated as sufficient compliance. On that basis, the penalty was described as unsustainable where there was substantial compliance and no proved active facilitation of the contravention.

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Issues: Whether penalty under Section 114(iii) of the Customs Act, 1962 was justified against the Customs House Agent for alleged failure to obtain exporter authorization and to verify the particulars in the shipping bills.

Analysis: The allegation rested on the premise that the appellant had facilitated misdeclaration and export of goods without proper authorization. The record, however, did not establish any specific lapse by the appellant. The goods had been examined by Customs officers before export, no independent fault in the shipping bill particulars was proved, and at the relevant time there was no prescribed proforma for exporter authorization. The exporter's signature on the shipping bills was treated as sufficient compliance. The reasoning was supported by the view that penalty under Section 114 of the Customs Act is not warranted where the allegation is essentially a failure in the discharge of CHA functions, particularly when the facts show substantial compliance and no proven active role in the fraud.

Conclusion: The penalty was not sustainable and was set aside in favour of the assessee.

Ratio Decidendi: A penalty under Section 114(iii) of the Customs Act, 1962 cannot be sustained against a Customs House Agent in the absence of proved misconduct or active facilitation of the contravention, especially where the authorization and verification requirements are substantially complied with and no specific lapse is established.

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