2026 (2) TMI 48 - AT - Customs

Contravention of hazardous cargo handling and storage obligations rejected; general penal invocation set aside, appeal allowed.

Contravention alleged for handling and storage of hazardous cargo under HCCAR regulations was rejected because the available evidence does not establish ... Contravention of handling and storage obligations for hazardous cargo - Findings of breach of regulation 5 and regulation 6(1)(i) and 6(1)(q) of HCCAR, 2009 - Invocation of penal provision u/s 117 - Principles of natural justice - duty to place party on notice before disagreeing with enquiry findings - Enquiry authority findings versus adjudicating authority's independent conclusion - HELD THAT:- The facts on record and the evidence available do not point to the appellant having breached any of their obligations to be responsible for the safety and security of the imported and export goods. In any case, as a ‘cargo service provider’, any loss attributable to the storage facility, insofar as goods is concerned would have to be borne by the appellant. Nor can we conclude that the appellant had not abided by the provisions of Customs Act, 1962 and rules framed thereto. The findings, based on speculation and unattributable conclusions, do not stand the test of law. The facts on record do not substantiate breach of regulation 6(1)(i) and6(1)(q) of the said Regulations. Invoking of section 117 of Customs Act, 1962, intended for penalization in the absence of express provisions, cannot be allowed in the light of penalties prescribed in the Regulations. Invoking of section 117 of Customs Act, 1962 is without foundation or any basis. Accordingly, the appeal is allowed. Issues: Whether the findings of breach of Regulation 5 and Regulation 6(1)(i)/(q) of the Handling of Cargo in Customs Areas Regulation (HCCAR), 2009 and the imposition of penalty under Section 117 of the Customs Act, 1962 are legally sustainable, including whether principles of natural justice were complied with.Analysis: The enquiry authority found contraventions of Regulation 6(1)(i) and 6(1)(q) read with Section 141(2) of the Customs Act, 1962, but the adjudicating authority reached additional adverse findings on breach of Regulation 5 without putting the appellant on notice of disagreement with the enquiry finding. The available evidence showed immediate remedial action and involvement of fire services; there was no allegation of deliberate conduct. The adverse findings were based on speculation and unattributable conclusions rather than on reasoned, substantiated evidence. Invoking Section 117 of the Customs Act, 1962 for penalization was examined against the statutory penalty framework in the Regulations and found to lack foundation where regulatory penalties applied. Procedural fairness required that the appellant be given notice before differing from the enquiry authority's conclusions; that requirement was not met.Conclusion: The findings of breach of Regulation 5 and the invocation of Section 117 are not sustainable; the impugned order is set aside and the appeal is allowed in favour of the appellant.