Knowing facilitation of diversion of duty-free imports attracts customs penalty when authorisation conditions are breached.

A customs broker who knowingly facilitates diversion and transportation of duty-free imported goods to premises other than those permitted under advance authorisation conditions attracts penalty under Section 112(b) of the Customs Act, 1962. The duty-free concession was subject to compliance with Notification No. 18/2015-Customs, the Foreign Trade Policy 2015-2020 and the Handbook of Procedures, which required the goods to be used and processed only in authorised units. Because the record showed that the broker arranged transport, received payment directly, knew the permitted factory locations, and nevertheless enabled delivery to other premises, the goods were treated as liable to confiscation and the broker's knowing participation justified penalty.

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Issues: Whether penalty under Section 112(b) of the Customs Act, 1962 was sustainable against the customs broker for facilitating diversion and transportation of duty-free imported goods to places other than those permitted under the advance authorisation conditions.

Analysis: The duty-free import concession was subject to the conditions in Notification No. 18/2015-Customs dated 01.04.2015 read with the Foreign Trade Policy, 2015-2020 and the Handbook of Procedures 2015-2020, requiring the goods to be utilised and processed only in the authorised units. The record showed that the appellant arranged transportation of the consignments, received payment directly, knew the permitted factory locations, and nevertheless facilitated delivery to other premises on the importer's instructions. The goods were found to have been diverted in breach of the authorisation conditions, making them liable to confiscation, and the appellant's knowing participation established the element required for penalty.

Conclusion: Penalty under Section 112(b) of the Customs Act, 1962 was rightly imposed and was upheld against the appellant.

Ratio Decidendi: A person who knowingly facilitates transportation or diversion of imported goods in violation of authorisation conditions, thereby dealing with goods liable to confiscation, attracts penalty under Section 112(b) of the Customs Act, 1962.

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