Customs broker diligence and lack of proven abetment led to steep penalty reduction in a red sanders export case.

Penalty on a customs broker's employee for attempted export of red sanders concealed in granite consignments was found excessive because the record did not prove abetment or knowledge of the prohibited goods. The Tribunal noted, however, that the employee was still expected to exercise due diligence, including verifying exporters' antecedents and complying with KYC requirements, and that a lapse in diligence had occurred. On that basis, the penalty under Section 114 of the Customs Act, 1962 was reduced from Rs. 10,00,000 to Rs. 10,000.

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Issues: Whether penalty imposed on the customs broker's employee under Section 114 of the Customs Act, 1962 for attempted export of red sanders concealed in granite consignments was sustainable, and if so, to what extent.

Analysis: The appeal arose from an attempted smuggling of red sanders logs concealed in export consignments declared as granite slabs. The record showed that the appellant had not been proved to have abetted the export or to have been aware of the prohibited nature of the goods. At the same time, the appellant, as an employee of the customs broker, was expected to exercise due diligence and verify the antecedents of the exporters and comply with KYC requirements. The Tribunal accepted that some lapse in diligence existed, but found no evidence justifying the heavy penalty originally imposed.

Conclusion: The penalty under Section 114 of the Customs Act, 1962 was held not sustainable to the extent of Rs. 10,00,000/- and was reduced to Rs. 10,000/-.

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