Customs penalty under Section 112(a)(i) fails without a finding that conduct made goods liable to confiscation.

Penalty under Section 112(a)(i) of the Customs Act, 1962 cannot be sustained unless the adjudication records a specific finding that the noticee's act, omission or abetment rendered the goods liable to confiscation under Section 111. A mere allegation of breach of Regulation 10 of the Customs Brokers Licensing Regulations, 2018 is insufficient where no such confiscation-linked finding is made, particularly when prior proceedings had found no mens rea, active involvement, knowledge or connivance. On that basis, the penalty was held unsustainable and the appeal was allowed.

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Issues: Whether penalty under Section 112(a)(i) of the Customs Act, 1962 was sustainable in the absence of a recorded finding that the appellant's act or omission rendered the goods liable to confiscation under Section 111 of the Customs Act, 1962, when the alleged default was only contravention of Regulation 10 of the Customs Brokers Licensing Regulations, 2018.

Analysis: The show cause notice alleged only breach of Regulation 10 of the Customs Brokers Licensing Regulations, 2018. The prior proceedings on the broker's licence had already recorded absence of mens rea, active involvement, knowledge, or connivance. The impugned order nevertheless sustained penalty under Section 112(a)(i) without recording any finding that the appellant committed an act, omission, or abetment attracting confiscation under Section 111. A penalty under Section 112(a)(i) can be imposed only where the goods are rendered liable to confiscation under Section 111, and a mere allegation of breach of the Customs Brokers Licensing Regulations, without such a finding, is insufficient.

Conclusion: The penalty under Section 112(a)(i) of the Customs Act, 1962 was held unsustainable and the appeal was allowed in favour of the appellant.

Ratio Decidendi: Penalty under Section 112(a)(i) of the Customs Act, 1962 cannot be sustained unless the adjudication records a specific finding that the noticee's act, omission, or abetment rendered the goods liable to confiscation under Section 111 of the Customs Act, 1962.

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