Customs penalty cannot rest on regulatory omission alone without evidence of knowledge or active participation in smuggling.

Penalty under Section 114 of the Customs Act, 1962 was held unsustainable against a Customs Cargo Service Provider where the only allegation was non-compliance with Regulation 6(1)(k) of the Handling of Cargo in Customs Areas Regulations, 2009. In the absence of admissible evidence that the provider knew the goods were liable for confiscation, or actively participated in or colluded with the smuggling attempt, penalty could not rest merely on an alleged regulatory omission. The penalty was therefore set aside.

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Issues: Whether penalty under Section 114 of the Customs Act, 1962 was sustainable against the Customs Cargo Service Provider for alleged omission under Regulation 6(1)(k) of the Handling of Cargo in Customs Areas Regulations, 2009 in the absence of admissible evidence of knowledge or active participation in the smuggling attempt.

Analysis: The only substantive allegation against the appellant was non-compliance with the requirement of secure transport of export cargo under Regulation 6(1)(k) of the Handling of Cargo in Customs Areas Regulations, 2009. The record did not show any admissible evidence that the appellant knew the goods were liable for confiscation or that it actively participated in, or positively colluded with, the attempted smuggling. In the absence of such material, invocation of penalty under Section 114 of the Customs Act, 1962 could not be sustained merely on the basis of an alleged regulatory omission.

Conclusion: Penalty under Section 114 of the Customs Act, 1962 was not sustainable and was set aside.

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