Prior knowledge of import misdeclaration is essential before Customs Broker penalties for aiding duty evasion can be sustained.

Penalties for aiding and abetting customs-duty evasion under Section 112(a)(ii) require evidence that the Customs Broker and its G-Card holder had prior knowledge of the importer's misdeclaration and materially assisted it. Processing import documents and filing Bills of Entry based on documents supplied by the importer, without corroborative evidence of knowledge of quantity misdeclaration or participation in duty evasion, does not establish aiding or abetting. On the stated analysis, the penalties were unsustainable and set aside.

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Issues: Whether penalties upon a Customs Broker and its G-Card holder for aiding and abetting duty evasion through misdeclaration of imported goods could be sustained without evidence of their prior knowledge of the misdeclaration.

Analysis: The Customs Broker and its G-Card holder processed import documents and filed Bills of Entry on the basis of documents supplied by the importer. The record contained no evidence that they had prior knowledge of the misdeclaration of quantity, and no corroborative material established that they aided or abetted the importer in evading customs duty.

Conclusion: Penalties under Section 112(a)(ii) of the Customs Act, 1962 were unsustainable and were set aside in favour of the assessee.

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