Prohibited goods penalty limits under customs law: separate duty-evasion penalty unsustainable, death abates personal liability, and penalties may be reduced.

Where imported goods are treated as prohibited goods under the Customs Act, penalty must be confined to the prohibited-goods limb of Section 112, and a separate duty-evasion penalty on the same footing is not sustainable. A personal penalty cannot continue against an appellant after death and abates on that event. For the remaining individuals, involvement in the import decisions supported liability, but the passage of time justified reduction of the personal penalties to a lesser quantum. The core finding of import contravention remained undisturbed, while duplicated penalty exposure was removed and the remaining penalties were moderated.

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Issues: (i) whether a separate penalty for duty evasion could be sustained when the imported goods had been treated as prohibited goods and penalty was already invoked under Section 112(i); (ii) whether the personal penalty on an appellant stood abated on his death; and (iii) whether the personal penalties on the remaining individual appellants required reduction.

Issue (i): whether a separate penalty for duty evasion could be sustained when the imported goods had been treated as prohibited goods and penalty was already invoked under Section 112(i).

Analysis: Section 112 of the Customs Act, 1962 prescribes distinct penalty limits for prohibited goods and for dutiable goods other than prohibited goods. Once the imports were treated as having been made in contravention of import-control restrictions and thus as prohibited goods, the case fell within clause (i). In that situation, a further separate penalty referable to duty evasion was not justified, especially since the show-cause notices themselves proceeded on the footing of prohibited goods and invoked clause (i).

Conclusion: The separate penalty for duty evasion was set aside in favour of the assessee.

Issue (ii): whether the personal penalty on an appellant stood abated on his death.

Analysis: The personal penalty proceeded against the individual in relation to the import-related contravention. On the admitted fact of death, the penalty could not be enforced further against him.

Conclusion: The penalty against the deceased appellant abated.

Issue (iii): whether the personal penalties on the remaining individual appellants required reduction.

Analysis: The record showed involvement in the import decisions, so liability was not eliminated. However, the long lapse of time was taken into account for determining the proper quantum of penalty, and a lesser penalty was considered sufficient to meet the ends of justice.

Conclusion: The penalties on the remaining individual appellants were reduced.

Final Conclusion: The decision granted partial relief by eliminating the duplicated duty-linked penalty, recognising abatement on death, and reducing the remaining personal penalties while leaving the core finding of contravention otherwise undisturbed.

Ratio Decidendi: Where imports are held to be prohibited goods, penalty under Section 112 must be confined to the prohibited-goods limb and a separate duty-evasion penalty is not sustainable on the same footing.

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