Customs penalty liability turns on knowledge of duty-paid status and the extent of responsibility for imported consignments.

A Customs House Agent was held liable in penalty for permitting imported goods to be stored in its godown without payment of duty, because it was expected to know the applicable customs formalities and its claim of bona fide belief was unsupported by evidence; the penalty was upheld. The godown keeper's penalty was set aside because he acted under his employer's directions and could not reasonably be expected to verify the duty-paid status and details of every consignment; the material on record was insufficient to justify penalty against him.

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Issues: (i) whether the penalty imposed on the Customs House Agent for permitting storage of imported goods in its godown without payment of duty was sustainable; (ii) whether the penalty imposed on the godown keeper, who acted under the directions of his employer, was sustainable.

Issue (i): Whether the penalty imposed on the Customs House Agent for permitting storage of imported goods in its godown without payment of duty was sustainable.

Analysis: The appellant was a Customs House Agent and was expected to know the Customs formalities applicable to imported consignments. The volume of such consignments was not so large as to prevent verification of whether duty had been paid. The explanation of bona fide belief was not supported by evidence. On the facts, the goods were wrongly permitted to be stored in the godown, and the penalty was justified.

Conclusion: The penalty on the Customs House Agent was upheld and the appeal was dismissed.

Issue (ii): Whether the penalty imposed on the godown keeper, who acted under the directions of his employer, was sustainable.

Analysis: The godown keeper was only following the directions of his employer and could not reasonably be expected to verify the duty-paid nature and other details of every consignment. The material on record was insufficient to justify imposition of penalty on him.

Conclusion: The penalty on the godown keeper was set aside and the appeal was allowed.

Final Conclusion: The decision sustained the penalty against the Customs House Agent while granting relief to the godown keeper, resulting in partial success for the appellants overall.

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