Penalty on clearing and forwarding agent unsustainable where duty demand against principal was dropped and invoice particulars were in order

Penalty on a clearing and forwarding agent was held unsustainable where the duty demand against the principal assessee had been dropped. The appellate tribunal accepted that the agent acted only in a consigning and forwarding capacity and that the invoices contained the required particulars. It treated the alleged Rule 57GG irregularity as a lapse not justifying penal action in the circumstances. On that basis, the penalty was set aside and the Revenue's challenge failed.

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Issues: Whether penalty on the C & F agent was sustainable when the duty demand against the main assessee had been dropped and the alleged irregularity under Rule 57GG was treated as a lapse.

Analysis: The Commissioner (Appeals) found that the C & F agent acted only as consigning and forwarding agent and that the invoices contained the required particulars. The appellate tribunal accepted the view that, in the absence of a confirmed duty demand against the principal assessee, penalty could not be sustained against the agent. The tribunal also treated the irregularity as not warranting penalty in the circumstances of the case.

Conclusion: The penalty on the C & F agent was not sustainable and the Revenue appeal failed.

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