2025 (6) TMI 2047 - AT - Customs

Levy of penalty u/s 114 of CA 1962 - export consignment of the appellant was never held liable for confiscation under Section 113 of the Customs Act - appellant was involved in mis-declaration and overvaluation of the goods - HELD THAT - A penalty of Rs. 5, 94, 096/- has been imposed on the appellant under Section 114 of the Customs Act 1962 without confiscation of the export consignment of the appellant. In these circumstances we find that penalty under Section 114 of the Act is not imposable. Further the fact is noted that there is no allegation against the appellant that the appellant was engaged in export of diamonds by mis-declaring or overvaluing the same. The whole investigation is based on the allegation that the importers namely M/s. Chirayu Impex Private Limited and M/s. Amrapali Exim Private Limited have imported cut and polished diamonds by mis-declaring the same as broken diamonds which had been overvalued and thus there is no involvement of the appellant for the act of the above said importers. The Revenue has failed to bring in any evidence on record against the appellant to impose penalty u/s 114 of the Customs Act and therefore no penalty is imposable on the appellant - the penalty of Rs. 5, 94, 096/- imposed on the appellant u/s 114 of the Customs Act is dropped - Appeal allowed.

Summary

ISSUES:

Whether penalty under Section 114 of the Customs Act, 1962 can be imposed on an exporter without confiscation of the export consignment under Section 113 of the Act.Whether mere involvement of an exporter in exporting goods, without evidence of mis-declaration or overvaluation, attracts penalty under Section 114 of the Customs Act.Whether imposition of penalty under Section 114 of the Customs Act is valid without specifying the exact provision under Section 114 invoked.Whether mens rea (guilty mind) is a necessary element for imposing penalty under Section 114 of the Customs Act.

RULINGS / HOLDINGS:

Penalty under Section 114 of the Customs Act is not imposable without confiscation of the export consignment under Section 113 of the Act.There was no allegation or evidence that the exporter mis-declared or overvalued the goods; hence, no penalty under Section 114 could be imposed on the exporter for acts of the importers.Failure to specify the particular provision of Section 114 under which penalty is imposed renders the penalty invalid.Absence of mens rea on the part of the exporter negates the imposition of penalty under Section 114 of the Customs Act.

RATIONALE:

The Court applied the statutory provisions of the Customs Act, 1962, particularly Sections 113 and 114, emphasizing that penalty under Section 114 is contingent upon confiscation under Section 113.The Court relied on the principle that penalty provisions require clear evidence of wrongdoing by the person penalized, including mis-declaration or overvaluation, which was absent in this case regarding the exporter.The decision underscores the necessity for the adjudicating authority to specify the exact clause under Section 114 invoked for penalty imposition to ensure legal clarity and fairness.The Court affirmed the requirement of mens rea as a factor in imposing penalty under Section 114, thereby protecting innocent parties from unwarranted penalties.