PENALTIES UNDER CUSTOMS ACT, 1962

[Mr. M. GOVINDARAJAN]

The Customs Act, 1962 (‘Act’ for short) provides for penalties.  Chapter XIV of the Act provides for imposition of penalties.  The following sections dealt with imposition of penalties-

• Section 112 – Penalty for improper importation of goods etc.,
• Section 114 – Penalty for attempt to export goods improperly etc.,
• Section 114A – Penalty for short levy or non levy of duty in certain cases;
• Section 114AA – Penalty for use of false and incorrect material;
• Section 116 – Penalty for non accounting for goods;
• Section 117 – Penalty for contravention etc., not expressly mentioned;

Penalty for improper importation of goods

Section 111 provides for confiscation of improperly imported goods etc., under various situations.  Section 112 provides for the penalty for improper import of goods.

Section 112 imposes penalty on any person in relation to any goods, in respect of the following:

• Doing an act which would render such goods liable for confiscation under Section 111;
• Omits to do any act which would render such goods liable for confiscation under Section 111;
• Abets the doing or omission to do such act;
• acquiring possession of or is in any way concerned in carrying, removing, depositing, harboring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111.

The term ‘goods’ referred to in this section is of three categories – one is prohibited goods; the second is the goods other than the prohibited goods and the third is the baggage.

The details of penalties imposed under this Section are as follows:

(i) in case of goods for which any prohibition is in force under the provisions of this Act or any other law for the time being in force – penalty not exceeding the value of the goods or ₹ 5000/- whichever is the greater;

(ii) in case of dutiable goods other than prohibited goods -

where such duty as determined under after giving the reasonable opportunity to the concerned person under Section 28(8) and the interest payable thereon under section 28AA is paid within 30 days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be 25% of the penalty so determined.

 (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or ₹ 5000/-, whichever is the greater;

(iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or ₹ 5000/-, whichever is the highest;

(v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or ₹ 5000/-, whichever is the highest. 

Penalty for attempt to goods improperly etc.,

Section 113 provides for confiscation of goods attempted to be improperly exported etc.,   Section 114 provides for penalty for confiscation of goods under Section 113. Section 114 imposes penalty on any person in relation to any goods, in respect of the following:

• Doing an act which would render such goods liable for confiscation under Section 113;
• Omits to do any act which would render such goods liable for confiscation under Section 113;
• Abets the doing or omission to do such act;

The term ‘goods’ referred to in this section is of three categories – one is prohibited goods; the second is the dutiable goods other than the prohibited goods and the third other goods.

The details of penalties imposed under this Section are as follows:

• in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding 3 times the value of the goods as declared by the exporter or the value as determined under this Act, whichever is the greater;
• in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding 10% of the duty sought to be evaded or ₹ 5000/-, whichever is higher.

where such duty as determined after giving reasonable opportunity to the concerned person under section 28(8) and the interest payable thereon under section 28AA is paid within 30 days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be 25% of the penalty so determined;

• in the case of any other goods, to a penalty not exceeding the value of the goods, as declared by the exporter or the value as determined under this Act, whichever is the greater.

Penalty for short levy or non levy of duty in certain cases

Section 114A provides that where the duty-

• has not been levied or has been short-levied
• he interest has not been charged or paid or hasbeen part paid; or
• the duty or interest has been erroneously refunded by reason of-
  • collusion; or
  • any willful mis-statement; or
  • suppression of facts,

the person who is liable to pay the duty or interest, as the case may be, as determined under section 28(8) shall also be liable to pay a penalty equal to the duty or interest so determined.

The first proviso to this section provides that where such duty or interest, as the case may be, as determined under  section 28(8), and the interest payable thereon under section 28AA, is paid within 30 days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be 25% of the duty or interest, as the case may be.

The second proviso to this section provides that the benefit of reduced penalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of 30 days referred to in that proviso.

The third proviso to this section provides that where the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purposes of this section, the duty or interest as reduced or increased, as the case may be, shall be taken into account.

The fourth proviso to this section provides that in case where the duty or interest determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available if the amount of the duty or the interest so increased, along with the interest payable thereon under section 28AA, and 25% of the consequential increase in penalty have also been paid within thirty days of the communication of the order by which such increase in the duty or interest takes effect.

Where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114.

Penalty for use of false and incorrect material

Section 114AA provides that if a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding 5 times the value of goods.

Penalty for non accounting for goods

Section 116 of the Act provides that if any goods loaded in a conveyance for importation into India, or any goods transshipped under the provisions of this Act or coastal goods carried in a conveyance, are not unloaded at their place of destination in India, or if the quantity unloaded is short of the quantity to be unloaded at that destination, and if the failure to unload or the deficiency is not accounted for to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs, the person-in-charge of the conveyance shall be liable, -

• in the case of goods loaded in a conveyance for importation into India or goods transshipped under the provisions of this Act, to a penalty not exceeding twice the amount of duty that would have been chargeable on the goods not unloaded or the deficient goods, as the case may be, had such goods been imported;
• in the case of coastal goods, to a penalty not exceeding twice the amount of export duty that would have been chargeable on the goods not unloaded or the deficient goods, as the case may be, had such goods been exported.

Penalty for contravention etc., not expressly mentioned

Section 117 of the Act provides that any person who contravenes any provision of this Act or abets any such contravention or who fails to comply with any provision of this Act with which it was his duty to comply, where no express penalty is elsewhere provided for such contravention or failure, shall be liable to a penalty not exceeding Rs.1 lakh.