Legal principle

A customs broker who requests first check before assessment demonstrates bona fide and diligence, and while Section 112(a) penalty may be sustained for participation in undervaluation, its quantum must be proportionate to the duty liability and any penalty already paid under CBLR Regulation 18.

Court decision

The Tribunal upheld the broker's liability to penalty under Section 112(a) but held the Rs.15,00,000 penalty exorbitant and reduced it to Rs.1,00,000; the appeal was partially allowed in favour of the appellant only to that extent.

Facts

M/s. 6th Gear Autohub Pvt. Ltd., Bangalore imported seven MB651 engines declaring a value of Rs.3,49,447.13 through the appellant customs broker, M/s. G. Narayan & Co., Mangaluru. The department doubted the declared value, issued a notice for enhancement (which was accepted), and on adjudication redetermined the value at Rs.63,60,316.714, confirming duty of Rs.31,24,188 plus penalties on the importer and the broker. Separately, in CBLR proceedings, the Commissioner by Order-in-Original dated 16.06.2023 imposed a penalty of Rs.50,000 on the broker under Regulation 18, which the broker accepted and paid. The broker appealed against the penalty of Rs.15,00,000 imposed on it under Section 112(a) of the Customs Act, 1962.

Key provisions

• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Regulation 18, Customs Brokers Licensing Regulations, 2018 — Penalty