Legal principle

Where a penalty under Section 114 has already been imposed and upheld, the Court may, having regard to the limited role of the person, treat it as sufficient and decline to impose the further Section 114AA penalty, which entails five times the value of the goods.

Court decision

The Division Bench (Prathiba M. Singh and Shail Jain, JJ.) disposed of the Department's appeal, holding that considering the Respondent's role, the penalty of Rs.10 lakhs already imposed under Section 114 and upheld was sufficient, and no further penalty under Section 114AA (which would entail five times the value of the goods) was called for; the question of law was left open to be considered in an appropriate proceeding.

Facts

Acting on specific intelligence of illegal export of Red Sanders (an endangered species under CITES, exportable only with a valid export certificate), Customs intercepted consignments declared as 'household goods' under a fake baggage declaration filed in the name of Shri Vipin Dua, with an airway bill booked in the fictitious name of M/s Sikki Auto India Pvt. Ltd. The seized consignment of 1103.1 kgs was confiscated under Sections 113(d) and 113(h)(1), its declared value was rejected and re-determined at Rs.2,00,00,306 under Rules 8 and 6 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007, and penalties were imposed on several persons in the documentation chain, including Rs.10 lakhs on the Respondent Ravindra Kumar (freight forwarder of M/s Vin Global Logistics) under Section 114. CESTAT, by order dated 18.10.2024, upheld the Section 114 penalty on the Respondent but dismissed Revenue's appeal seeking a Section 114AA penalty against him, while imposing Section 114AA penalties on Sarvesh Kumar (Rs.75 lakhs) and Krishna Chandra Jha (Rs.50 lakhs). The Department appealed to the Delhi High Court under Section 130A seeking imposition of the Section 114AA penalty on the Respondent.

Key provisions

• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 114, Customs Act, 1962 — Penalty for attempt to export goods improperly etc
• Rule 8, Customs Valuation (Determination of Value of Export Goods) Rules, 2007 — Rejection of declared value
• Section 130A, Customs Act, 1962 — Application to High Court
• Rule 6, Customs Valuation (Determination of Value of Export Goods) Rules, 2007 — Residual method
• Section 113(d), Customs Act, 1962 — Confiscation of goods attempted to be improperly exported