Legal principle

Penalty under Section 117 of the Customs Act, 1962 attracts on a plain contravention or failure to comply without any requirement of mens rea, and it operates in a domain distinct from Regulation 14 of the 2010 Courier Regulations so that both penalties may be imposed; yet revocation of an authorised courier's licence will be struck down as harsh and disproportionate where the Revenue itself, by releasing the goods on payment of duty and penalty, has removed the very basis of the proceedings.

Court decision

Appeal allowed-in-part, largely in favour of the Revenue: substantial questions of law Nos. 1 and 3 were answered in favour of the appellant. The Court held that mens rea is NOT a prerequisite for penalty under Section 117, restored the Rs. 50,000 penalty under Section 117 (set aside by CESTAT), and restored the original Rs. 50,000 penalty under Regulation 14 (holding CESTAT erred in reducing it to Rs. 25,000 on equity grounds). However, the Court upheld CESTAT's setting aside of the revocation of the authorised courier licence and enforcement of the Bond/Bank Guarantees as harsh and disproportionate, since the Revenue itself had released the goods on payment of duty and penalty, destroying the basis of the proceedings. Substantial question No. 2 (Bank Guarantee) was held not to arise and was not answered.

Facts

M/s Pigeon International was a licensed Authorised Courier at the International Courier Terminal, Devanahalli, Bengaluru, clearing imported consignments under the Courier Imports and Exports (Clearance) Regulations, 1998 and the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010. Investigation revealed that its employee, Sri M. Elias, created a GSTIN in the name of Ms. Kajal Thakur (M/s K.T. Technologies) without her knowledge and filed bills of entry therein with mis-declaration of value, description and quantity of goods. The Principal Commissioner, by order dated 27.09.2023, revoked the courier licence under Regulation 13 of the 2010 Regulations, enforced the Bond and Bank Guarantees, and levied penalties of Rs. 50,000 each under Regulation 14 of the 2010 Regulations and Section 117 of the Customs Act, 1962. CESTAT reduced the Regulation 14 penalty to Rs. 25,000, set aside the Section 117 penalty, and set aside the revocation and enforcement of Bond/Bank Guarantees; the Revenue appealed to the High Court under Section 130 of the Customs Act.

Key provisions

• Section 117, Customs Act, 1962 — Penalties for contravention etc not expressly mentioned
• Section 130, Customs Act, 1962 —  Appeal to High Court
• Section 108, Customs Act, 1962 — Power to summon persons to give evidence and produce documents