Legal principle

Once a contravention of Regulation 6(2) of the Handling of Cargo in Customs Areas Regulations, 2009 or Section 45(2)(b) of the Customs Act, 1962 occurs, penalty under Regulation 12(8) and Section 117 is mandatorily attracted without any requirement of mens rea—mere contravention of law attracts penalty—and only the quantum of penalty is within the adjudicating authority's discretion.

Court decision

The Tribunal (Member (Technical), P.R. Chandrasekharan) upheld the imposition of penalties under both Regulation 12(8) of the 2009 Regulations and Section 117 of the Customs Act, holding that contravention of Regulation 6(2) and Section 45(2)(b) was attracted and that penalty is mandatory once contravention occurs, with no requirement of mens rea; however, finding maximum penalties unwarranted since permission had been obtained and the matter regularised (though after about six months and several reminders), it reduced the Regulation 12(8) penalty from Rs. 50,000 to Rs. 25,000 and the Section 117 penalty from Rs. 1,00,000 to Rs. 25,000, and disposed of the appeal and stay application accordingly.

Facts

Welspun Maxsteel Ltd. was appointed custodian of the Welspun Maxsteel Jetty at Salav Village, Revdanda Port, Dist. Raigad and its back-up customs area under Section 45(1) of the Customs Act, 1962 read with the Handling of Cargo in Customs Areas Regulations, 2009, vide Notification No. 8/2010-Cus(NT) dated 02/07/2010. It engaged three firms (M/s. Mahalaxmi Shipping Pvt. Ltd., M/s. Mitra S.K. Pvt. Ltd. and M/s. Geo Chem Laboratories Pvt. Ltd.) to clean barges, test their seaworthiness, and load and unload cargo, without obtaining the written permission of the Commissioner of Customs required by Regulation 6(2) of the 2009 Regulations. After repeated letters from Customs between November 2011 and March 2012, the appellant applied for permission on 16/04/2012 and it was granted in December 2012. A show cause notice dated nil May 2012 culminated in Order-in-Original No. CCP/ADJ/APSS/03/2013 dated 24/06/2013 by which the Commissioner of Customs (Preventive), Mumbai imposed a penalty of Rs. 50,000 under Regulation 12(8) of the 2009 Regulations and Rs. 1,00,000 under Section 117 of the Customs Act, 1962.

Key provisions

• Section 117, Customs Act, 1962 — Penalties for contravention etc not expressly mentioned
• Regulation 12(8), Handling of Cargo in Customs Areas Regulations, 2009 — Procedure for suspension or revocation of approval and imposition of penalty
• Section 45(2)(b), Customs Act, 1962 — Restrictions on custody and removal of imported goods
• Regulation 6(2), Handling of Cargo in Customs Areas Regulations, 2009 — Responsibilities of Customs Cargo Service provider