Knowledge Is A Necessary Element For Committing Abetment : Delhi High Court Quashes Penalty Against Customs Broker

The Delhi High Court has quashed the penalty against customs brokers on the grounds that knowledge is a necessary element for committing abetment. 

The bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that knowledge of a wrongful act of omission or commission, which rendered the goods liable for confiscation under Section 111 of the Customs Act, is a necessary element for the offence of abetting the act.

The appellant had preferred the appeal against an order passed by the Adjudicating Authority imposing a penalty of Rs. 34,14,020 on the appellant under Section 112(a) of the Customs Act.

The appellant is a G-Card holder of M/s GND Cargo Movers, a person licensed as a Customs Broker within the meaning of Regulation 2(d) of the Customs Broker Licensing Regulations, 2018 (CBLR). The appellant had filed the Bill of Entry for the import of certain goods that were found to be liable for confiscation. The Adjudicating Authority had found that the goods imported were prohibited goods and were illegally imported.

The Adjudicating Authority also found that the appellant was "aware of the things that led to the irregular filing of the Bill of Entry for the illegal imports made" and imposed a penalty equivalent to 25% of the maximum penalty leviable under Section 112 of the Customs Act.

The appellant preferred an appeal before the Tribunal. The Tribunal found that "no case of connivance is made out against the appellant or employee". It appeared that the appellant had "unknowingly abetted or been instrumental in the nefarious activity of the import of the prohibited goods by the actual importer and the lender of the IEC Code". The Tribunal also found that the penalty imposed under the order was high and disproportionate and reduced the quantum of the penalty from Rs. 34,14,020 to Rs. 10,00,000.

The issue raised was whether, given the finding that no case of connivance is made out by the appellant and he had no knowledge of the import of prohibited goods, a penalty under Section 112(a) of the Customs Act for abetting their illegal import of prohibited goods can be imposed on the appellant.

The department contended that the penalty imposed under Section 112(a) of the Customs Act was civil in nature. Therefore, there is no necessity for imputing any knowledge of the acts that rendered the goods liable for confiscation. The appellant's filing of the Bill of Entry for the import of goods, which were found to be prohibited, was sufficient to impose a penalty under Section 112(a) of the Customs Act. It was not essential to establish a mens rea for imposing such a penalty.

The court held that persons who have committed acts of omission or commission in relation to goods that rendered them liable for confiscation are liable to pay the penalty as stipulated under Section 112(a) of the Customs Act without any requirement to establish their mal intent. However, the same principle would not apply to persons who are alleged to have abetted such acts of omission or commission. This is because abetment necessarily requires, at the minimum, knowledge of the offending Act.

Case Title: Rajeev Khatri Versus Commissioner Of Customs (Export)

Citation: 2023 LiveLaw (Del) 591

Date: 04.07.2023

Counsel For Petitioner: Amit Kumar Attri, Priyanshu Upadhyay

Counsel For Respondent: Anushree Narain, Mayank Srivastava

Click Here To Read The Order