Kerala HC sets aside SCN imposing Penalty u/s 117 of Customs Act without stating any Reason [Read Order]

The Kerala High Court sets aside the show cause notice imposing penalty under section 117 of the Customs Act, 1962 which was made without stating any reason for the imposition of penalty.

MBK Logistics Private Limited, the appellant, was visited with a proceeding for imposition of penalty and cancellation of the license on the pretext that the employees of the appellant had misused the seal of the customs authority. The notice to show cause was answered by the appellant. However, the reply was not accepted, and the customs authority proceeded to cancel the license of the appellant and imposed a penalty of Rs.50,000/- (Rupees Fifty Thousand only). 

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The appellant approached the appellate tribunal.  In the appeal, on an extensive consideration of the material facts, the tribunal concluded that there is no evidence to show that the appellant had forged the seal of the customs authority. Thus, it was found that the appellant is not vicariously liable. However, despite the aforesaid finding, the tribunal proceeded to sustain the penalty under Section 117 of the Customs Act.

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On consideration of the submissions raised across the Bar,the court viewed that the finding of the tribunal sustaining the penalty cannot be sustained. By order, the appeal preferred by the employees against the imposition of penalty on the ground of forgery stands allowed and the order of imposition of penalty has been set aside. It is also brought to our notice that by  the report filed by the Investigating Officer before the Judicial First Class Magistrate CourtI, Kochi, in Crime No.1635/2018 of Harbour Police Station, the appellant has been exonerated from the crime. 

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A perusal of the order impugned reveals that while the tribunal has found that there are no reasons to sustain the allegations in the show cause notice and thereby interfered with the order of cancellation of the license, it has not assigned any reason for nevertheless sustaining the  penalty under Section 117 of the Customs Act. Moreover, when the employees against whom the allegations of forgery were made have been exonerated and the penalty imposed against them has been set aside, we find no reason to sustain the findings of the tribunal that penalise the appellant. A division bench of Dr. Justice A.K.Jayasankaran Nambiar  &  Justice Easwaran S. held that the order of the tribunal Customs Appeal sustaining the penalty under Section 117 of the Customs Act cannot be sustained and allowed the appeal by set aside the order challenged.

To Read the full text of the Order CLICK HERE

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