Customs Broker Penalised for Importer’s Misdeclaration of Value of Goods: Madras HC allows to Contest without 7.5% Pre-Deposit [Read Order]

The Madurai Bench of the Madras High Court has allowed the licensed Customs broker to contest the penalty imposed with regards to an importer’s fraudulent misdeclaration of goods’ value without pre-deposit.

The petitioner, M/s Pentagon Shipping Services, was imposed with a penalty of ₹50 lakhs under Section 112(a) of the Customs Act, 1962, on the ground that it failed to exercise vigilance and thereby facilitated the importer’s fraudulent acts, including the use of another person’s import code and undervaluation of imports.

Challenging the penalty, the Customs broker argued that mere lapses in discharging professional duties cannot attract penal liability under Section 112(a).

The petitioner submitted that on the Madras High Court Division Bench ruling in Commissioner of Customs (Exports), Chennai v. I. Sahaya Edin Prabhu (2015), which held that penalties cannot be imposed for every omission unless active involvement in abetment is established.

Justice G.R. Swaminathan considered the submissions and noted that the impugned order had imposed penalties not only on the petitioner but also on several others, and it would be more appropriate for the appellate authority to adjudicate all appeals together.

Accordingly, the Court exempted the petitioner from the mandatory pre-deposit of 7.5% under Section 129E, allowing it to file an appeal within two weeks and shall be entertained without reference of limitation period.

The Court clarified that it had not examined the merits of the penalty and left all contentions open for determination by the appellate authority.

Mr. S. Baskaran, Advocate appeared for the petitioner.

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