Section 114(i) of the Customs Act, 1962 imposes civil liability for acts or omissions rendering goods liable to confiscation, independent of any requirement for mens rea or conscious involvement in smuggling activities.

This appeal challenges Order-in-Original No. 42365/2015 dated 30.10.2015 (OIO), passed by the Commissioner of Customs, Chennai–IV (impugned order).

2. The brief facts of the case are that the appellant, a Customs Broker, filed a Shipping Bill dated 30.04.2014 on behalf of M/s. Solar Granite Exports, Karnataka, for export of 169 pieces of polished granite slabs to M/s. Banha General Trading LLC, Dubai. Acting on specific intelligence regarding attempted export of red sanders disguised as other goods, the DRI conducted an investigation. The container which shipped to Jebel Ali Port, Dubai, was recalled to Chennai Seaport and examined in the presence of the appellant’s proprietor. Examination revealed 439 red sander logs weighing 12.33 MTs which were valued at ₹5,54,85,000/- and were prohibited for export under the Foreign Trade Policy,. The container seal was also found tampered. The appellant in his voluntary statement admitted that he had allowed M/s TRC Shipping and Logistics Pvt Lt. to use their CHA licence, which facilitated the attempted smuggling of the prohibited goods. Following investigation and recording of statements, a Show Cause Notice (SCN), dated 02.12.2014 was issued to the parties involved, including the appellant. By the impugned Order, the Commissioner imposed a penalty of ₹10 lakhs under Section 114(i) of the Customs Act, 1962 on the appellant for having facilitated the smuggling activities. Aggrieved by the said penalty, the appellant has filed the present appeal.

3. The learned Advocate Shri S. Murugappan appeared for the appellant and Ld. Authorized Representative Shri N. Satyanarayanan appeared for the respondent.

3.1 Shri S. Murugappan the Ld. Counsel for the appellant submitted that it is a settled legal position that penalty under Section 114 can be imposed on a third party, such as a Customs House Agent (CHA), only upon clear evidence of conscious and knowing involvement in, or abetment of, smuggling. In the absence of evidence establishing knowledge of or participation in the alleged smuggling activity, such penalty is unsustainable. In the present case, there is no material whatsoever to show that the appellants had knowledge of, or intentionally abetted, the alleged smuggling. This position stands reaffirmed by this Hon’ble Tribunal in Shri A. Elango Vs Commissioner of Customs (Port-Export), Chennai, Final Order No. 40680/2025 dated 01.07.2025, wherein it was held that personal penalty under Section 114 is not leviable in similar circumstances. The appellants further rely on a consistent line of decisions of the Tribunal and the Hon’ble High Court supporting this settled principle as cstated below:

In support of their contention, the appellants rely on the following decisions:

(a) Neil Armstrong v. Commissioner of Customs, Trichy – 2009 (240) ELT 686 (Tri.-Chennai)

(b) C. Ashok Kumar v. Commissioner of Customs (Export Seaport), Chennai – 2010 (262) ELT 321 (Tri.-Chennai)

(c) Skyline Shipping & Logistics v. Commissioner of Customs, Chennai – 2010 (262) ELT 985 (Tri.-Chennai)

(d) Commissioner of Customs, New Delhi v. Hargovind Export – 2003 (158) ELT 496 (Tri.-Del.)

(e) Commissioner of Customs (Exports), Chennai v. Sahaya Edin Prabhu – 2015 (320) ELT 264 (Mad.)

3.2 Shri N. Satyanarayanan, Ld. A.R. took us through the findings in the OIO and stated that the investigations brought out that Shri J. Arokia Manohar, Proprietor of M/s Jeyam & Co., admitted to lending his CHA licence to M/s TRC Shipping & Logistics Pvt. Ltd. for filing shipping bills in the name of M/s Solar Granite