Customs Act| Knowledge Of Wrongful Act Necessary Element For Committing Abetment- Delhi HC Quashes Penalty Of ₹10 Lakhs Against Broker
A Delhi High Court Bench of Justice Vibhu Bakhru and Justice Amit Mahajan has held that the knowledge of a wrongful act of omission or commission is a necessary element for the offence of abetting the act under the Customs Act.
In that context, it was said that "in the context of Section 112(a) of the Customs Act, by definition, the expression ‘abet’ means instigating, conspiring, intentionally aiding the acts of commission or omission that render the goods liable for confiscation. It is apparent from the above that the 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 doing of such an act."
Counsel Amit Kumar Attri and Counsel Priyanshu Upadhyay appeared for the appellant, while Counsel Anushree Narain and Counsel Mayank Srivastava.
In this case, the appellant, a licensed Customs Broker, filed an appeal against a penalty imposed by the Adjudicating Authority under the Customs Act.
The penalty was imposed due to the importation of prohibited goods and irregularities in the filing of the Bill of Entry. The Adjudicating Authority determined that the appellant was aware of the illegal imports and imposed a penalty of Rs. 34,14,020. However, the Tribunal found that there was no evidence of the appellant's connivance or intentional involvement in the illegal activity. It was concluded that the appellant unknowingly assisted in the prohibited goods' importation by the actual importer and the lender of the IEC Code. The Tribunal also deemed the imposed penalty to be excessive and reduced it 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.
On hearing the parties, the Court observed that mens rea is not necessary for imposing penalty under Section 112(a) of the Customs Act. In that context, it was said that "There is no cavil that mens rea is not a necessary element for imposing penalty under Section 112(a) of the Customs Act. The penalty imposed for failure to perform a civil obligation is required to be distinguished from a penalty imposed as a punishment for committing a crime. Whereas in the latter case, it would be necessary to establish that a person committing the crime had the intent or the knowledge of committing such a crime; there is no such requirement in case of penalty for default in compliance of a statue imposing a civil obligation, unless the words of that statute indicate otherwise."
Holding that abetment necessarily requires, at the minimum, knowledge of the offending Act, the Court said that "The use of the expression ‘abet’ in Section 112(a) of the Customs Act, makes it implicit that the person charged, who is alleged to have abetted the acts of omission or commission, has knowledge and is aware of the said acts. A plain meaning of the word ‘abet’ means instigation, aid, encouragement of an offence. It necessarily involves the knowledge that the act being abetted is wrong."
In light of the same, the penalty imposed on the appellant under Section 112(a) of the Customs Act was set aside.
Cause Title: Rajeev Khatri v. Commissioner of Customs (Export)