In CUSAA 3/2021 -DEL HC- ‘Knowledge’ necessary for ‘Abetment’ under Section 112(a) of Customs Act, rules Delhi High Court
Justice VibhuBakhru& Justice Amit Mahajan [04-07-2023]

Read Order: Rajeev Khatri V. Commissioner of Customs (Export)

Chahat Varma

New Delhi, July 6, 2023: In a recent decision, the Delhi High Court has set aside the penalty imposed on the appellant under Section 112(a) of the Customs Act. The High Court found that there was no evidence to establish the appellant's knowledge of the import of prohibited goods, thereby concluding that he cannot be penalized for abetting the illegal import.

The issue in the present matter involved the appellant, who was a G-Card holder of M/s GND Cargo Movers, a licensed Customs Broker. The appellant had filed a Bill of Entry for the import of certain goods, which were later found to be prohibited and illegally imported. The Adjudicating Authority had imposed a penalty on the appellant, stating that he was aware of the irregularities in the Bill of Entry filing. The appellant appealed to the Tribunal, which found that there was no evidence of connivance on the part of the appellant. The Tribunal concluded that the appellant may have unknowingly aided the import of prohibited goods and reduced the penalty imposed by the Adjudicating Authority.

The central issue in the case was whether a person who lacked knowledge of the goods' liability for confiscation could be penalized under Section 112(a) for abetting such an offense.

The division bench of Justice VibhuBakhruand Justice Amit Mahajan observed that while individuals who directly commit acts that render goods liable for confiscation are liable to pay penalties under Section 112(a) of the Customs Act, the same principle did not apply to individuals alleged to have abetted such acts. Abetment requires, at the minimum, knowledge of the offending act, and thus, the penalty for abetment cannot be imposed without establishing such knowledge.

The bench interpreted the term 'abet' in Section 112(a) as implying that the person accused of abetment must possess awareness and understanding of the acts of omission or commission. 'Abet' was defined as instigating, aiding, or encouraging an offense, thereby requiring knowledge, that the act being abetted was wrongful.

The bench concurred with the view expressed by the Bombay High Court in M/s. Amritlakshmi Machine Works & Another v. The Commissioner of Customs (import) [LQ/BomHC/2016/229], which had recognized that Parliament included abetment in Section 112(a) to encompass acts performed with knowledge. It was held that imposing penalties on abettors without their mens rea, or guilty mind, would have severe consequences for businesses, as even innocent facilitation of acts or omissions could result in penalties being levied.