Penalty reduced from ₹1 crore to ₹5,000

₹1 Crore Customs penalty for alleged smuggling abetment successfully challenged — Tribunal reduced to ₹5,000 after accepting duty evaded was unquantified.

The issue

A penalty of ₹1 crore was imposed under Section 112 of the Customs Act, 1962 for abetting the smuggling of cigarettes by mis-declaring them as ‘rice cookers’.

Why it matters

It was argued that even if the charges levelled against the appellant were assumed to be correct, the penalty imposed could not exceed ₹5,000. Under Section 112, in the case of dutiable goods other than prohibited goods, the penalty is 10% of the duty sought to be evaded or ₹5,000, whichever is higher — and in this matter the duty sought to be evaded was never quantified.

Accepting the argument, the Tribunal reduced the penalty from ₹1 crore to ₹5,000.

The wider point is one we see repeatedly: the figure proposed in a show-cause notice is a proposal, not a settled liability. Where the department’s own computation has never been established, the quantum is open to challenge.

Related practice area

This matter falls within our customs law practice.