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1. The appellant is a Pre-Shipment Inspection Agency owned by its proprietor Shri Sandeep Garg, having offices in several countries including USA.
2. Their Houston (USA based) office issued 02 Pre-Shipment Inspection Certificates Nos. UK- IN 101811-62769 dated 18.10.2011 and UK-IN 092611-62170 dated 29.06.2011 for inspection of 04 & 17 containers respectively of Cast Iron Scrap of UK origin certifying, inter alia, that the
2|Page C/11010/2014-DB consignment does not contain any type of arms, ammunition, shells, cartridges or any other explosive material in any form. These containers were imported into India by M/s. Alang Metal Exim Pvt. Ltd. On import into India and an examination by Customs Pipavav, a total of 10 bomb shells were found in consignments. Shri Kapil Aggarwal, Manager & Authorized Person of appellant, in his statement, informed the officers that their Inspector Mr. Bob Rushton, a citizen and resident of UK had examined the cargo in UK and the Certificates were issued by their Houston (USA) office during investigation it was recorded that it was human error of Mr. Bob Rushton which led to the offending import. Penalty was proposed against the appellant under Section 112 (without specifying sub- clause) and 114AA of Customs Act, 1962. Same was dropped by lower authorities for Section 114AA, but upheld for Section 112 to the extent of Rs. 10 Lakhs by Commissioner (Appeals) after reduction from Rs. 15 Lakhs. Vide its written submissions dated 05.07.2023 advocate for the appellant submitted that the Hon'ble Tribunal has held in the case of P. P. Dutta Wing CDR (Retd.) v/s Commissioner of Customs, New Delhi, 2013 (293) ELT 127 (Tri-Del.) that show cause notice issued without mention of clause or sub-clauses of Section 112 of Customs Act, 1962 cannot be sustained.

5|Page C/11010/2014-DB submission in accordance with the procedure prescribed in the HBP. In the normal course of business, the U. S. A. based office of the appellant issued two pre-shipment inspection certificate bearing No. UK-IN 101811-62769 (in respect of 98.520 MT of cast iron scrap that was thereafter loaded in 4 containers) and certificate bearing No. UK-IN 092611-62170 (in respect of 429.540 MT of cast iron scrap that was thereafter loaded in 17 containers) consigned to M/s. Alang Metal Exim Pvt. Ltd., India. Based on visual inspection at the time of loading & spot radiation testing using a hand held monitor carried out by London-based inspector Shri Bob Rushton at the scrap yard at Kenninghall Road, London, the U.S.A. based office of the appellant had issued the aforesaid certificates stating that the consignment did not contain any type of arms, ammunition, mines, shells, cartridges, or any other explosive material in any form, either used or otherwise. On import of the above consignments at Pipavav, M/s. Alang Metal Exim Pvt. Ltd. filed two bills of entry bearing Nos. 5144502 dated 9.11.2011 and 5423747 both dated 9.12.2011 with Custom House, Pipavav for clearance. The goods were examined by the Custom officers of Pipavav, who found 10 live bomb shells in the consignments. Accordingly, both the consignments were placed under seizure by the Custom officers and statements of importer, manager & authorized person of the appellant company, were recorded under section 108 of the Customs Act, 1962. It was clarified on behalf of the appellant that the goods were loaded at London scrap yard by grabs which lifted the scrap from big heaps and dropped it into the containers that were vertically placed with door open to sky, that containers were loaded in the presence of Shri Bob, inspector, who had carried out visual inspection after completion of 25%, 50% and 100% loading of the containers and had also checked the radiation level; that on enquiry with Shri Bob, he informed that owing to loading the scrap through grabs, shells having rusty and dusty look may have escaped his notice. On this basis, it was clarified that it was a human error and may be condoned. On 4.4.2012,

It was further submitted that the lower authorities have erred in failing to appreciate that personal penalty under section 112 (b) of the Customs Act, 1962 was proposed in the notice on the proprietorship firm of the appellant without even recording the statement of the appellant, who is the proprietor of the firm. Therefore, the entire proceedings are void ab initio and accordingly, the impugned order was liable to be quashed and set aside.

9. This Court has considered the adversarial submissions as above. Devoid of unnecessary details, the issue falls within the narrow encompass as Commissioner (Appeals) has already dropped penalty under Section 114AA of the Customs Act, 1962, as neither the investigation nor the charge made by the department against the appellant attributed any knowledge on the part of the appellant who is the employer and approved Inspection Agency by DGFT authorities. . Shri Bob Inspector who failed to check and detect the rusty bomb shells due to his stated human error. As the material relied upon by AR indicates, the agency is subjected to discipline by D.G.F.T authorities. This Court is only concerned with penal proceeding under Section 112(a). Shri. Bob Inspector was located in London which was at the 11 | P a g e C/11010/2014-DB relevant time not a territory, within the purview of penalty proceedings under Indian Customs Act, 1962, as being a person who commits any omission outside India. However, for the purposes of present proceeding this may not be a relevant consideration as the penal proceedings have been directed against the present appellant in its capacity as an employer for lack of diligence on the part of its employee and itself. The concept of vicarious liability in penal proceedings, is not completely unknown in the Customs Act proceedings, as number of such cases between CHA and its employees have been dealt with under purview of Section 117, which is in the nature of residuary penal provision, and is applicable when no other express penalty provision is available. In the instant case, this Court is concerned with penalty which was initially purposed under Section 112 without quoting any sub-clause. However, same was later confirmed under Section 112(a) of Customs Act, 1962. The Hon'ble High Court of Gujarat being a jurisdictional High Court in this context, in the matter of RAMA NAGAPPA SHETTY Vs. COMMISSIONER OF CUSTOMS as reported in 2020 (374) ELT 683 (Gju.) has held as follows:-