Dipankar Sen vs Kolkata(port)

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA

REGIONAL BENCH – COURT NO. 2

Customs Appeal No. 75522 of 2014

(Arising out of Order-in-Original No. KOL/CUS/PORT/05/2014 dated 16.01.2014
passed by the Commissioner of Customs (Port), Custom House, 15/1, Strand Road,
Kolkata – 700 001)

M/s. The India Mercantile Agency
CHA Agent’s Hall,
Custom House, 15/1, Strand Road,
Kolkata – 700 001 (West Bengal)
: Appellant

VERSUS

Commissioner of Customs (Port)
Custom House, 15/1, Strand Road,
Kolkata – 700 001 (West Bengal)
: Respondent
AND
Customs Appeal No. 75521 of 2014
(Arising out of Order-in-Original No. KOL/CUS/PORT/05/2014 dated 16.01.2014
passed by the Commissioner of Customs (Port), Custom House, 15/1, Strand Road,
Kolkata – 700 001)

Dipankar Sen, Partner,
M/s. The India Mercantile Agency
nd
6, Motilal Nehru Road, 2 Floor, Manorama Building
Kolkata – 700 029 (West Bengal)
: Appellant

VERSUS


Commissioner of Customs (Port)
Custom House, 15/1, Strand Road,
Kolkata – 700 001 (West Bengal)
: Respondent

APPEARANCE:
Shri R.N. Bandyopadhyay, and Smt. Rupsha Chatterjee, both Advocates,
For the Appellant(s)

Shri S. Debnath, Authorized Representative,
For the Respondent

CORAM:
HON’BLE SHRI R. MURALIDHAR, MEMBER (JUDICIAL)
HON’BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)

FINAL ORDER NOs. 76572-76573 / 2026
DATE OF HEARING: 28.09.2026
DATE OF DECISION: 30.10.2026

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ORDER: [PER SHRI K. ANPAZHAKAN]

The present appeals have been filed against the
Order-in-Original No. KOL/CUS/PORT/05/2014 dated
16.01.2014, passed by the Ld. Commissioner of
Customs (Port), Custom House, 15/1, Strand Road,
Kolkata, insofar as the same imposes penalties of
Rs.10,00,000/- upon M/s. The Indian Mercantile
Agency, a Customs House Agent (CHA) firm
(hereinafter referred to as the “appellant No. 1”), and
Rs.5,00,000/- upon Shri Dipankar Sen, partner of the
said firm (hereinafter referred to as the “appellant No.
2”), under Section 114 of the Customs Act, 1962 on
the ground of aiding / abetting the alleged attempted
export of old, used and rejected leather garments and
footwear, purportedly mis-declared in respect of their
description, quality and value with a view to enable
availment of undue duty drawback thereon.
2. The facts of the case are that the proceedings
originated from specific intelligence received by the
officers of the Directorate of Revenue Intelligence
(DRI), Kolkata Zonal Unit, concerning the attempted
export of old, used and rejected leather garments and
shoes under mis-declared descriptions and values,
allegedly with the object of claiming an undue duty
drawback benefit. Acting upon such intelligence,
officers of the DRI visited the Haldia Dock Complex,
Kolkata on 27.04.2012 and intercepted four
containers bearing Nos. PALU 5010309, CRXU
3196050, PALU 5011115 and PALU 5007455, which
were found loaded on four carrier trucks. Upon
verification, the said containers were found to contain
goods pertaining to export consignments covered by
12 (twelve) Bills of Entry, of which six were in the
name of the exporter, M/s. Tara India and the

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remaining six were in the name of the exporter, M/s.
Krish Exports, with the descriptions therein being
given as leather jackets, leather waistcoats, leather
shoes, leather skirts and leather pants.
3. The DRI officers thereafter examined the export
consignments in the presence of representatives of
the CHA firm, namely, M/s. The Indian Mercantile
Agency (appellant no. 1 herein). Upon examination, it
appeared to the officers of the DRI that the various
leather items were old, used and rejected goods of
very cheap quality, possessing negligible or no
commercial value. It was thus alleged that the goods
had been mis-declared in respect of their quality,
description and value. The goods were seized on
28.04.2012, pursuant to container-wise inventories
prepared on the same date.
4. Thereafter, the investigation was extended to
the freight forwarder, M/s. Trexim Shipping
Corporation, and its proprietor, Shri Sanjay Singh
Mourya. In the course of such investigation, it was
gathered that M/s. Trexim Shipping Corporation did
not possess a CHA licence of its own and had used the
CHA licence of M/s. The Indian Mercantile Agency /
appellant no. 1 for handling the customs clearance of
the export consignments in question. The
investigation was subsequently extended to, inter
alia, M/s. Tara India and M/s. Krish Exports, the
exporting firms. Summons were issued to various
persons alleged to have been connected with the
transactions, and their statements were recorded
during the course of the investigation. Among those
summoned was Shri Dipankar Sen, partner of the CHA
firm / appellant No. 2 herein.

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4.1. In his statement dated 08.05.2012, recorded
under Section 108 of the Customs Act, 1962, the
appellant No. 2 stated, inter alia, that the export
consignments stuffed in the four containers
intercepted at Haldia had been handled by the freight-
forwarding firm, namely, M/s. Trexim Shipping
Corporation, which was owned by Shri Sanjay Singh
Mourya. He stated that an agreement existed between
his CHA firm and M/s. Trexim Shipping Corporation for
the promotion and development of the business of
both firms. He further stated that, acting in good faith,
he had not verified the signatures of the exporters
appearing on the relevant documents; that he had
filed Annexure-A with CMC through his authorised
person, Shri Sankha Subhra Aich, and that he had not
personally seen the goods before they were stuffed
into the containers.
5. From the investigation conducted, it was
inferred that one Shri Manish Singh was the principal
person behind the attempted fraudulent and illegal
export of old, used and rejected factory-reject leather
garments, purportedly undertaken with the object of
availing an undue duty drawback benefit. It was
alleged that Shri Manish Singh had procured the
goods in question, which were sought to be exported
under the names of M/s. Tara India and M/s. Krish
Exports; the proprietrix of M/s. Tara India was stated
to be Smt. Shakuntala Singh, mother of Shri Manish
Singh, and that Shri Manish Singh himself looked after
the affairs of the said firm; that Shri Manish Singh had
obtained the Importer Exporter Code (IEC) particulars
of M/s. Krish Exports, the other exporting firm, for
facilitating the fraudulent export of a portion of the
goods in the name of that firm, allegedly in exchange
for monetary or other consideration. Accordingly, on

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the basis of the investigation, it was alleged that Shri
Manish Singh had procured cheap and low-value
goods for export under the names of the two firms,
stored the goods in his godown at Kolkata, arranged
for their stuffing into the four containers, and
organised the associated logistics, including the hiring
of containers, transportation of the goods to Haldia
Dock Complex and appointment of a CHA through the
freight forwarder, M/s. Trexim Shipping Corporation.
5.1. In this connection, the Revenue alleged that the
appellant no. 1 (CHA) had wilfully and knowingly
permitted M/s. Trexim Shipping Corporation to use its
CHA licence for handling the customs clearance of the
export consignments, thereby facilitating the
attempted exports and abetting the alleged wrongful
availment of duty drawback. The allegation against
the appellants was thus founded principally upon the
asserted use of the CHA firm’s licence by the freight
forwarder as well as the alleged lapses on the part of
appellant No. 2 in verifying the credentials of the
exporters and the relevant export documents.
5.2. The statement of Shri Dipankar Sen / appellant
No. 2 was also relied upon in support of the allegation
that the CHA firm had failed to exercise due care in
handling the consignments. In particular, the
investigation referred to his alleged admission that he
had neither met the exporters nor spoken to them,
had not verified the signatures appearing on the
export documents, and had permitted Dock Sircar
licences to be given to persons who were employees
of the freight-forwarding firm rather than employees
of the CHA firm.

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5.3. On the basis of these circumstances, the
Revenue alleged that the appellants had, through
their respective acts of omission and commission,
facilitated the attempted export of mis-declared goods
and were consequently liable to penal action under
Section 114 of the Customs Act, 1962, for their
alleged role in rendering the goods liable to
confiscation under Section 113 of the Act.
6. Accordingly, a Show Cause Notice dated
19.10.2012 was issued to M/s. Tara India, M/s. Krish
Exports, Shri Manish Singh and various other
co-noticees, including the present appellants. The
Notice, inter alia, proposed the imposition of penalties
upon the appellants under Section 114 of the Customs
Act, 1962, on account of the alleged acts of omission
and commission attributed to them in connection with
the export consignments seized by the DRI.
6.1. Upon adjudication, the ld. adjudicating
authority, vide the impugned order, apart from
ordered confiscation of the goods under Section 113(i)
of the Customs Act, 1962 allowing their redemption
thereof under Section 125 ibid. and ordering denial of
the respective duty drawback claims made by the
exporting firms, also imposed penalties upon various
co-noticees, having regard to the respective roles
attributed to them in the alleged attempted fraudulent
exports. Insofar as the present appellants are
concerned, a penalty of Rs.10,00,000/- was imposed
upon M/s. The Indian Mercantile Agency / the CHA
firm, and a further penalty of Rs.5,00,000/- was
imposed upon Shri Dipankar Sen, its partner, under
Section 114 of the Customs Act, 1962.

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6.2. Aggrieved by the imposition of the aforesaid
penalties, the appellants have filed the instant
appeals.
7. At the outset, the Ld. Counsel appearing on
behalf of the appellants drew our attention to the fact
that in respect of the very same goods and the same
investigation which forms the substratum of the
present proceedings, separate proceedings had been
initiated against appellant No. 1, the Customs House
Agent, under Regulation 22(7) of the Customs House
Agents Licensing Regulations, 2004. It has been
submitted that the said proceedings culminated in
Order-in-Original No. KOL/CUS/AIRPORT/
ADMN/12/2014 dated 11.08.2014, whereby the
Customs House Agent’s Licence of appellant No. 1 was
revoked and forfeiture of its security deposit was also
ordered, in terms of Regulation 20(1) of the said
Regulations.
7.1. Without prejudice to the above, the Ld. Counsel
for the appellants has also advanced various
submissions on the merits of the penalties impugned
in the present appeals, which are reproduced
hereinbelow: -
A. No direct involvement or conscious abetment in the
attempted fraudulent export
(i) The impugned export consignments were
allegedly mis-declared and overvalued by the
exporters for the purpose of claiming undue
duty drawback. The investigation itself
attributed the principal fraudulent activity to
other persons, including Shri Manish Singh and
the exporters.

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(ii) The appellants were merely the CHA firm and its
partner who processed the documents. There is
no positive evidence on record to establish that
the Appellants:
• Had knowledge that the goods were old, used
or otherwise not as declared.
• Participated in the preparation of false
invoices or shipping documents.
Had knowledge of the alleged overvaluation
•
or fraudulent drawback claim.
• Arranged the goods, transport or stuffing of
the containers.
• Received any part of the alleged undue
drawback.
• Conspired with the exporters or other
persons to commit the attempted fraudulent
export.
(iii) The learned Commissioner has principally relied
upon the alleged failure to verify the exporters'
credentials, signatures and authorisation
letters. However, such omissions, even if
established, are distinct from proving that the
CHA knowingly abetted the attempted
fraudulent export.
(iv) The absence of knowledge and active

participation is a material circumstance which
goes to the root of the penalty proceedings
under Section 114.

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B. Scope of Section 114 of the Customs Act, 1962
(i) Section 114 provides for penalty in relation to
goods which are liable to confiscation under
Section 113. However, the provision must be
applied to the particular act or omission of the
person sought to be penalised. The Appellants
submit that: 1) The goods were alleged to be
liable to confiscation due to misdeclaration and
overvaluation; 2) The alleged misdeclaration
was attributable to the exporters and other
persons; 3) There is no finding supported by
evidence that the Appellants knowingly caused
or abetted the particular acts rendering the
goods liable to confiscation; 4) The mere filing
of shipping bills cannot, without more, establish
the Appellants' participation in the fraud.
(ii) The Appellants accordingly submit that the
ingredients of Section 114 are not satisfied
against them.
C. Regulatory lapse under CHALR, 2004 cannot
automatically lead to penalty under Section 114
(i) The impugned order relies upon alleged
violations of Regulation 13(a), 13(b) and 13(o)
of the Customs House Agents Licensing
Regulations, 2004.
(ii) Regulation 13 prescribed obligations concerning
authorisation, dealings with Customs and
verification of the client. The Appellants submit
that any alleged failure in compliance with those
regulatory obligations is required to be dealt
with under the licensing regulations.
(iii) The Customs Act and the CHALR operate in
different fields. A licensing violation does not,
without proof of the necessary ingredients,

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automatically establish abetment of a
fraudulent export under Section 114.
(iv) The distinction is important in the present case
because the Appellants' alleged lapse is
essentially that they relied upon documents and
authorisation letters supplied through the
freight forwarder and did not independently
verify the signatures or exporters. The
Appellants deny any knowledge of the
fraudulent scheme.
(v) The Tribunal has repeatedly distinguished
between a regulatory breach and penal liability
under the Customs Act. The authorities cited
below support the Appellants' contention that
the evidence must establish the requisite
connection between the CHA's conduct and the
confiscable export goods. Reliance is placed on
the following decisions: -
• 2023 (385) E.L.T. 270 (Tri. - Chennai)/(2023)
4 Centax 391 (Tri. - Chennai) - CHAKIAT
AGENCIES Versus COMMISSIONER OF
CUSTOMS (EXPORTS), CHENNAI
• 2021 (375) E.L.T. 683 (Tri. - Del.) - RAJESH
GABA Versus COMMISSIONER OF CUS.
(IMPORT), ICD TUGHLAKABAD
• 2020 (372) E.L.T. 332 (Del.) -
COMMISSIONER OF CUSTOMS (IMPORT)
Versus TRINETRA IMPEX PVT. LTD.

7.2. In view of the above facts and submissions, the
Ld. Counsel for the appellants have prayed that the
penalties imposed upon the appellants herein under
Section 114 of the Customs Act, 1962 be set aside.

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8. On the other hand, the Ld. Authorized
Representative of the Revenue justified the imposition
of penalties on both the appellants under Section 114
of the Act, which, according to him, requires to be
upheld in the facts and circumstances of the case.
Accordingly, it is his contention that the appeals are
devoid of any merit.
9. Heard both sides and perused the documents
placed before us.
10. We observe that the challenge in the present
appeals is confined to the sustainability, in law, of the
penalties imposed upon M/s. The Indian Mercantile
Agency, the Customs House Agent (CHA) firm (the
appellant No. 1), and Shri Dipankar Sen, its partner
(the appellant No. 2), under Section 114 of the
Customs Act, 1962. The legality of the confiscation
ordered in respect of the goods, the denial of the duty
drawback claims of the exporters, and the substantive
findings recorded against the other noticees are not
the subject matter of the present dispute.
10.1. At the very threshold, we find it necessary to
advert to a significant circumstance which has a
bearing upon the question of imposition of penalty on
the appellants. It is observed that separate
proceedings, on the same factual substratum of the
present proceedings, concerning the very same goods
and arising from the same investigative matrix, had
been initiated against the appellant No. 1 / CHA under
Regulation 22(7) of the Customs House Agents
Licensing Regulations (CHALR), 2004, which
culminated in Order-in-Original No.
KOL/CUS/AIRPORT/ADMN/12/2014 dated
11.08.2014, whereby the competent licensing
authority ordered revocation of the CHA licence of

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Appellant No. 1 and forfeiture of its security deposit in
terms of Regulation 20(1) of the said Regulations.
Therefore, by way of the above proceedings, the
competent authority has already inflicted the highest
standard of administrative penalty on the appellant-
CHA. Considering the fact that separate proceedings
had been initiated against appellant No. 1 under the
CHALR, 2004 in respect of the very same goods and
investigation, we agree with the submission made by
the appellants that the penalties imposed under the
Customs Act, 1962 for the same allegations and
offence, are not sustainable in the eyes of law.
11. Even otherwise, upon an independent
examination of the allegations levelled against the
appellants and the evidence brought on record, we
find that the ld. adjudicating authority has principally
rested its conclusions upon the alleged failure of the
appellants to verify the credentials of the exporters,
the genuineness of the signatures appearing on the
export documents and the authenticity of the
authorisation letters. While such omissions may
undoubtedly constitute a breach of the obligations
incumbent upon a Customs House Agent (CHA) under
the Customs House Agents Licensing Regulations
(CHALR), 2004, the same cannot, without more, be
equated to a circumstance inviting penalty under
Section 114 of the Customs Act, 1962. The material
relied upon against the appellants substantially
concerns the manner in which the export
documentation was processed and the alleged failure
to exercise due diligence in verifying the particulars
and authorisations furnished in connection therewith.
However, a scrutiny of the record, as placed before
us, does not disclose any cogent evidence establishing
that the appellants had knowledge that the goods in

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question comprised old, used or rejected garments
and footwear, contrary to the descriptions declared for
export; or that they had participated in the
preparation of false invoices or other fabricated export
documents; or that they had prior knowledge about
such alleged overvaluation of the goods or the
contemplated fraudulent availment of duty drawback.
11.1. Equally, there is no material demonstrating that
the appellants had procured or arranged the goods,
organised their transportation or stuffing into the
containers, or otherwise participated in the
operational arrangements allegedly undertaken by the
persons identified as being behind the attempted
export. Nor has any evidence been brought to our
notice to establish that either appellant received any
part of the alleged undue drawback, entered into a
conspiracy with the exporters or other persons
concerned, or knowingly facilitated the attempted
export of the goods by resorting to any act or omission
intended to further the alleged fraud. The absence of
such evidence is material, for the liability
contemplated under Section 114 cannot be founded
merely upon the association with the consignments as
a CHA or upon the fact that their CHA licence was
utilised in processing the export documentation. The
statutory requirement is not satisfied by association
or procedural involvement alone; the act or omission
attributable to the person proceeded against must be
examined in the context of the statutory ingredients
governing the imposition of penalty.
11.2. We are, therefore, of the considered view that
the alleged lapses and omissions in verifying the
antecedents of the exporters, their signatures and the
supporting export documents, even if accepted as

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established, must be distinguished from the more
serious allegation that the appellants knowingly
abetted an attempted fraudulent export.
12. This distinction between a breach of licensing
obligations and the establishment of penal liability
under the Customs Act has also been considered by
this Tribunal in various decisions. The same issue
came up for consideration in the case of Chakiat
Agencies v. Commissioner of Customs (Export),
Chennai [2023 (385) E.L.T. 270 (Tri. - Chennai)] ,
wherein, under similar facts and circumstances, it was
observed as under: -
“9. Be that as it may, the appellant as a CHA
cannot be expected to examine and ensure the
nature of the goods in the consignment. In Para-65
of the impugned order, the adjudicating authority
has observed that when the test report mentioned
that the samples are naturally occurring Potassium
Chloride, the CHA ought to have classified the goods
under ITC HS 3104 20 00; and they ought to have
not assisted the exporter in misdeclaring the goods
as ITC HS as 2827 39 90. The classification is not
mentioned in the test reports. The main reason for
imposing penalty on the appellants is that they did
not ensure correct classification of the goods so as
to see whether the goods are restricted items. The
original authority has held that the appellant has
abetted in the attempt to export restricted goods as
they did not exercise due diligence to ascertain the
correctness of the information imparted by their
client. There is no allegation or evidence to establish
that the appellant had indulged in any overt act or
played any role in any manner so to assist the
exporter in his attempt to export the goods. The
issue of classification is of complex nature.
10. The Tribunal in the case of HIM Logistics Pvt.
Ltd. (supra) has held as under :
“2. From the impugned order, it appears that the
original authority has levied the penalty only on the
ground that the appellant has failed to exercise due
diligence to ascertain the correctness of the
information as regards the correct classification of

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the goods being imported by his client. The appellant
is mainly a CHA and the issue of classification is of
complex nature. It cannot be said that the CHA
should have information that the goods were ‘Food
Supplements’ and not ‘Medicaments’. It is for the
Customs Department to classify the goods. Under
these circumstances, the levy of the penalty is not
justified. By following the earlier decision of the
Tribunal dated 28-4-2016, we find no reason to
sustain the penalty and, therefore, set aside the
impugned order. The appeal stands disposed of
accordingly.”
11. After appreciating the evidence and following
the decision of the Tribunal in the above case, we
are of the view that the penalty imposed on the
appellants under Section 114 of the Customs Act is
not warranted and are therefore required to be set
aside which we hereby do. The impugned order is
modified to the extent of setting aside the penalties
imposed on these appellants.”

12.1. Similarly, in Rajesh Gaba v. Commissioner of
Cus. (Import), ICD, Tughlakabad [2021 (375) E.L.T.
683 (Tri. – Del.)], it has been observed that: -
“15. Having considered the rival contentions, we
find that no case of aiding and abetting is made out
against this appellant. This appellant as an employee
of the CHA company was working as per the
instructions given to him by his senior. There is no
case made out of any abnormal gain by the appellant
to indicate any collusion or abetment on his part with
the importer of the consignment under dispute Shri
Goyal and/or Shri Brijesh Mishra. Penalty has been
imposed mechanically without application of mind..”
13. In the light of the foregoing discussion, we take
the view that the material on record does not
adequately establish the requisite connection between
the alleged procedural lapses of the appellants and the
attempted fraudulent export in question so as to
warrant the imposition of penalties upon them under
Section 114 of the Customs Act, 1962.

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14. Accordingly, the penalties of Rs.10,00,000/-
imposed upon M/s. The Indian Mercantile Agency and
Rs.5,00,000/- imposed upon Shri Dipankar Sen,
under Section 114 of the Customs Act, 1962, are not
sustainable and are hereby set aside.
15. In these terms, the appeals filed by both
appellants are allowed.
(Order pronounced in the open court on 30.10.2026 )



(R. MURALIDHAR)
MEMBER (JUDICIAL)



(K. ANPAZHAKAN)
MEMBER (TECHNICAL)
Sd/-
Sd/-
Sdd