CESTAT Orders Kolkata Customs To Issue Nuance Group’s Warehouse Licence, Says Sections 112/114 Penalties Aren’t ‘Offences’

The appellant applied for a Special Warehouse Licence under Section 58A of the Customs Act, 1962, for operations at Kolkata Airport.

The Commissioner issued a notice proposing rejection under Regulation 3(2)(c) of the Special Warehouse Licensing Regulations, 2016 (SWLR), because penalties had previously been upheld against the appellant under Sections 112 and 114 of the Customs Act, and because the appellant had declared that it had not been penalised for an offence under that Act.

The penalties related to proceedings arising from events in 2009 and were upheld by the Tribunal in 2017.

The Commissioner rejected the application on 14 October 2026, and the appellant appealed.

The appellant also relied on a change in ownership and management from 2017, a warehouse licence granted at Bengaluru Airport in 2023, and its AEO certificate.

Section 58A of the Customs Act provides for licensing of special warehouses, subject to prescribed conditions; Regulation 3(2)(c) of the SWLR bars a licence where the applicant has been penalised for an offence under the Customs Act, the Central Excise Act, 1944, or Chapter V of the Finance Act, 1994.

The Tribunal applied the distinction in the Customs Act between Chapter XIV, which concerns confiscation and civil penalties for contraventions, and Chapter XVI, which concerns offences and prosecutions.

It noted the General Clauses Act, 1897 definition of “offence” as an act or omission made punishable by law.

It followed Kundan Care Products Ltd. v. Commissioner of Customs, Mumbai Travel Retail Pvt. Ltd. v. Commissioner of Customs, and Hari Krishna Exports Pvt. Ltd. v. Commissioner of Customs, which treated penalties under Sections 112 or 114 as penalties for contraventions, not offences for purposes of Regulation 3(2)(c).

It distinguished Bhagwati Products Ltd. v. Commissioner of Customs, which relied on authorities concerning the former Sea Customs Act and FERA rather than the relevant provisions of the Customs Act, 1962.

The Tribunal held that the penalties under Sections 112 and 114 fell within the Customs Act’s framework for penalties for contraventions, not its framework for offences and prosecutions.

Accordingly, those penalties did not trigger the disqualification in Regulation 3(2)(c), which refers to being penalised “for an offence”.

Because the appellant’s declaration concerned penalties for offences, its failure to disclose the earlier contravention penalties was not a misdeclaration.

The Tribunal also noted the appellant’s post-2017 change in management, its Bengaluru warehouse licence, and its AEO status, and considered that the earlier contravention should not bar the licence in light of those circumstances.

It set aside the Commissioner’s order, allowed the appeal, and held the appellant eligible for the Special Warehouse Licence.

Given the stated operational deadline, it directed the licensing authorities to issue the licence by 15 November 2026 and directed the Revenue’s representative to report compliance by 16 November 2026.