No Proof Customs Agent Knowingly Aided Alleged Export Fraud: Kolkata CESTAT Sets Aside ₹15 Lakh Penalties On Firm, Partner

DRI intercepted four containers at Haldia Dock Complex containing export consignments declared as leather garments and footwear. The goods were alleged to be old, used and rejected, and misdeclared in description, quality and value to obtain undue drawback.

The investigation alleged that freight forwarder Trexim Shipping Corporation used the CHA licence of M/s. The India Mercantile Agency to handle the consignments. The CHA firm and its partner, Dipankar Sen, were penalised under Section 114 of the Customs Act, 1962, for allegedly facilitating the attempted exports; the appeals challenged those penalties. In separate proceedings arising from the same investigation, the CHA firm’s licence had been revoked and its security deposit forfeited under the Customs House Agents Licensing Regulations, 2004.

Section 114 of the Customs Act, 1962 provides for penalties in connection with goods liable to confiscation under Section 113; liability must be assessed by reference to the particular act or omission attributed to the person proceeded against.

Procedural involvement or association with a consignment, without evidence connecting the person’s conduct to the acts rendering the goods liable to confiscation, is not by itself sufficient to establish penal liability under Section 114.

The Tribunal distinguished breaches of CHA duties under the Customs House Agents Licensing Regulations, 2004—including Regulations 13(a), 13(b) and 13(o)—from the separate question of liability under the Customs Act.

It relied on Chakiat Agencies v. Commissioner of Customs (Exports), Chennai, 2023 (385) E.L.T. 270 (Tri.—Chennai), and Rajesh Gaba v. Commissioner of Cus. (Import), ICD Tughlakabad, 2021 (375) E.L.T. 683 (Tri.—Del.), in support of the distinction between a regulatory lapse and proven aiding or abetting.

The Tribunal found that the case against the appellants principally concerned alleged failures to verify the exporters, signatures and authorisation documents—conduct which might constitute a breach of CHA obligations but did not, without more, establish knowing abetment of the attempted fraudulent export.

The record contained no cogent evidence that the appellants knew the goods were old, used or rejected; participated in preparing false documents; knew of the alleged overvaluation or drawback scheme; arranged the goods or their transport; received any drawback; or conspired with the exporters or other persons.

Their role in processing export documents and the use of their CHA licence did not establish the necessary connection to the conduct rendering the goods liable to confiscation.

The Tribunal also noted that the CHA firm had already faced licence revocation and forfeiture proceedings concerning the same goods and investigation.

It set aside the penalty of Rs. 10,00,000 imposed on M/s. The India Mercantile Agency and the penalty of Rs. 5,00,000 imposed on Dipankar Sen, and allowed both appeals.