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2026 Supreme(Online)(CESTAT) 2031
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI
P.V. Subba Rao, Technical Member
RAVI DHANWARIYA – Appellant
Versus
COMMISSIONER OF CUSTOMS EXPORT ICD TKD-NEW DELHI – Respondent
CUSTOMS APPEAL NO. 51731 OF 2025
For the Appellants/Petitioners: T. Chakrapani, Gayathri, Jiten Yadav, Anil Kumar
For the Respondents: Ram Parvesh Prasad
Penalty under Section 114(iii) of the Customs Act, 1962, cannot be imposed on a Customs Broker for overvaluation of goods without evidence of knowledge or abetment, as brokers do not determine prices or examine goods. Non-cooperation with summons is not a ground for such penalty.
Headnote:The case involves the imposition of a penalty under Section 114(iii) of the Customs Act, 1962, on a customs broker after export goods filed on behalf of an exporter were found to be overvalued to avail ineligible benefits. The lower authorities upheld a penalty of Rs. 3,00,000/-, asserting that the broker's failure to cooperate during the investigation and violations of the Customs Broker Licensing Regulations, 2018, indicated abetment of overvaluation. The primary issue was whether the customs broker had knowledge of or abetted the overvaluation of the export goods to render them liable for penalty under Section 114(iii) of the Act. The court reasoned that the price of goods is a matter of agreement between the buyer and seller, and a customs broker has no legal right to decide, question, or examine the goods, as such powers vest solely with customs officers. Furthermore, the court held that non-cooperation during an investigation is not a valid ground for imposing a penalty under Section 114(iii). In view of the above, the appeal is allowed and the penalty imposed on the appellant in the impugned order is set aside with consequential relief to the appellant.
| Table of Content |
|---|
| 1. background of overvaluation and imposition of penalty on the customs broker. (Para 1 , 2 , 3 , 4) |
| 2. arguments regarding the broker's knowledge of overvaluation and cooperation during investigation. (Para 5 , 6) |
| 3. customs broker's lack of role in price determination and lack of evidence of abetment. (Para 7 , 8 , 9 , 10 , 11) |
| 4. non-cooperation during investigation is not a ground for penalty under section 114(iii). (Para 12 , 13) |
| 5. setting aside of the penalty and allowing the appeal. (Para 14) |
P.V. SUBBA RAO
1. Shri Ravi Dhanwariya1Appellant filed this appeal to assail the order dated 23.07.20252Impugned order passed by the Commissioner of Customs (Appeals), New Delhi in which she dismissed the appeal filed by the appellant and upheld the order dated 30.06.20233OIO passed by the Additional Commissioner imposing, inter alia, penalty of Rs. 3,00,000/- on the appellant under section 114(iii) of the Customs Act, 19624Act
2. I have heard Shri T. Chakrapani, learned consultant for the appellant and Shri Ram Parvesh Prasad, learned authorized representative appearing for the Revenue and perused the records.
3. The appellant, a Customs Broker, had filed six shipping bills on behalf of M/s Sharp Enterprises, the exporter. Suspecting that the export goods were heavily overvalued in order to avail ineligible export benefits, the Special Intelligence and Investigation Branch5SIIB of the Commissionerate of Customs, Tughlakabad examined the goods under Panchnama dated 30.11.2021 and seized them under seizure memo dated 01.12.2021.
4. After completing the investigation, a show cause notice dated 30.05.2022 was issued to M/s Sharp Enterprises, the exporter, to the appellant herein and to others. The Additional Commissioner decided the proposals in the show cause notice by order dated 30.06.2023 and he imposed a penalty of Rs. 3,00,000./- on the appellant under section 114(iii) of the Act. On appeal, the Commissioner (Appeal), by the impugned order, upheld the order of the Additional Commissioner. Hence, this appeal.
5. Learned consultant for the appellant submits that in respect of the same investigation, separate proceedings were also initiated against the appellant under Customs Broker Licensing Regulations, 2018 6CBLR and an order was passed revoking his licence and imposing penalty under CBLR. This Tribunal, by Final Order dated 05.03.2025, partly allowed the appeal of the appellant by setting aside the revocation of licence but upholding the penalty of Rs. 50,000/- imposed on the appellant for the reason that the appellant was found to have violated regulation 10(a) and 10(q) but not other clauses of the CBLR. Learned consultant for the appellant submits that insofar as the question of overvaluation is concerned, in paragraph 17 of the Final Order it is recorded that there was nothing on record to show that the appellant had knowledge of overvaluation of exports but had not informed the department. He, therefore, prays that the penalty imposed on the appellant under section 114(iii) may to be set aside and this appeal may be allowed.
6. Learned authorized representative for the revenue, on the other hand, asserted that the impugned order is correct and proper and calls for no interference. He draws the attention of the Bench to the fact that the appellant had not all cooperated during the entire investigation against the exporter which should be sufficient evidence of his intentions. Therefore, the penalty imposed on the appellant is justified. He further draws attention of this Bench, paragraph 5.1.3. of the Commissioner (Appeals) order in which she noted that in the Final Order of this Tribunal there was a categorical finding that the appellant had violated regulations 10(a) and 10(q) and, therefore, the Commissioner (Appeals) held that it was sufficient to show that the appellant had abetted overvaluation of the goods. In view of the above, the appeal may be dismissed and the
