2026-VIL-1003-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs – Penalty under Sections 112 (a) and 114AA on custom brokers for alleged misclassification of imported goods - Revenue alleged that the brokers knowingly overlooked the details regarding the nature of goods and customs tariff classification of the wheel loaders to enable the importer to claim concessional rate of duty - Whether the imposition of penalty under Sections 112(a) and 114AA of the Customs Act, 1962 on custom brokers is justified when the importer has been exonerated on the ground that the issue involved a matter of classification which is interpretational in nature and does not involve mala fides – HELD - In a parallel case concerning the importer, this bench has confirmed the proposed classification but held that the demand should be restricted to the normal period of limitation as the show cause notice was issued beyond the normal period. Since the issue involved classification which is an interpretational matter, no mala fide intentions can be attributed to the importer. Extending this rationale, a custom broker who merely files Bills of Entry at the instructions of the importer cannot be found fault with for abetment when the underlying classification issue is interpretational in nature and the importer itself stands exonerated. Additionally, the same principle regarding the issuance of show cause notice beyond the normal period of limitation applies equally to the custom brokers - The order imposing penalties under Sections 112(a) and 114AA of the Customs Act, 1962 on the custom brokers stands set aside in its entirety. The appeal is allowed
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