2026-VIL-1856-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs - Penalty under Section 114 of Customs Act, 1962 on Customs House Agent and its partner for aiding and abetting attempted export of mis-declared old and used leather goods for undue duty drawback - Containers of leather garments and footwear were intercepted and found to contain old and used goods, the freight forwarder without a CHA licence used the licence of the Appellant No. 1 for customs clearance, and the Appellant No. 2, its partner, had not verified the credentials of the exporters, the signatures and the authorisation letters - Penalties were imposed on both Appellants, and separate proceedings under the Customs House Agents Licensing Regulations, 2004 on the same goods had resulted in revocation of the licence and forfeiture of the security deposit - Whether penalties under Section 114 can be sustained on the Appellants - HELD - The competent authority had already inflicted the highest administrative penalty on the Appellant No. 1 under the Regulations for the very same goods and investigation, and penalties under the Customs Act for the same allegations are not sustainable. The failure to verify the credentials of the exporters, signatures and authorisation letters may be a breach of obligations under the Regulations but cannot without more invite penalty under Section 114. There was no cogent evidence that the Appellants knew that the goods were old and used, participated in the preparation of false documents, knew of the fraudulent drawback, arranged the goods, received any part of the drawback or conspired with others. Liability under Section 114 cannot be founded merely on association with the consignments as a CHA or on use of the CHA licence - The procedural lapses are not connected to the attempted fraudulent export, the penalties on both Appellants are set aside and the appeals are allowed
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