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  • Writer's pictureRajesh Audithyan


An importer had outsourced the entire import clearance operations to the customs broker. The Customs Broker has mis declared value of goods. During the assessment of the bill of entry, it was found by the department that the value declared by the CB was much lower than the value of contemporaneous imports and found CB had deliberately mis declared the quantity of the goods in order to evade payment of customs duty.

The Deputy Commissioner narrating the entire sequence of events ordered for confiscation of the imported consignments under Section 111(l) of the Customs Act 1962 and allowed the redemption on payment of redemption fine of ₹ 2,00,000/- under Section 125 of the Customs Act. He confirmed the demand of duty of ₹ 4,82,054/- upon reassessment and appropriated the amount of duty already paid towards this amount. He also imposed a penalty of ₹ 49,000/- on the importer under Section 112(b)(ii) of the Customs Act 1962.

Further he imposed a penalty of ₹ 1,00,000/- upon the Customs Broker under Section 114AA of the Customs Act 1962 for presenting false and incorrect material in the declarations made in the bills of entry.

The importer has not contested the order of the Deputy Commissioner and neither has the CB. The CB has paid the penalty imposed under Section 114AA.

Aggrieved by the order of the adjudicating authority, the Revenue has filed an appeal before the first appellate authority arguing that the penalties should have been imposed by the Deputy Commissioner upon the customs broker under Section 114A of the Customs Act 1962 which has not been done. Agreeing with the appeal filed by the Revenue, the first appellate authority has imposed a penalty of ₹ 4,82,054/- under Section 114A upon the Customs Broker. Aggrieved by the order, the present appeal has been filed by the Customs Broker before CESTAT.

Now let us the CESTAT order as follows ;

“SECTION 12. Dutiable goods. - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under [the Customs Tariff Act, 1975 (51 of 1975)], or any other law for the time being in force, on goods imported into, or exported from, India.

(2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government.”

As can be seen, the charge of customs duty is on the goods imported or exported. The importer or exporter is therefore liable to pay the customs duty. It does not matter if the importer or exporter entrusts this responsibility to somebody else, may be his own employee or an agent. The liability is on the importer or exporter only. The definition of importer also includes “any person who holds himself out to be importer”. In this case the Customs Broker has not claimed to be importer. In fact, the bills of entry mention the name of the main importer as the importer for the consignments. Therefore, the liability of customs duty rests only upon the importer. Accordingly Section 114A also applied to the importer in this case. It cannot apply to customs broker whose offence was mis-declaring facts in the bills of entry. Section 114AA is meant for such offences and a penalty under this has already been imposed by the Deputy Commissioner which has been paid by the Customs Broker.

Hence the impugned order imposing penalty of ₹ 4,82,054/- under Section 114A upon the Customs Broker is set aside.


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