Export Overvaluation | Rs. 3 Lakh Penalty on Customs Broker Quashed: CESTAT

The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside a penalty of Rs. 3 lakh imposed on a Ravi Dhanwariya, customs broker in an alleged export overvaluation case citing that there was no evidence to show that the broker had knowledge of the overvaluation or had abetted the exporter in claiming ineligible export benefits. The bench of P.V. Subba Rao (Technical Member) has observed that although the export goods had been held liable to confiscation on account of overvaluation, there was no evidence in the investigation records or the impugned orders demonstrating that the customs broker had participated in determining inflated values or was aware of such overvaluation. The dispute arose from six shipping bills filed by the appellant on behalf of exporter M/s Sharp Enterprises. Customs authorities suspected that the export goods had been heavily overvalued with the intention of availing ineligible export incentives. Acting on this suspicion, the Special Intelligence and Investigation Branch (SIIB) of the Customs Commissionerate at Tughlakabad examined the goods in November 2021 and subsequently seized them. Following investigation, a show cause notice dated May 30, 2022 was issued to the exporter, the customs broker and other parties. The Additional Commissioner of Customs later imposed a penalty of ₹3 lakh on the customs broker under Section 114(iii) of the Customs Act, alleging abetment in the attempted improper export. The Commissioner (Appeals) affirmed the penalty, prompting the present appeal before the Tribunal. During the hearing, counsel for the appellant pointed out that separate proceedings had also been initiated under the Customs Broker Licensing Regulations (CBLR), 2018, arising from the same investigation. In those proceedings, the customs broker’s licence had initially been revoked and a penalty imposed. However, the Tribunal in an earlier order dated March 5, 2025 had partly allowed the broker’s appeal by setting aside the licence revocation while sustaining a reduced penalty of ₹50,000 for violation of Regulations 10(a) and 10(q) of the CBLR. Importantly, the Tribunal in that order had observed that there was nothing on record to establish that the broker knew about the overvaluation of export goods or had failed to inform customs authorities about it. Relying on these findings, the appellant argued that the penalty under Section 114(iii) was unsustainable. The department opposed the appeal and argued that the customs broker had failed to cooperate during the investigation despite summons being issued. According to the department, this conduct itself reflected the broker’s involvement and justified the penalty. The department further relied on the findings recorded in the earlier CBLR proceedings regarding violation of broker obligations under Regulations 10(a) and 10(q), contending that these violations indicated abetment in the overvaluation of export goods. The Tribunal held that the central issue was whether the customs broker had knowledge of the overvaluation or had actively abetted it. The Tribunal noted that penalties under Section 114 of the Customs Act can only be imposed where a person’s acts or omissions render goods liable for confiscation under Section 113. The tribunal emphasized that the pricing of export goods is determined between the exporter and the overseas buyer and reflected in commercial documents prepared by them. A customs broker, the Tribunal said, neither has authority to determine or question such prices nor the power to independently examine export goods, as these functions lie with customs authorities. The Bench also rejected the Revenue’s argument regarding non-cooperation during investigation. It clarified that failure to cooperate with investigation proceedings may attract action under other legal provisions, but cannot by itself justify imposition of penalty under Section 114(iii) of the Customs Act. In view of the absence of evidence linking the customs broker to the alleged overvaluation, the Tribunal allowed the appeal and set aside the ₹3 lakh penalty imposed on the appellant, granting consequential relief. Case Details Case Title: Ravi Dhanwariya Versus Commissioner Of Customs Export Icd TKD-New Delhi Citation: JURISHOUR-1457-CES-2026(DEL) Case No.: CUSTOMS APPEAL NO. 51731 OF 2025 Date: 26/05/2026 Counsel For Appellant: T.Chakrapani, Consultant Counsel For Respondent: Ram Parvesh Prasad, Authorised Representative Click Here To Read Order Read More: Re-Exports from India: What Customs Law Demands?

Export Overvaluation | Rs. 3 Lakh Penalty on Customs Broker Quashed: CESTAT

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