DRI Ahmedabad | CESTAT Quashes Penalty On Customs Broker In Memory Card Concealment Case

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside a penalty of ₹1 lakh imposed on a Customs House Agent (CHA), holding that penalty under Section 112(a) of the Customs Act, 1962 cannot be sustained in the absence of evidence proving knowledge or involvement in the alleged smuggling activity. The bench of S. S. Garg (Judicial Member) observed that no proceedings had been initiated against the customs broker under the Customs Broker Licensing Regulations (CBLR), which also weighed in favour of the appellant. The appeal was filed by Anand D. Mehta, proprietor of Ad Mehta Clearing Agency, against an order passed by the Commissioner of Customs, Kandla dated 25 July 2012 imposing a penalty of ₹1 lakh under Section 112(a) of the Customs Act. The matter was heard by Judicial Member S.S. Garg, who delivered the final order on 8 May 2026 allowing the appeal. The dispute arose from an investigation conducted by the Directorate of Revenue Intelligence (DRI), Ahmedabad, concerning imports made by M/s Rodex International, a partnership concern operating in the Kandla Special Economic Zone. Intelligence inputs suggested that certain goods were being smuggled into India through a container by concealing them within declared imported goods. According to the case records, Rodex International had filed a Bill of Entry dated 2 February 2011 for import of refrigerators and LCD/plasma televisions. Acting on suspicion, DRI officers examined the container and allegedly recovered four black polyethylene bags hidden inside refrigerators. The bags reportedly contained 28,580 pieces of “Micro” brand 2 GB SD memory cards, which had not been declared in the Bill of Entry. Following investigation, a show cause notice was issued and penalties were imposed on various persons allegedly connected with the import transaction, including the present appellant. The appellant argued that he had merely assisted Rodex International in preparation of import documentation and that the Bill of Entry had actually been filed by the importer itself on a “SELF” basis. It was contended that the department had failed to produce any material evidence establishing that the customs broker had prior knowledge regarding concealment of the memory cards. The appellant further submitted that penalty had been imposed solely on assumptions without any corroborative evidence linking him to the alleged act of smuggling. The appellant also pointed out that the Tribunal had already set aside penalties imposed on the alleged mastermind, Lilaram Arjandas Asudani, in an earlier order passed in December 2024. Reliance was additionally placed on several Tribunal decisions holding that penalty under Section 112(a) cannot be imposed on a customs broker unless there is evidence showing conscious involvement or knowledge of the offence. The Tribunal noted that even the Commissioner, in the impugned order, had recorded that the CHA merely helped in preparation of documents while the Bill of Entry was filed by the importer itself. The Bench observed that the Customs department failed to bring any corroborative material on record to establish that the appellant knew about concealment of the undeclared memory cards. CESTAT further emphasized that no proceedings had been initiated against the appellant under the Customs Broker Licensing Regulations, 2013. Referring to the decision in G. Narayan & Co. v. Commissioner of Customs, Mangalore, the Tribunal reiterated that penalty under Section 112(a) is not ordinarily imposable on a CHA in the absence of proceedings under the CBLR framework. The Tribunal also relied upon earlier precedents holding that penalty on a customs broker cannot be sustained merely on suspicion or association with the importer unless there is concrete evidence proving knowledge, connivance, or active abetment in the offence. The CESTAT held that the penalty imposed on the appellant was unsustainable in law and allowed the appeal by setting aside the ₹1 lakh penalty in entirety. Case Details Case Title: Anand D Mehta Versus Commissioner of Customs-Kandla Citation: JURISHOUR-1192-CES-2026(AHM) Case No.: Customs Appeal No. 275 of 2012 Date: 08.05.2026 Counsel For Appellant: Nirav P Shah, Advocate Counsel For Respondent: Himanshu Nachane, Superintendent (AR) Click Here To Read Order Read More: Separate Penalty On Partner Not Sustainable Once Partnership Firm Penalised Under Customs Act: CESTAT

DRI Ahmedabad | CESTAT Quashes Penalty On Customs Broker In Memory Card Concealment Case

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