Custom, Excise & Service Tax Tribunal
M/S Pt Varghese & Company vs Commissioner Of Customs - Cochin on 25 February, 2026
Customs Appeal No. C/20005/2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 2
Customs Appeal No. 20005 of 2025
(Arising out of Order-in-Original No. COC-CUSTOMS-000-COM-08/2024-25 dated
02.12.2024 passed by the Commissioner of Customs, Cochin.)
M/s. P T Varghese & Company
Ground Floor, Unity Centre Railway,
Goods Shed Road,
Willingdon Island,
Cochin, Kerala. ..........Appellant(s)
VERSUS
Commissioner of Customs
Customs House, Willingdon Island,
Ernakulam,
Kerala - 682 009. ........Respondent(s)
APPEARANCE:
Mr. Baby. M.A, Advocate for the Appellant.
Mr. M. Sreekanth, Asst. Commr. (AR) for the Respondent.
CORAM:
HON'BLE MR. P.A. AUGUSTIAN, MEMBER (JUDICIAL) HON'BLE MR. PULLELA NAGESWARA RAO, MEMBER (TECHNICAL) Final Order No. 20171 /2025 Date of Hearing: 17.12.2025 Date of Decision: 25.02.2026 PER: P.A. AUGUSTIAN The issue in the present appeal is regarding Revocation of Customs Broker License, forfeiture of Security Deposit and penalty imposed under the Customs Brokers Licensing Regulation (CBLR), 2018.
2. The brief facts are alleging that the appellant had assisted some of the cargo companies abroad for mis-using the provisions of Baggage Page 1 of 12 Customs Appeal No. C/20005/2025 Rules, 2016, proceedings were initiated and one of the baggage consignments filed by the appellant was identified. As per the declaration, the baggage contained 45 packages of "Personal Effects and Household Goods" which included items such as used kitchen items, used stove, used weighing scale, used tools, used wire roll, crockery, used other household items, stationary, toiletry etc. Most of the items were declared and assessed free of duty under Rule 6 of the Baggage Rules and Rs.1,925/- was collected as customs duty on miscellaneous items such as toiletries, cosmetics, etc. The SIIB re-examined the packages and on re-examination, inventory of goods were prepared and based on the revised inventory list, the total value of the subject consignment worked out to Rs.1,14,520/- as against the declared value of Rs. 27,000/-. Based on the above-mentioned mis-declaration goods were seized and statement of the appellant and the passenger were recorded. On conclusion of the investigation, show cause notice was issued alleging that the appellant had colluded with the overseas customer, M/s. Good Care Cargo Services to clear the consolidated cargo of different persons using the passport of Mr. Yoonus Kallivalappil and caused revenue loss. Similarly proceeding under CBLR,2018 was also initiated and as per the impugned order, Adjudication Authority revoked the license, forfeitured security deposit and also imposed penalty. Aggrieved by said order, present appeal is filed.
3. When the appeal came up for hearing, Learned Counsel for the appellant submits that Shri. Yoonus Kallivalappil was working in a supermarket at Jeddah, Saudi Arabia for last 4 years. Due to closure of the supermarket, he came back to India in December 2023. Before leaving Saudi Arabia, he entrusted his used personal effects and household items such as used kitchen and household items, used cloths, stationary, toiletry, etc., to M/s Good Care Cargo Services, Saudi Arabia to deliver the same to his home address under Transfer of Residence, Rules. When the baggage reached Cochin port, the passenger called Shri. C G Prathapan and entrusted the clearance of his unaccompanied baggage to him for filing Baggage Declaration. The passenger handed over authorization letter authorizing Appellant to Page 2 of 12 Customs Appeal No. C/20005/2025 clear the goods and also handed over the list of items to 'G' Card holder. As per the list of items given by the passenger, 'G' Card holder had filed Baggage Declaration No. 397602 on 03.04.2024. Thereafter proper officer inspected the baggage and assessed value of the goods as Rs.27,000/- and assessed a duty of Rs.1,925/-. The passenger paid the said duty through E-payment vide Challan No.10203790 dated 05.04.2024 and concerned Asst. Commissioner of Customs who is in- charge of Baggage clearance cleared the baggage. Learned Counsel also drew our attention to copy of the Passport of the passenger, list of items, Baggage Declaration dated 03.04.2024 and Challan No.10203790 dated 05.04.2024. The allegations were made when the goods were about to cleared and on investigation, detailed inventory was drawn. Learned Counsel also drew our attention to the inventory of valuation as relied in the show cause notice and submits that the method adopted by the respondent to assess the value and to allege loss of revenue is prima facie unsustainable, since the inventory is prepared by adding assessable value on the used personal effects and in spite of conducting detailed investigation, the alleged differential duty is only negligible, which proves that there is no attempt to misuse the benefit extended to passenger and such allegation is prima facie unsustainable. Against the initially assessed Customs Duty of Rs.1,925/-, due to such illegal method, Adjudication Authority demanded differential duty of Rs.86,576/- and after imposing fine and penalty, goods were allowed to be release to the passenger, though allegation is made that the goods doesn't belongs to said passenger. Learned Counsel also drew our attention to the statement recorded from the Sri. C. G. Prathapan, 'G' card holder, who is alleged as the mastermind for abetting such illegal import and it was specifically stated that he was not aware of such illegal activity committed by the employee. Further for the failure on the part of 'G' Card holder, Shri. C G Prathapan, his service was terminated by appellant vide letter dated 24.06.2024. Learned Counsel further submits that the appellant had given clear instruction to the all the employees not to act in any import and export clearance by violating any provision of law.
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4. Learned Counsel also draw our attention to the inquiry report dated 06.09.2024 and the finding in the impugned order. As regards allegation of violation of Regulation 10(a) of the CBLR, 2018 as per the provision "the Customs Broker shall obtain an authorization from each of the companies, firms or individuals by whom he is for the time being employed a Customs Broker and produce such authorization whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be". The goods imported by the passenger was allowed to be redeemed on payment of Rs.20,000/- by the Adjudicating Authority. Moreover, the appellant obtained authorization from the passenger in the form of copy of the Passport and list of the goods he has imported as unaccompanied baggage and only where the officer below the Respondent was satisfied with the authorization and other documents, then only the goods were released. Further, there is no allegation in the SCN that the Appellant has not obtained the authorization from the passenger, and the passenger was personally available before the proper officer while clearing the consignment. Hence, finding against the Appellant regarding violation of the Regulation 10(a) is arbitrary and unsustainable.
5. As regards Violation of Regulation 10(d), as per the said regulation the Customs Broker shall advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof, and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner or Assistant Commissioner, as the case maybe. To allege violation of ibid Regulation, prior knowledge regarding illegality intended to be committed by the importer is a mandatory ingredient and the same is missing in the present case. Learned Counsel further submits that it is an admitted fact that Appellant had undertaken the clearance of baggage only after compliance with documents submitted by the passenger. There is no allegation of undue monetary gain by Appellant through said import. Learned Counsel also submits that when goods are imported/exported, Customs Broker has no opportunity to verify or cross check the declaration with goods physically available and only if presence of any Page 4 of 12 Customs Appeal No. C/20005/2025 of the goods methods he can advise his client regarding the restriction / prohibition while importing such goods.
6. Further, it is submitted that only from the statement of the passenger, it is revealed that along with the baggage, goods belonging to two others were also sent under his baggage. The goods were entrusted to overseas cargo agency M/s Good Care Cargo Services by the passenger. List of items and authorization for filing the Baggage Declaration were given by the passenger himself. If there is any illegality found in Baggage Declaration, the same is known to the 'G' Card holder Sri. C. G. Prathapan, only. Thus, there is no reason to allege that appellant failed to verify the facts and report to the Deputy/Assistant Commissioner regarding violation of any Regulation to allege violation of Regulation 10(d) of the CBLR, 2018.
6. Learned Counsel further submits that as per Regulation 10(e) of the CBLR, 2018, appellant has to "exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo baggage". It means "the care that a reasonable person takes to avoid harm to other persons or their property". Due diligence is a process or effort to collect and analyse information before making a decision or conducting a transaction so a party is not held legally liable for any loss or damage. In this regard, Learned Counsel submits that Appellant had taken extreme care while handling import/export activities on behalf of Appellant's customer and there is no allegation that Appellant had made any attempt to cover up any omission or commission of an offence committed by Appellant's clients. When goods are imported/exported, Customs Broker have no opportunity to verify or cross check the declaration with goods physically available. Appellant is not expected to check the genuineness of the goods as the verification or examination of the goods is the statutory function of the Customs. Once the passenger himself was present for the clearance of the baggage, the CB has no role as alleged in the impugned order. Thus, there is no reason Page 5 of 12 Customs Appeal No. C/20005/2025 to allege that Appellant has failed to impart proper information to allege violation of 10(e) of the CBLR, 2018.
7. Learned Counsel further draws our attention to the judgment of the Hon'ble High Court of Delhi in the matter of Kunal Travels (Cargo) Vs. CC, reported in 2017 (354) ELT 447 (Del.) wherein while dealing with the obligations of CHA had held that; if the goods do not corroborate with declaration, it cannot be deemed to be mis- declaration by CHA and hence there could be no guilt, wrong, fault or penalty on the appellant and If any doubt about the issuance of the IE code is concern, it is upto the department to take appropriate action, while the IE Code is the locus standi of importer/exporter and the CHA is not expected to do a background check of the importer/exporter who approaches them for facilitation services in exports and imports and the documents prepared by the CHA is based on the instructions/ documents received from the importer/exporter and therefore any wrong information provided by the importer/exporter cannot be attributable against the CHA.
8. As regards Violation of Regulation 10(n) of the CBLR, 2018, Learned counsel submits that as per the said Provision, appellant is responsible to verify correctness of Importer Exporter Code, Goods and Service Identification Number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. This obligation of the Customs Broker is applicable in the case of normal imports and exports and not in the case of unaccompanied baggage. Further submits that while importing personal baggage passenger provided copy of the passport, authorization and list of items in the baggage for the purpose filing the Baggage Declaration, the passenger has to present personally for the clearance of the baggage. Appellant had undertaken the import of goods on behalf of Shri. Yoonus Kallivallappil under BD No. 397602 dated 03.04.2024 only after compliance with the KYC norms. Hence, there is no reason or justification to allege that Appellant had failed to Page 6 of 12 Customs Appeal No. C/20005/2025 verify the identity of the client to allege violation of 10(n) of the CBLR, 2018.
9. As regarding Violation of Regulation 13(12) of the CBLR, as per said provision, "the Customs Broker shall exercise such supervision as may be necessary to ensure proper conduct of his employees in the transaction of business and he shall be held responsible for all acts or omissions of his employees during their employment". Learned Counsel submits that as a Customs Broker, while appointing the employees, Appellant had given clear instruction to them that they shall not engage in any unlawful activities. Further, Learned Counsel submits that Appellant used to conduct random checking of the clearance of the consignments. Even if it is assumed that 'G' card holder of the appellant Sri. C. G. Prathapan had abetted illegal clearance of Unaccompanied Baggage as alleged, it cannot be considered as a bonafide act of an employee of Customs Broker to proceed against the Customs Broker under the provisions of Customs Act, 1962 or CBLR 2018 as he has undertaken such activities for his personal benefit and there is no allegation that the appellant was benefitted by involving in such unlawful activity. While considering the issue regarding liability of principal and agent, the Hon'ble Tribunal in the matter of M/s MNS Exports Pvt. Ltd Vs. Commissioner of Customs, Bangalore (reported in 2007 (219) E.L.T 649 (Tri. Bang)) categorically held that "fraud committed by an agent which does not fall within his authority does not affect the principal. Fraud committed by employee which was not within knowledge and consent of company, company is not liable for acts and omissions of its employees in terms of Customs Act, 1962. Thus, there is no reason to allege violation of Regulation 13(12) of the CBLR, 2018 against the Appellant.
10. Further it is alleged that an email communication was recovered from the appellant and only based all said document, it is held that the consignment brought by the passenger are not bona fide baggage and it consists of the baggage belongs to some other passengers also. But such email cannot be considered as admissible evidence to allege Page 7 of 12 Customs Appeal No. C/20005/2025 illegality against the appellant since it is relied without following the statutory provisions as applicable to such electronic data. Learned Counsel also relied on the following judgments:-
i. H20 Logistics Vs. Principal Commissioner of Customs - 2024 (17) Centax 3 (Tri. - Bom.) ii. Advent Shipping Agency Vs. Principal Commissioner of Customs, Kolkata - 2023 (2) Centax 157 (Tri. - Cal.) iii. Commissioner of Customs, Bangalore Vs. MNS Exports (P) Ltd. - 2012 (281) ELT 524 (Kar.) iv. M/s. Ajay Oerseas shipping Vs. Commissioner of Customs, Cochin vide Final Order No. 20326/2024 dated 30.04.2024 in Customs Appeal No. C/20068/2024 CESTAT, Bangalore.
11. Learned Authorized Representative (AR) for the Revenue reiterated the finding in the impugned order and submits that Customs Broker adopted a systematic approach to exploit the benefits of Rule 6 (Transfer of Residence), Baggage Rules, 2016 in connivance with overseas cargo companies. Customs Broker also acknowledged about non-bonafide and consolidated nature of impugned baggage. The inquiry officer in his report dated 06.09.2024, has very clearly given his findings in respect of each regulation and concluded that Sri.C. G. Prathapan, 'G' Card holder of the Appellant, was aware that the consignment was consolidated cargo of multiple consignees and that he had canvassed and cleared the consolidated baggage. Sri. C.G Prathapan had admitted this fact in his statement obtained under Section 108 of the Customs Act, 1962. The adjudicating authority also very clearly brought out in this finding that the appellant has failed to discharge their duties as Customs Broker; not followed the procedure as prescribed and violated Regulations 10 (a), 10 (d), 10 (e), 10 (n) and 13 (12) of the CBLR, 2018. The referred case laws do not come to the rescue of the Customs Broker because the Hon'ble Supreme Court in the case of Commissioner of Customs Vs K.M. Ganatra and Co., Page 8 of 12 Customs Appeal No. C/20005/2025 the Hon'ble Delhi High Court in the case of Sriaanshu Logistics Vs. Commissioner of Customs (General), CUSAA 17/2021 & CM APPL. 11107/2021 and the Hon'ble Madras High Court in the case of Sri Kamakshi Agency Vs. Commissioner of Customs, Madras, 2001(129) ELT29 (MAD) in cases which are of similar gravity to the present case upheld the revocation of Customs Broker license. Learned AR further submits that the present proceedings being of civil nature run on the principle of preponderance of probability and the charges against the Customs Broker are not required to be proved with mathematical precision. Moreover, in view of the legal responsibility cast on the Customs Broker making him responsible for acts and omissions of his employees under Regulation 13(12) of Customs Brokers Licensing Regulations, 2018. The evidences collected in the subject case as discussed in the Show Cause notice clearly highlights the attempt to exploit Rule 6 (Transfer of Residence) of Baggage Rules, 2016 by the Customs Broker in collusion with the cargo companies based abroad. All that the law requires is the establishment of such a degree of probability that a prudent man may on its basis believe in existence of the fact in issue. Therefore, even if some of the facts remain undisclosed during investigation, it does not tantamount to the absence of such malicious act as all other evidence go against the Appellant. Learned AR also relied on the following decisions : -
a) M/s. Prabhu Shipping Systems v. Commissioner of Customs Thoothukudi -2021 (11) TMI 666 - CESTAT CHENNAI
b) Nitco logistics Pvt. Ltd v. The Commissioner of Customs Airport and General - 2025 (10) TMI 509 - DELHI HIGH COURT
c) S.C. Ghose & Co (India) Pvt. Ltd v. C.C. (Admin & Airport) Kolkatta - 2015 (317) ELT 85 TRI. CAL.
d) EXIM Cargo Services v. C.C. New Delhi - 2018 (5) TMI 731 - CESTAT NEW DELHI Page 9 of 12 Customs Appeal No. C/20005/2025
12. Heard both sides and perused the records.
13. As regarding violation of the condition of Regulation 10(a) of CBLR, 2018, we find that Custom Broker has to obtain authorization from the importer / exporter while acting on behalf of them. However, said condition is not relevant in the present situation, since the baggage clearance is permitted by customs officer only when the passenger is personally available before the concerned officer. Moreover, based on the authorization, goods were also released by proper officer to the passenger on payment of redemption fine and penalty. In such a situation, allegation that the appellant failed to produce proper authorization under Regulation 10(a) of the CBLR is unsustainable. As regarding violation of Regulation 10(d), the appellant is liable to advise the importer and exporter to comply with the provisions of the Act. In the present case, admittedly there is a violation of the provisions of Baggage Rules. Further, as per the evidence on record, an email communication was recovered from the email of the appellant and from said document, it is evident that the consignment brought by the passenger as bona fide baggage consists of baggage belonging to some other passengers also. Once such an email communication recovered and when not rebutted it amounts to failure of the appellant to inform the same to concerned passenger not to proceed with such clearance.
Thus, there is an admitted violation of the Regulation 10(d) of the CBLR, 2018. As regarding violation of Regulation 10(e) of the CBLR, 2018, appellant has to exercise due diligence while ascertaining the correction of the information. Though the illegality was committed by one of the employees of the appellant in connivance with the overseas cargo movers, the appellant being a Customs Broker having unblemished record over a period of time, cannot be held personally liable for the said violation to proceed against him under the Provisions of CBLR, 2018. Further, as held by this Tribunal in the matter of M/s. MNS Export Private Limited (supra), fraud committed by an agent which does not fall within the authority, does not affect the principle. Fraud committed by employee, which was not within the knowledge and consent of the company, company is not liable for acts and omissions of Page 10 of 12 Customs Appeal No. C/20005/2025 his employees in terms of provisions of 13(12) or 10(e) of the CBLR, 2018. Further, as regarding violation of Regulation 10(n) of the CBLR, 2018, we find that the said provision is also not applicable in such a case where personal presence of the passenger is mandatory before the Customs Officer while clearing the goods. Thus, identification, Import and Export (IE) code, etc., is not relevant in such a situation and it is for the Customs Officer to verify the background of the passenger directly and no failure can be alleged against custom broker in such situation.
14. Thus, the finding of the Adjudication Authority regarding violations of the provisions of 10(a)(e) and (n) are unsustainable. However, the finding as regarding violation of the provisions of 10(d) is upheld. As regarding invoking the revocation, suspension forfeiture of security deposit and penalty under various provisions of law, we find that the customs broker regulation envisages such harsh penal consequences depends upon the involvement of the customs broker in the alleged fraud. In the present case, though it is an admitted fact that there was under valuation, we find that on perusal of the method of valuation adapted by the Investigating Officer, it is not a usual practice and even as per the initial examination, the value was found normal by the proper officer of the customs. In the absence of any authority vested on the customs broker regarding valuation of goods and in the absence of any knowledge regarding such under valuation till it was brought to the notice of the customs broker while conducting examination by SIIB, the appellant cannot be held liable for such under evaluation. Further, it is an admitted fact that there is no contraband or prohibited or restricted goods imported under the guise of baggage rules, and such a harsh penal proceeding can be imposed only when such illegalities are committed with the direct knowledge of the customs broker. In the present case, the only evidence available on record is the email communication, which was received by the appellant through the official email of the appellant and in the absence of any other satisfactory explanation, it is has to be presumed that the appellant had knowledge regarding presence of baggage of other passengers in the Page 11 of 12 Customs Appeal No. C/20005/2025 said consignment. Considering the same, we uphold the penalty of Rs.50,000/- imposed by the Adjudication Authority. However, revocation of the custom broker license and forfeiture of security deposits is not necessary for such venial violations of CBLR, 2018.
15. Accordingly, revocation of the custom broker license and forfeiture of security deposit as per the impugned order are set aside. However, considering the violation of the provisions of 10(d), penalty of Rs.50,000/- imposed by Adjudication Authority is confirmed.
16. Accordingly, Appeal is partially allowed in the above terms.
(Order pronounced in Open Court on 25.02.2026) (P. A. AUGUSTIAN) MEMBER (JUDICIAL) (PULLELA NAGESWARA RAO) MEMBER (TECHNICAL) hr/Sasi Page 12 of 12