ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 19.09.2025
CESTAT Kolkata Quashes Penalty on Broker in Diamond Tradeβ β β Β
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
In a significant judgment, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has set aside the penalty imposed on Appellant, a broker in the diamond trade, under Section 112(a) of the Customs Act, 1962. The case revolved around allegations of over-invoicing and circular trading of diamonds by certain firms, with the appellant accused of being a link between the parties involved. β This blog delves into the details of the case, the arguments presented, and the Tribunal’s reasoning behind its decision.
Background of the Case
The appellant worked as a broker in the diamond trade, earning a small commission of 2 paisa per US dollar. He was accused of being involved in circular trading and over-invoicing of diamonds imported by M/s Chirayu Impex Pvt. β Ltd and M/s Amrapali Exim Pvt. β Ltd. The Directorate of Revenue Intelligence (DRI) initiated an investigation against these firms, alleging that they were importing diamonds without paying customs duty and overvaluing the goods to remit excess foreign exchange overseas. β
The appellant was issued a Show Cause Notice, and the adjudicating authority imposed a penalty of Rs. β 2,00,000 under Section 112(a) of the Customs Act, 1962. β On appeal, the Commissioner of Customs (Appeals) reduced the penalty to Rs. β 1,50,000. Aggrieved by this decision, the appellant filed an appeal before the Tribunal.
Source: CESTAT Kolkata
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