This case digest provides comprehensive coverage of violation cases under the Customs Brokers Licensing Regulations, 2018. These regulations, issued by the central government, are designed to regulate customs brokerage activities within a specific jurisdiction. They outline the requirements, procedures, and standards that individuals or entities must adhere to in order to obtain and maintain a customs broker license, including the examination process.
The regulation mandates that no person can conduct customs brokerage business at a Customs Station without a valid license, except for certain exceptions. These exceptions include:
Eligibility Criteria:
Eligibility criteria for obtaining a customs broker license include:
Examination Requirements:
The examination process for customs broker licensing includes:
Grant of Licence :
The process for granting a customs broker license involves:
CASE LAWS
CESTAT
The CESTAT upheld the revocation of a Customs Broker license, citing a recorded admission under Section 108 of the Customs Act as sufficient evidence. The appeal challenged the revocation on grounds of violating CBLR regulations, with the appellant claiming fraudulent activity by certain importers led to duty evasion and goods diversion.
However, the Tribunal rejected the defense, highlighting the appellant’s awareness of the importers’ actions and their decision to remain silent for business relations. Despite lack of documentary evidence, the Tribunal deemed the appellant’s admission as substantial proof, citing legal precedence.
Additionally, the Tribunal noted that a confession under Section 108 can justify license suspension if voluntary and truthful. Ultimately, the Tribunal upheld the revocation, emphasizing deference to disciplinary authorities unless punishment is disproportionate or malicious.
The Hyderabad bench of CESTAT nullified penalties imposed under Customs Broker License Regulations, 2018 due to non-revocation of license. Lotus Integrated Logistics Pvt Ltd appealed against penalties levied by the Commissioner of Customs for regulation breaches. The appellant’s counsel argued that due process wasn’t followed, relevant documents weren’t provided, and the inquiry lacked natural justice principles. The revenue’s counsel cited lower authorities’ decisions, asserting penalty legality.
The bench noted that if violations aren’t severe enough for license revocation, maximum penalties aren’t warranted. Anjani Kumar (Technical), presiding as a single-member bench, annulled the penalties imposed by the Commissioner, favoring the appellant’s appeal.
The Bangalore bench of CESTAT overturned the revocation of a customs broker’s license, citing violation of rule 11(a) of the Customs Brokers Licensing Regulation. The appellant, M/s. Global Agencies held a regular customs broker license and operated in Chennai under Regulation 7(2) of CBLR 2013. Upon discovery of undeclared items in a consignment, Chennai Customs issued a prohibition order against the appellant. Subsequently, the Commissioner of Customs, Cochin, revoked the license citing violations. The appellant’s counsel argued against the revocation, citing previous tribunal decisions and procedural limitations.
The bench, comprising Dr. Dm. Misara and R. Bhagya Devi, found no merit in the revocation, as the basis for the order had been set aside by the Tribunal Chennai Bench. As a result, the impugned order was annulled, and the appeal was upheld.
The New Delhi Bench of CESTAT annulled the suspension of revocation of a Customs Broker License of a Customs House Agent (CHA) as there was no alleged violation of provisions of Customs Broker Licensing Regulations (CBLR) 2018. The appeal, filed by M/s. ICS Cargo, contested the revocation of their customs broker license, forfeiture of security deposit, and imposition of penalty. Allegations of undervaluation of imported goods were made against the appellant by DRI, DZU, Delhi, regarding power tools of Dongcheng brand and other Chinese brands imported through various ports.
The tribunal noted that the appellant was not aware of the arrangement regarding the handling of import consignments and found no evidence of deliberate violation of regulations. Consequently, the revocation of the license and penalty imposition were deemed wrong, unreasonable, and unjustified by the tribunal.
The Chandigarh bench of CESTAT affirmed the revocation of a Customs Broker License due to proven violations of Customs Broker Licensing Regulation, 2018 (CBLR). Ms. Meenu Rathore, the appellant, contested the revocation order issued by the Commissioner of Customs Ludhiana, which included forfeiture of security and imposition of penalty. Allegations arose when Ms. Rathore subleased her license to Shri Girish Kumar of M/s Global Art Logistics, leading to an inquiry and subsequent revocation by the Commissioner. Despite arguments regarding procedural flaws and employee misconduct, the bench concluded the appellant’s guilt based on violations of CBLR regulations. Consequently, the appeal was dismissed, and the impugned order was upheld by CESTAT.
The Kolkata bench of CESTAT overturned a penalty imposed on a Customs Broker, citing lack of evidence for violating Customs Broker Licensing Regulations 2013 (CBLR). M/s. JKG Infralogistics Pvt. Ltd., the appellant, was accused of involvement in fraudulent export practices by handling overvalued shipments. Despite preliminary investigations and allegations, the tribunal found insufficient evidence linking the appellant to the fraud. The bench noted the absence of conclusive evidence and reliance on unverified oral testimony. Furthermore, the appellant’s cooperation in the inquiry was acknowledged. Consequently, the tribunal deemed the penalty unjustified and revoked the Customs Broker license, citing the failure to establish violations of CBLR regulations.
The Chennai bench of CESTAT, led by Ms. Sulekha Beevi C.S., Member (Judicial), emphasized that attempts to smuggle prohibited goods cannot be treated lightly as mere violations of Customs Brokers Licensing Regulations (CBLR). In a case involving the illicit export of red sanders logs, the tribunal upheld the decision to remand the matter for reconsideration, rejecting the appellant’s argument that penalties should not apply solely under CBLR. The adjudicating authority’s finding that the appellant had not abetted the smuggling plan was challenged by the department, leading to an appeal before the Commissioner (Appeals). Despite arguments from both sides, the tribunal affirmed the remand order, emphasizing the seriousness of the smuggling attempt. Dr. Sunitha Sundar represented the appellant, while Mr. R. Rajaraman AC appeared for the respondent.
The Chandigarh bench of CESTAT upheld the penalty and forfeiture of security deposit imposed on a Customs Broker for illegal smuggling of cigarettes, citing violations of Regulations 10 of the Customs Broker Licence Regulations (CBLR), 2018. Safe Cargo Clearing Services appealed against the revocation of its Custom Broker Licence and the imposition of a penalty of Rs. 50,000/-. The appellant’s counsels argued defects in the show cause notice and lack of findings on the limitation period, while the department’s counsels highlighted the deletion of crucial WhatsApp chat evidence.
The bench acknowledged the illegal clearance of cigarette consignments by the appellant but deemed the extreme penalty of license revocation unjustified. Consequently, the license revocation was quashed, while the penalty imposition and forfeiture of the security deposit were upheld. The two-member bench comprised S.S Garg (Judicial) and Anjani Kumar (Technical).
The Delhi bench of CESTAT ruled that non-traceability of exporters alone does not violate Regulation 10(n) of Custom Brokers under CBLR, 2018. World Line Cargo Movers, the appellant, faced license suspension for handling consignments from untraceable exporters flagged by DGARM. The appellant argued lack of evidence and violation of natural justice principles. They emphasized compliance with GST documentation requirements and absence of fraudulent activity.
The bench noted that Regulation 10(n) doesn’t mandate physical verification of exporters. It overturned the revocation of the appellant’s license, forfeiture of deposit, and penalty imposition. The division bench comprised Ms Binu Tamta, Member (Judicial), and Ms Hemambika R Priya, Member (Technical).
The New Delhi bench of CESTAT overturned the cancellation of a Customs broker license due to non-violation of regulations 11(d), 11(e), and 11(n) of CBLR Rules, 2013. Trinity International Forwarders, the appellant, appealed against the cancellation, forfeiture of security deposit, and penalty imposition. Counsel Priyanka Goel argued that the broker had no authority to determine transaction value, thus not violating the regulations. The bench, comprising Rachna Gupta (Judicial) and Subba Rao (Technical), ruled in favor of the appellant, quashing the license cancellation, forfeiture, and penalty imposition.
The Kolkata bench of CESTAT overturned the revocation of a Customs Broker License due to non-violation of regulation 18 of CBLR, 2013, concerning the illegal import of food supplements. RDR Clearing Agent, the appellant, contested the order passed by the Commissioner of Customs, appealing against license revocation and forfeiture of the Security Deposit. Counsel S. K. Mohapatra and Sudipta Ghosh argued that responsibility for any violation of terms and conditions lay with the Departmental Officer, not the Customs Broker. Counsel Faiz Ahmed, representing the department, contended that the revocation was lawful. The bench, comprising Muralidhar (Judicial) and Anpazhakan (Technical), cited precedent, ruling in favour of the appellant and quashing the license revocation and forfeiture.
The New Delhi bench of CESTAT upheld the forfeiture of the security deposit of a Customs Broker for mis-declaring the weight of pan masala, citing violation of Regulations 10(6) of CBLR, 2018. Durga Link Logistics (Pvt.) Ltd, the appellant, contested the order confirming license revocation, forfeiture, and penalty imposition. Counsel L B Yadhav argued that the weight difference was unknown to the appellant, emphasizing cooperation with customs. Girijesh Kumar, representing the department, claimed negligence on the appellant’s part. The bench, comprising Rachna Gupta (Judicial) and Subba Rao (Technical), concluded the appellant violated regulations 10(a), 10(b), and 10(e) of CBLR, affirming the forfeiture and penalty.
The New Delhi bench of CESTAT revoked the Customs Broker license of Aradhya Export Import Consultants Pvt Ltd for facilitating fraudulent exports to claim ineligible IGST refund, citing violation of regulation 10(n) of CBLR, 2018. The revenue appealed against the adjudicating authority’s decision to revoke the broker’s suspended license. Counsel Munshi Ram Dhania argued that the exports were made to claim bogus IGST refunds. Ram Avatar Singh, representing the assessee, contended that the broker never provided incorrect information to the exporter. However, the bench, comprising Rachana Gupta (Judicial) and Hemambika Priya (Technical), upheld the suspension of the broker’s license, citing violation of regulation 10(n) of CBLR.
CESTAT Kolkata overturned the revocation of a Customs Broker License, initially revoked for alleged violations of Regulations 10(d) and 10(e) of CBLR, 2013. The appellant, M/s. S. K Kanjilal, faced accusations of facilitating fake exports for drawback claims. Despite the Inquiry Report suggesting violations, the tribunal found insufficient evidence linking the appellant to the alleged fraudulent activities. It was emphasized that allegations alone cannot substitute for concrete proof. Consequently, the tribunal deemed the license revocation unwarranted and set aside the impugned order.
CESTAT New Delhi overturned a Customs duty demand imposed on a Customs Broker (CB) for importing Vontron make RO membranes, citing no violation of Regulations 10(n) of CBLR, 2018. NPL Impex Pvt. Ltd, the appellant, imported goods, but allegations of misdeclaration and undervaluation were directed at the importer and the mastermind, Sandeep Jain, not the CB. The tribunal ruled that the CB couldn’t be held responsible for actions they weren’t party to and lacked evidence of benefiting from any arrangement. Consequently, the Customs duty demand was quashed, and the appeal was upheld.
The Mumbai Bench of CESTAT overturned the revocation of a customs broker license, noting the dependence of the broker’s business on the livelihood of its employees. The suspension was based on alleged violations of CBLR, 2018, following an offence report and show cause notice. The appellant argued that they were not aware of the overvaluation of imported goods and had requested a first check assessment. The prolonged suspension during inquiry proceedings was deemed excessive, considering its impact on the broker’s livelihood. The Bench found the conclusions of the Principal Commissioner contrary to the factual position, deeming them legally unsustainable.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside the revocation of Customs Brokers Licenses of M/s Bright Clearing and Carrier Pvt Limited. The revocation was based on alleged violations of Regulation 10(n) of the Customs Broker Licensing Regulations (CBLR), 2018. The Directorate General of Analytics and Risk Management (DGARM) identified risky exporters, including some handled by the appellants, leading to Show Cause Notices (SCNs) being issued. However, the Tribunal found that the verification reports provided by the officers did not establish that the appellants had not fulfilled their obligations under Regulation 10(n) of the CBLR. Consequently, the Tribunal ruled to set aside the orders revoking the licenses, forfeiting security deposits, and imposing penalties on the appellants.
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that Customs Brokers are not obligated to conduct physical verification of business premises under Rule 10(n) of the Customs Brokers Licensing Regulations (CBLR, 2018). M/s. B. K. Clearing Agency, a holder of Customs Broker license, faced proceedings for alleged violations related to past exports of M/s. S. S. Impex. The Principal Commissioner of Customs ordered revocation of the license, forfeiture of security deposit, and imposed a penalty. However, the Tribunal observed that the appellant cannot be held responsible for the non-existence of the exporter’s premises specified in the documents submitted. The allegation of violating Regulation 10(n) of CBLR, 2018 was deemed unsustainable by the Tribunal.
The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that failure to comply with the Customs Brokers Licensing Regulations (CBLR), 2013 does not warrant penalty under sections 114 and 114AA of the Customs Act, 1962. The respondent, Jayachandran, was exonerated from charges of violating Regulation 11(n) of CBLR. The Tribunal upheld the decision of the Commissioner (Appeals), stating that there was no sufficient evidence to impose penalties as per the Act or Rules.
The recent verdict from the Delhi bench of CESTAT emphasised the crucial role of Customs Brokers in preventing illegal transactions. SKH Freight Logistics, acting on behalf of M/s. Linwood Sales without proper authorization, violated regulations governing Customs Brokers’ responsibilities. They failed to verify authorization, leading to fraudulent transactions and significantly undervalued exports. The appellant breached several regulations, including Regulation 10 (a), (b), (d), (k), and (n) of CBLR 2018. Due to these violations, the two-member bench revoked the appellant’s license.
The New Delhi Bench of CESTAT observed that the responsibility of a customs broker under Regulation 10(n) of the Customs Brokers Licensing Regulations, 2018 is fulfilled when the verification of the client’s address is complete. The appellant’s license was revoked based on allegations of violating CBLR 2018. However, the appellant argued that all necessary documentation to verify the client’s identity was undertaken, and none of the documents were found false or forged. The Bench noted that both the GSTIN and the IEC indicated the client’s address, serving as independent data to verify identity/address. As the verification of the address was complete, the responsibility under Regulation 10(n) was fulfilled.
The Bangalore Bench of CESTAT upheld a penalty against a customs broker for failing to verify the genuineness of a person claiming to be the authorized representative of the exporter. The appellant filed shipping bills for export of ‘Industrial Ductile Pipes’ on behalf of M/s. TEAC Engineers, but the consignment contained red sanders logs, a prohibited item. Despite the appellant’s claim of verifying the exporter’s genuineness online, the Bench found the failure to verify the representative warranted a penalty under CBLR 2018. The penalty of Rs. 50,000 was upheld, and the appeal was partly allowed.
The CESTAT, Delhi bench granted partial relief to Falcon India (Customs Broker) by overturning the penalty order while affirming the revocation of its license and forfeiture of the security deposit. The appellant was found involved in importing goods through dummy firms to evade detection, leading to the recovery of cash during searches. The Tribunal emphasized the significant role of Customs Brokers and their obligation to fulfill responsibilities under regulations. It noted that even unintentional violations warrant action, emphasizing the duty to advise clients on legal compliance. The bench disagreed with the appellant’s argument against revocation, citing the importance of adhering to reporting obligations. Consequently, the penalty was set aside while the revocation of license and forfeiture of the security deposit were upheld, considering the appellant’s failure to meet regulatory obligations.
The Delhi Bench of CESTAT ruled that Customs Brokers Licensing Regulations (CBLR, 2018) do not require Customs Brokers to verify exporters’ eligibility for Input Tax Credit (ITC) under GST. M/s Bright Clearing & Carrier Pvt. Limited and M/s Star Carriers, appellants, had their licenses revoked under CBLR, 2018, with penalties imposed for alleged violations of Regulation 10(n). The impugned orders were based on DGARM analysis identifying risky exporters. CESTAT emphasized that if documents or data confirm the client’s operation at the declared address, the broker’s obligation is fulfilled. Reports stating exporter non-bonafide or lack of ITC do not entail broker responsibility. The bench, led by Justice Dilip Gupta and Mr. P V Subba Rao, set aside the orders, revoking licenses and forfeiting deposits.
The Chennai bench of CESTAT set aside the revocation of a Customs Broker License due to its harshness, considering financial distress caused to the broker. M/s. Sameer Logistics Pvt. Ltd., faced penalties for a Bill-of-Entry filed on behalf of M/s. Jeppiar Furnace and Steels Pvt. Ltd., involving smuggled cigarettes. While violations were confirmed, CESTAT deemed license revocation excessive due to the broker’s prolonged suspension. The tribunal upheld forfeiture of the security deposit and imposed penalty, directing license restoration.
The Mumbai Bench of CESTAT imposed a penalty of Rs. 10,000 on a Customs Broker, emphasizing their crucial role in revenue protection. The broker’s license was suspended based on violations of CBLR, 2018. The advocate argued discrepancies in the inquiry report, stating lack of prior knowledge of under-valuation. However, the tribunal upheld the penalty, stressing the broker’s responsibility to ensure compliance with legal requirements and expeditious cargo clearance.
The Kolkata bench of CESTAT ruled that customs brokers have a limited role in facilitating import clearance, and they cannot be held liable for violations committed by importers. RDR Clearing Agent, the appellant, appealed against the revocation of its Customs Broker License and forfeiture of the Security Deposit under CBLR, 2013. The tribunal noted that the broker’s role is to follow importer instructions and that the decision on exemption benefits lies with the Deputy Commissioner of Customs. The bench, comprising Muralidhar (Judicial) and Anpazhakan (Technical), held that brokers cannot be held responsible for importer violations.
The Chennai Bench of CESTAT nullified the penalty imposed on Customs Brokers due to a breach of natural justice principles. M/s. Seaswan Shipping and Logistics appealed against a penalty of Rs.50,000/- under CBLR, 2013. The tribunal emphasized the importance of inquiry proceedings before adjudication, highlighting the need for fairness and the right to defend oneself. Despite the inquiry officer’s findings, the adjudicating authority concluded violations without informing the broker of disagreement, violating natural justice principles.
The Kolkata Bench of CESTAT observed that the immediate suspension of a Customs Broker’s license is not warranted after the completion of an investigation and issuance of a show cause notice. M/s India Transport & Travel Private Limited, the appellant, faced suspension under Regulation 16(1) of CBLR, 2018 for alleged violations. The appellant argued that suspension is unnecessary as the investigation is concluded and a notice issued. The Bench agreed, stating that immediate suspension is only necessary to prevent interference with ongoing investigations, which wasn’t the case here.
M/s Swastik Cargo Agency appealed against the revocation of their Customs Broker License for various violations of Customs Broker License Regulation, 2013 (CBLR). Allegations included the absence of a CB office at the provided address and involvement in fraudulent export transactions with fictitious entities. The Tribunal upheld the revocation, noting the fraudulent nature of the exports and the CB’s involvement in using forged documents, which amounted to defrauding the revenue.
The Chennai bench of CESTAT overturned the revocation of a Customs Broker license held by M/s. Souparnika Shipping Services after more than 4 years due to facilitating fraudulent import and export activities. The tribunal deemed the revocation too severe, considering its impact on the broker’s livelihood. While upholding the penalty of Rs. 50,000, the CESTAT directed the Customs authority to reinstate the broker’s license, considering the lengthy period of suspension as sufficient punishment for the broker’s lapses.
The New Delhi Bench of CESTAT overturned the revocation of a Customs Broker License held by M/s Sai Chhaya Impex Pvt Ltd, stating that the show cause notice was vague and irrelevant for denying a Non-Objection Certificate (NOC). The tribunal emphasized that the responsibility of a Customs Broker under Regulation 10(n) does not include continuous surveillance on the client’s operations. The evidence presented in the show cause notice was deemed vague and insufficient to establish a violation of Regulation 10(n) by the appellant.
The New Delhi bench of CESTAT ruled that Customs Brokers have no authority to determine or re-determine the value of imported or exported goods, as per Customs Broker Licensing Regulations (CBLR), 2013. Trinity International Forwarders, the appellant, appealed against the cancellation of its Customs Broker license, forfeiture of its security deposit, and imposition of a penalty. The appellant argued that it had no knowledge of any ineligible drawback claimed by the exporter and had no authority to verify export values. The bench concurred, stating that Customs Brokers are not authorized to re-determine values or inspect goods, thus concluding that the appellant did not violate any regulations under the Customs Broker Licensing Regulations.
The Mumbai bench of CESTAT imposed a penalty on Ramesh Transport Company for not being proactive in fulfilling regulation 10(d) of Customs Brokers Licensing Regulations (CBLR) 2018. The appeal was filed against the Principal Commissioner of Customs (General). The company was alleged to have handled exports in a larger fraud case involving ABC Cotspin Pvt. Ltd. The Commissioner revoked the company’s Customs Broker license and imposed a penalty of Rs. 50,000, along with forfeiting the security deposit. The company argued that they were not involved in the fraud and had no interaction with the exporter. The bench agreed, stating that while a penalty for not being proactive was justified, there was no violation of regulations 10(d), 10(e), and 10(m), and the appeal was allowed.
The New Delhi Principal Bench of CESTAT directed the restoration of a customs broker license, finding no evidence to support the allegations against the appellant, M/s. Perfect Cargo and Logistics. The Directorate General of Analytics and Risk Management (DGARM) had raised concerns about exporters handled by the appellant, leading to the revocation of its license and imposition of a penalty. However, the tribunal noted that no documents were provided to substantiate the allegations in the show cause notice, and the communication from DGARM was not enclosed with the notice. Therefore, the tribunal set aside the impugned order, directing the restoration of the appellant’s customs broker license within 10 days of receiving the order.
The Mumbai Bench of CESTAT upheld the forfeiture of a customs broker’s security deposit due to their failure to act proactively in fulfilling their obligations under sub-regulation 11(a) of the Customs Brokers Licensing Regulations, 2013 (CBLR). The Principal Commissioner of Customs (General), Mumbai suspended the customs broker license based on a report from DRI, citing violations of various regulations. The appellants argued they had obtained necessary authorizations, but the tribunal found they could have been more proactive in ensuring document authenticity. Therefore, the forfeiture of the security deposit for non-compliance with regulation 11(a) was deemed appropriate and justifiable by the Bench.
The Bangalore Bench of CESTAT nullified the cancellation of a Customs Broker’s License as examination and inquiry are still pending. M/s Mercantile & Marine Services, the appellant, faced suspension after gold was found in a baggage declaration filed by Mr. Althaf Moosan Mukri. The tribunal deemed the suspension unwarranted as the appellant’s involvement was not clearly established and proceedings were ongoing. The suspension was set aside, allowing the Department to take suitable action after completing the examinations and inquiries.
The Mumbai Bench of CESTAT ruled that regulation 10(n) of Customs Broker Licensing Regulations was not violated due to a lack of evidence showing delay in the customs broker’s duties. Shree Simandhar Shipping Service appealed against an order from the Principal Commissioner of Customs (Gen), Mumbai. The appellant was charged with failing obligations related to advising clients on compliance with customs regulations, diligence in verifying information, and efficient discharge of responsibilities. The case involved import of ‘natural/alkalized cocoa powder’ against authorizations for different goods, triggering charges under the Foreign Trade Policy. The tribunal, comprising Mr. C J Mathew (Technical Member) and Mr. Ajay Sharma (Judicial Member), concluded that there was no evidence of delay or violation of regulation 10(n), thus setting aside the impugned order and revocation of the license.
The New Delhi bench of CESTAT ruled that Customs House Agents (CHAs) are not responsible for verifying the genuineness of transactions but are merely processing agents for document clearance. Durga Link Logistics (Pvt.) Ltd, the appellant, appealed against the revocation of its customs broker license, forfeiture of security deposit, and imposition of a penalty. The appellant argued that a clerical error in the invoice was the exporter’s responsibility, not the CHA’s. The department contended that the appellant failed in its obligations under Regulation 10(b) of Customs Broker Licensing Regulations (CBLR), 2018.
The bench noted that as a customs broker, the appellant wasn’t required to verify the quantity or weight of sealed goods. Referring to a previous case, the bench affirmed that CHAs are not responsible for verifying transaction genuineness. Consequently, the bench held that the appellant, as a customs broker, was not liable to inspect transaction genuineness.
The New Delhi Bench of CESTAT confirmed the revocation of a customs broker license due to unauthorized use of login credentials. M/s Paramount Cargo & Logistics Solutions allowed an unauthorized person, Ashish, to use their credentials to file shipping bills. Ashish misused this to export narcotic drugs, prompting the license suspension. While the appellant argued Ashish’s impersonation, the tribunal held that allowing him to use the credentials led to the violation. The bench emphasised that Ashish filed the shipping bill using the appellant’s credentials, indicating their involvement in the violation.
The Chennai bench of CESTAT ruled that the Assessing Officer can reject the FOB value if there are doubts about its accuracy. M/s. Sri Velavan Logistics Services Private Limited challenged a penalty imposed under Section 114 of the Customs Act, 1962 for undervalued goods. On appeal, the First Appellate Authority accepted the violation of Regulation 10(n) of the CBLR and rejected the appeal. Despite the appellant’s appeal, the penalty was upheld by the First Appellate Authority. However, CESTAT overturned the decision, stating that the penalty was unjustified as the reasons for rejecting the FOB value were not justified.
The Delhi bench of CESTAT upheld the penalty against a customs broker for aiding in the export of prohibited Gutkha pouches. The appellant, Sanjay Prabhakar, facilitated the export of goods declared as Pan Masala but containing Gutkha pouches. Despite initial denial, Prabhakar later confessed to his involvement under pressure from the Directorate of Revenue Intelligence (DRI). The DRI issued a show cause notice, resulting in the revocation of Prabhakar’s customs broker license, forfeiture of security deposit, and imposition of a penalty. Prabhakar’s request for cross-examination of key witnesses was denied. The Tribunal found sufficient evidence of Prabhakar’s connivance and upheld the penalty, dismissing his appeal.
In a recent case, the Delhi bench of CESTAT overturned the revocation of a customs broker license regarding alleged fraudulent IGST refunds. M/s Friends Cargo, the appellant, faced penalties and license revocation based on allegations of involvement with risky exporters. However, the tribunal found no evidence connecting them to the exporters in question. The appellant argued that their responsibility ended once address verification was completed, which was done using reliable documents like GSTIN and IEC. The bench concurred, stating that Regulation 10(n) does not mandate physical verification and ruled in favour of the appellant, setting aside the penalties and license revocation.
The Kolkata Bench of CESTAT ruled that Regulation 10(n) of CBLR, 2018 does not require customs brokers to physically verify import addresses. M/s Sinha Shipping Agency, the appellant, faced penalties based on alleged address discrepancies in import documents. However, the tribunal found no fault with the appellant’s actions, noting that the Department itself failed to verify the address. The bench set aside the penalties and restored the appellant’s Customs Broker License.
The New Delhi Bench of CESTAT ruled that a customs broker cannot be held liable for the illegal actions of importer firms after cargo clearance. The appellant, a licensed customs broker, faced penalties due to alleged customs duty evasion by importers. However, the tribunal found no evidence linking the broker to the fraud. It emphasized that the broker fulfilled obligations by verifying importer premises through KYC documents. Citing a High Court decision, the bench set aside the license revocation and forfeiture of security deposit but upheld the penalty.
The Kolkata Bench of CESTAT ruled that the issuance of a show cause notice under Section 124 instead of Section 146 of the Customs Act 1962 regarding a customs broker license was void ab initio. The Department accused Axis Shipping Agency of violating Customs Broker Licensing Regulations 2013. Represented by Tariq Suleiman, the revenue argued the case. The Bench, consisting of P. K. Choudhary (Judicial) and Rajeev Tandon (Technical) Members, highlighted that Section 124 pertains to the adjudication of confiscation of goods, not to issuing notices for a Customs Broker License under Section 146. Consequently, the notice was deemed invalid and quashed.
The Ahmedabad bench of CESTAT ruled that no penalty could be imposed under Regulation 18 of Customs Broker Licensing Regulation (CBLR) when two operative Customs House Agent (CHA) licenses were obtained by one person due to procedural failures. The appellants, M/s. Asia Shipping Services and Shri Harendra M Karia, contested the penalty of Rs. 50,000 imposed on them. While the proceedings for revocation of their license were dropped, the penalty was imposed under Regulation 18. The Tribunal observed that the situation arose due to procedural lapses and confusion, with no malicious intent. They concluded that the penalty imposition was unjustified, setting it aside and allowing the appeal.
The Ahmedabad Bench of CESTAT quashed the suspension of MAT Shipping’s Customs Broker License, citing lack of evidence regarding manipulation of boiling point of Superior Kerosene Oil (SKO) samples. The suspension arose from suspicion of importing SKO disguised as Industrial Composite Mixture Plus/Low Aromatic White Spirit. Allegations included attempting to influence customs laboratory officers to issue fabricated test reports. However, the tribunal found no clarity on how manipulating the final boiling point below 240 degrees Celsius could aid in classification as ICMP, as alleged. Without clarification, the impugned order couldn’t be sustained, prompting CESTAT to quash the suspension.
The Mumbai Bench of Customs, Excise & Service Tax Appellate Tribunal upheld the forfeiture of the security deposit of M/s. Sky Sea Services, a Customs Broker, for facilitating fake importers. The investigation conducted by the Special Intelligence and Investigation Branch (SIIB) revealed that the appellant did not follow proper procedures for cargo examination and failed to verify the importers’ credentials. Consequently, the security deposit was forfeited, and a penalty was imposed.
The tribunal, comprising Mr. S.K. Mohanty, Member (Judicial), and Mr. P. Anjani Kumar, Member (Technical), noted that the appellant failed to conduct due diligence in verifying the clients’ credentials and ended up aiding fake importers, violating several provisions of the Customs Broker Licensing Regulations. While considering the punishment already suffered by the appellant, the tribunal found the Commissioner’s decision to impose a penalty and forfeit the security deposit reasonable and legally justifiable, avoiding revocation of the license.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside a penalty imposed under Section 117 of the Customs Act, 1962, ruling that Customs House Agents (CHAs) are not obligated to advise clients on assessment aspects unless solicited. The department alleged that these duties should have been paid in cash and invoked the extended period, accusing the appellants of evasion. However, the tribunal noted that the imposition of penalties under the Customs Broker License Rules was not mentioned, and since the CHA wasn’t obliged to offer assessment advice, the penalty under Section 117 was set aside, leading to the appeal’s success.
The tribunal, consisting of Mr. Raju, Member (Technical), and Mr. Somesh Arora, Member (Judicial), emphasized that penalties for violating regulations should align with specific provisions, not be relegated to general provisions like Section 117 of the Customs Act, 1962. They highlighted that no action had been taken against the CHA under the Customs Broker License Rules, further supporting their decision to annul the penalty. As a result, the appeal filed by Narendra Forwarders P Ltd was upheld, emphasizing the importance of adherence to regulatory frameworks and the limitations of imposing penalties beyond their purview.
The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) overturned a penalty imposed on Customs House Agents (CHAs) M/s KVS Cargo and M/s Him Logistics Pvt Ltd for failing to verify the KYC documents of a bogus firm involved in fraudulent exports. The tribunal found that the appellants did not abet the export scheme orchestrated by Shri Anand Sharma, who created a fictitious firm to fraudulently claim duty drawbacks.
Despite the appellants’ failure to verify the documents, the tribunal reasoned that they couldn’t be expected to detect the fraudulent nature of the documents, especially when even government departments and bank officials failed to do so. As a result, the tribunal held that the appellants did not commit any act warranting a penalty under Section 112 of the Customs Act, ultimately setting aside the penalty imposed on them.
HIGH COURTS
The Calcutta High Court stayed the revocation of a Customs Broker license, ruling that the timeline prescribed under Regulation 17(7) of CBLR, 2018 is mandatory. Shaikh and Pandit Agencies Private Limited challenged the revocation order based on alleged violations. The court noted that the order was passed beyond the prescribed timeline, finding in favor of the petitioner. Considering a prima facie case, the court stayed the revocation until April 30, 2023, or until further order, whichever is earlier.
The Calcutta High Court stayed the permanent suspension of the petitioner’s Customs Broker License, emphasising the strict observance of the time limit prescribed by Regulation 17(7), CBLR, 2018. The petitioner challenged the revocation of their license, citing a violation of Regulation 17(7)’s 90-day period for issuing such orders. The court deemed the petitioner’s case prima facie valid, noting the Inquiry Officer’s finding of no violation and citing a Delhi High Court decision affirming the mandatory nature of the 90-day timeline. Considering these factors, the court stayed the revocation order until January 31, 2023, or until further notice, and directed the respondents to file their opposition affidavit within four weeks after the Puja Vacation. The petitioner was given two weeks to respond, and the matter was listed for final hearing in the monthly list of January 2023.
In a recent case, the Delhi High Court ruled that allegations of import by another person in the name of importers on bills of entry weren’t sufficient to doubt importer identity, affirming the order setting aside a Customs House Agent’s (CHA) license suspension. The Commissioner of Customs appealed the Customs, Excise and Service Tax Appellate Tribunal’s order revoking the respondent’s CHA license, M/S ICS Cargo. DRI conducted raids on importer companies allegedly undervaluing goods, implicating the respondent for facilitating clearance without verifying importers’ IECs. A show cause notice was issued, revoking the license for violating regulations 10(a), 10(d), and 10(n) of the CBLR, and imposing penalties. CESTAT decided against the respondent on certain issues but found no guilt on statutory duties. The court stated there was proper verification by the respondent and allegations didn’t render importer identity doubtful, dismissing the petition against CESTAT’s decision.
The Andhra Pradesh High Court quashed a suspension order by the Customs Commissioner against a customs broker license, citing a lack of opportunity for a hearing. The managing director of the company, while in judicial custody, couldn’t respond to authorities’ notices before the suspension order was issued. The company, engaged in customs clearance and import-export activities, faced suspension due to alleged misdeclaration of goods. Despite requests for a postponed hearing due to the director’s custody, the suspension continued. The court deemed this a violation of natural justice and directed the managing director to submit explanations within two weeks of receiving the order, followed by a hearing before any further action.
The Delhi High Court quashed a penalty under the Customs Broker Licensing Regulation, 2018, ruling that the Commissioner failed to prove the non-existence of exporters at the time of export. The petitioner, Naman Gupta, challenged the revocation of their custom broker license, imposition of penalty, and forfeiture of security deposit. Allegations arose from the clearance of ball bearings where some exporters were found non-existent. The Commissioner suspended the petitioner’s license, citing violations of regulations. However, the court found flaws in the inquiry process, including lack of cross-examination opportunity for exporters. It concluded that non-existence of exporters post-export couldn’t incriminate the customs broker. The Court quashed the penalty and upheld the petitioner’s appeal.
The Delhi High Court invalidated a notice revoking a Customs Broker license issued beyond ninety days from the offence report. HIM Logistics Pvt. Ltd. challenged the revocation order dated 31.12.2020, arguing that it exceeded the prescribed time frame. The petitioner contended that the order lacked jurisdiction and was issued beyond ninety days from the receipt of the Offense Report, received on 16.02.2015. Despite allegations of violations, including regulations 11(a), 11(d), 11(j), 11(m), and 11(n) of the Customs Brokers Licensing Regulations, 2013, the court ruled in favour of the petitioner, emphasising adherence to the regulatory timeframe.
The court observed that the proceedings for revocation commenced beyond ninety days from the Offense Report’s date. Regulation 17 of the Customs Brokers Licensing Regulations 2018 mandates initiating revocation within this timeframe. While acknowledging alternative remedies, the court ruled the notice invalid due to its untimely issuance, allowing the appeal and setting aside the order.
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