Customs Broker Fails to Verify Importer’s Credentials u/r 10(n) of CBLR: CESTAT Upholds Forfeiture of Security Deposit [Read Order]

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that failure to verify the importer’s credentials as mandated under Regulation 10(n) of the Customs Brokers Licensing Regulations (CBLR), 2018, justifies forfeiture of the customs broker’s security deposit.

Cargo Yatri Private Ltd., the appellant, held a customs broker licence issued under CBLR, 2018. The dispute arose when customs authorities intercepted a consignment of black pepper and cigarettes misdeclared as perlite ores, imported under a bill of entry dated 4 March 2023.

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The goods were hugely undervalued and attracted only nominal duty. This incident triggered disciplinary proceedings against the customs broker, culminating in an order dated 29 February 2024 by the Principal Commissioner of Customs (General), Mumbai, revoking the appellant’s licence, forfeiting the security deposit, and imposing a penalty of Rs. 50,000 under Regulation 18.

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The customs broker admitted to having received KYC and authorisation documents from a person claiming to represent the importer, without verifying the importer’s physical existence or confirming details through independent and reliable sources. The authorities found that the importer failed to respond to a summons, and there was no evidence of their functional operations at the declared address.

The appellant’s counsel argued that the documentation was submitted in good faith and that there was no specific requirement in the regulations to personally meet the IEC holder. They argued that the customs broker acted in a bona fide manner based on representations made by a third-party intermediary and that any failure, if at all, was technical and not wilful.

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The two-member bench comprising C.J. Mathew (Technical Member) and Ajay Sharma (Judicial Member) examined the structure of the CBLR and explained that customs brokers are entrusted with sensitive access to the customs system. The tribunal found that the appellant failed to perform the basic verification required under Regulation 10(n). The tribunal also observed that the breaches under Regulations 10(d) and 10(e) were not proven and that there was no evidence of misconduct or deliberate concealment.

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The tribunal held that revocation of the licence and imposition of a penalty under Regulation 18 were disproportionate to the nature of the lapse. The tribunal set aside both the penalty and the revocation but upheld the forfeiture of the security deposit as a reasonable consequence of the established violation. The tribunal allowed the restoration of the customs broker licence, subject to the appellant making a fresh security deposit as prescribed under the regulations.

The appeal was disposed of accordingly.

To Read the full text of the Order CLICK HERE

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