The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the suspension order of the appellant’s Customs Broker (CB) license citing non-fulfillment of the procedural requirements under Regulation 17 of the Customs Brokers Licensing Regulations (CBLR), 2018.
Airmasters Freight Services, the appellant is a Customs Broker (CB), held a valid license issued by the Nagpur Customs Commissionerate under Regulation 7(3) of the Customs Brokers Licensing Regulations (CBLR), 2018. The license was valid until October 30, 2027.
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The Customs authorities alleged that the appellant violated sub-regulations 10(d), 10(e), 10(k), and 10(n) of the CBLR, 2018. These provisions are related to obligations such as advising clients to comply with customs regulations, exercising due diligence, maintaining accurate and up-to-date records, and verifying client credentials and operational existence.
The appellant acted as a Customs Broker for R.S. Creation filing shipping bills for the exporter in question. The department alleged that the appellant failed to verify the exporter’s credentials properly, exercise due diligence, maintain required documentation, and report non-compliance.
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The department issued a show-cause notice on December 22, 2022, stating the allegations and immediate suspension of the CB license were ordered under Regulation 16(2) of the CBLR.
On appeal before the CESTAT, the appellant’s counsel argued that the allegations were baseless, lacked evidence, and that they had no prior knowledge of the fraudulent activities conducted by the exporters.
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They further argued that the Customs authorities did not follow the proper inquiry procedures under Regulation 17 including issuing a show-cause notice and providing an opportunity for cross-examination.
The two-member bench comprising S.K. Mohanty (Judicial Member) and M.M. Parthiban, (Technical Member) observed procedural irregularities, including the fact that the suspension order was issued four years after the alleged violations without any evidence of urgency.
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The tribunal referenced the CBIC’s Instruction No. 24/2023 which explained that immediate suspension should only be invoked in urgent cases supported by proper reasoning and evidence. The tribunal found that the Customs authorities acted without providing substantial evidence linking the appellant to the overvaluation of export goods.
With that said, the tribunal set aside the suspension order and directed the Customs Commissioner to fully complete the inquiry proceedings under Regulation 17 within six months.
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