The Delhi High Court invalidated the suspension of the Customs Broker license and set aside the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) order on the grounds that suspension under the Customs Brokers Licensing Regulations ( CBLR ), 2018 is not a penalty.
The appellant, Aradhya Export Import Consultants Pvt. Ltd. was a licensed Customs Broker operating with permissions granted by the Commissioner of Customs, New Delhi, and held an additional CB license issued by the Mumbai Commissionerate.
An investigation was initiated by the respondent against M/s Fine Overseas, alleging fraudulent availing of Integrated Goods and Services Tax (IGST) refunds and drawback benefits.
Consequently, the appellant’s CB license was suspended on 15 September 2020. Despite a post-decisional hearing resulting in the revocation of the suspension, the respondent’s appeal to the CESTAT led to the reinstatement of the suspension, terming it a “proportionate penalty.”
Represented by Pradeep Jain, Shubhankar Jha, and Harneet Pushkarna, the appellant argued that the CESTAT erroneously construed suspension as a penalty, contrary to the regulations which do not categorize suspension as such. They contended that the appellant had fulfilled the obligations under Regulation 10(n) by verifying the client’s credentials using reliable documents.
The respondent, represented by Harpreet Singh and Suhani Mathur contended that the appellant facilitated fraudulent exports and failed to verify the authenticity of M/s Fine Overseas, thereby infringing Regulation 10(n).
The Delhi High Court, comprising Justice Yashwant Varma and Justice Ravinder Dudeja noted that suspension is a provisional measure pending investigation, not a penalty under CBLR 2018, which distinguishes penalties from suspension explicitly.
The bench observed that Regulation 10(n) requires verification using reliable documents such as the Importer Exporter Code (IEC) and GST Identification Number (GSTIN). The appellant had duly complied by verifying these documents issued by official authorities. There was no requirement for physical verification of the client’s premises.
The court referenced the statement of Shri Zoheb Moin, the authorized representative of M/s Fine Overseas, confirming the submission of all necessary documents and compliance with GST returns, further supporting the appellant’s compliance with Regulation 10(n).
The court concluded that the CESTAT order was unsustainable as it misinterpreted the provisions of CBLR 2018. The appeal was allowed, setting aside the CESTAT order, thus invalidating the suspension of the appellant’s CB license.
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