Bombay HC sets aside Customs Broker Licence Revocation, Holds Denial of Cross-Examination Vitiates Proceedings [Read Order]

The Bombay High Court has upheld an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) setting aside the revocation of a Customs Broker Licence for not granting cross-examination under Regulation 17(4) of Customs Brokers Licensing Regulations, 2018.

The appeal was filed by the Principal Commissioner of Customs (General) challenging a CESTAT order dated February 16, 2024 in favour of Suswashis Clearing and Forwarding Agency.

The appellate tribunal had set aside an order passed by the Principal Commissioner of Customs (General), Mumbai, under which the customs broker’s licence was deemed to be revoked, the security deposit was forfeited for the second time, and a penalty was imposed.

The Department contended that the Tribunal had erred in holding that a fresh show cause notice could not be issued after an earlier revocation order and that the customs broker had failed to avail several opportunities of hearing.

However, the Division Bench comprising Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla found that there was a clear violation of Regulation 17(4) of the CBLR, 2018.

The Court noted that after issuance of the show cause notice dated April 27, 2022, the customs broker had submitted a written request before the Inquiry Officer seeking permission to cross-examine two crucial witnesses, Rajesh Dilip Gihar, proprietor of M/s G.R. Creation, and Mohammad Yusuf, Manager of M/s Manjunatha Cargo Pvt. Ltd.

The statement of Rajesh Dilip Gihar had been specifically relied upon by the Department while framing charges against the customs broker. Despite the request, no opportunity for cross-examination was granted.

The Tribunal had therefore concluded that Regulation 17(4) had been violated and that the disciplinary proceedings were violated.

The High Court concurred with this conclusion and noted that denying cross-examination hits at the core of the procedures and amounts to a violation of natural justice principles when witness statements are used to substantiate charges.

According to the Court, once the violation of Regulation 17(4) was established, the other questions raised by the Revenue became irrelevant.

The Bench observed that the issue regarding whether a second show cause notice could be issued after an earlier revocation order, or whether the customs broker had failed to attend hearings, did not require adjudication because the proceedings themselves were unsustainable due to denial of cross-examination.

The Court, however clarified that the question of the permissibility of issuing a subsequent show cause notice after an earlier licence revocation was being left open for consideration in an appropriate future case.

Accordingly, the Bombay High Court dismissed the Revenue’s appeal and upheld the relief granted to the customs broker.

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