CESTAT Dismisses Department’s Appeal Challenging Revocation of Customs Broker Licence Suspension as Infructuous [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Bench at Chennai, has dismissed the appeal filed by the Commissioner of Customs, Chennai-VIII Commissionerate, and upheld the revocation of suspension of Customs Broker Licence, holding that the order of the Adjudicating Authority was legally sustainable and that the departmental appeal had become infructuous.

The Bench delivered the ruling while deciding Customs Appeal No. 41907 of 2017 arising out of Order-in-Original dated 25 May 2017 passed by the Commissioner of Customs, Chennai.

The Respondent, M/s. OPMS Clearing and Forwarding Agencies Pvt. Ltd., held Customs Broker Licence No. R-288/CHA, valid up to 14 March 2025. Based on intelligence received by the Directorate of Revenue Intelligence (DRI), it was alleged that certain importers were clearing multifunctional audio systems by mis-declaring them as computer peripherals and undervaluing goods to evade countervailing duty (CVD).

Investigations revealed that one Shri Govindasamy, Proprietor of M/s. Pranav Exim, was using the licence of the respondent Customs Broker for clearance of goods belonging to several importers, including M/s. V.M. Electronics and M/s. Goodwill Enterprises. The Customs Department held that such conduct amounted to a violation of Regulations 10, 11(a), 11(d), 11(e), and 11(n) of the Customs Broker Licensing Regulations (CBLR), 2013, as the respondent had allegedly failed to verify importer credentials and had permitted an unauthorized person to act on its behalf.

Accordingly, the Commissioner suspended the Customs Broker Licence on 04 May 2017. However, the Adjudicating Authority subsequently revoked the suspension by order dated 25 May 2017, observing that though there was prima facie violation, the matter required detailed inquiry and continuation of suspension was unwarranted.

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The Revenue assailed the revocation before the CESTAT, contending that the Adjudicating Authority had erred in revoking the suspension prematurely and had not adequately appreciated the seriousness of the offence. The Department sought remand of the matter for revocation of the licence and forfeiture of security deposit.

The CESTAT Bench comprising Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the Adjudicating Authority had considered all material facts and recorded findings acknowledging that the respondent appeared to have violated certain provisions of the CBLR, 2013. However, the Authority had rightly held that further inquiry was required before any punitive action such as cancellation could be taken.

Quoting from paragraph 32 of the impugned order, the Bench noted that the Adjudicating Authority had detailed its reasoning, finding prima facie irregularities but concluding that continuation of suspension was not justified at that stage.

The Tribunal remarked that the Department’s appeal was unsustainable, especially since the procedural timelines under the CBLR for issuing a show cause notice, conducting inquiry, and passing a revocation order had long expired.

Significantly, the Bench also recorded that during the pendency of this appeal, the respondent’s licence had again been suspended in a separate case on 27 February 2023, rendering the current proceedings infructuous.

Dismissing the appeal, the CESTAT held that there was no ground to interfere with the Commissioner’s decision to revoke the suspension. The Tribunal dismissed the grounds of appeal, upholding the order of revocation of suspension passed in favour of M/s. OPMS Clearing and Forwarding Agencies Pvt. Ltd.