CESTAT Quashes Customs Broker Licence Suspension, Holding No Mens Rea or Procedural Lapse Proven [Read Order]

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the suspension of the Customs Broker Licence of Karan Logistics, holding that no mens rea, collusion, or violation of Customs Broker Licensing Regulations (CBLR), 2018 had been established and that repeated suspension since 2018 was disproportionate and unjustified.

The dispute began when an investigation by the Assistant Commissioner of Customs revealed that exporter Krystfab Enterprises had fraudulently availed excess RoSL (Rebate of State Levies) amounting to ₹11,38,921, and all attempts by the Department to contact the exporter and the Customs Broker failed, with communications returning undelivered and the exporter withdrawing the funds from its bank account.

The shipping bills for the disputed exports had been filed through the appellant, leading the Department to conclude that the Customs Broker failed to verify the exact whereabouts of the exporter.

Following this, the Commissioner of Customs, Airport & General issued an order prohibiting the Customs Broker from operating under Regulation 15 of CBLR.

The licensing authority, the Commissioner of Customs (Preventive), then suspended the licence under Regulation 16(1) on 06.03.2024 and later confirmed the suspension through the impugned order dated 29.07.2024.

Before the Tribunal, the appellant argued that the licence had been continuously under suspension or revocation since 2018 and had twice been restored by the same Bench. They submitted that a Customs Broker is not required under law to conduct physical background checks of exporters and can only verify documents such as Importer-Exporter Code (IEC) and PAN, which were not alleged to be fake or forged.

The Bench Comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member), observed that shipping bills were duly filed, goods were presented for examination, Let Export Orders were issued by the Customs officers, and RoSL was credited by the system to the exporters’ bank accounts.

The Tribunal held that in such circumstances, responsibility could not be fixed on the Customs Broker alone, especially when other agencies were equally involved. The Bench noted that “no mens rea has been established” and found no evidence of any collusion or failure of due diligence under Regulation 10 of CBLR.

The Tribunal further remarked that the licence of the appellant had already been under suspension for 7–8 years, and a fresh suspension order was “redundant” and “smacks of vengeance.”

The Tribunal also referred to the Delhi High Court’s ruling in Ashiana Cargo Services (2014), emphasized that penalties must be proportionate and cannot unjustly deprive a Customs Broker of livelihood for years without concrete evidence.

Accordingly, the Tribunal set aside the impugned order and allowed the appeal.

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