CFS License Suspended Alleging Smuggling of Poppy Seeds from Myanmar: Madras HC Orders Customs to Reconsider Decision [Read Order]

The writ petition was filed by the company, Sudharsan Logistics, challenging the suspension order dated March 14, 2025, which was issued under Regulation 11(2) of the Handling of Cargo in Customs Areas Regulations, 2009.

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The suspension was triggered by a serious incident involving the unauthorized removal of 56 metric tons of poppy seeds from a customs-bonded warehouse. According to customs authorities, employees of Sudharsan Logistics were allegedly complicit in smuggling operations, acting in collusion with commission agents to substitute the consignment with locally sourced dummy cargo, namely rice bran.

The authorities also accused the company’s personnel of tampering with weighment records, deleting critical CCTV footage, and allowing the cargo-laden trucks to exit the facility without proper gate-in and gate-out documentation or customs approval.

The petitioner contended that the allegations remained unproven and that the company had already suspended the employees suspected of wrongdoing. It was submitted that the identities of the real culprits were yet to be confirmed and that the investigation by the Directorate of Revenue Intelligence (DRI) was still ongoing.

Additionally, the petitioner raised legal objections regarding the timing of the suspension. The incident had occurred in November 2024, but the licence was suspended only in March 2025. According to the petitioner, this delay invalidated the suspension under Regulation 11(2), which is applicable only where “immediate action” is warranted.

The petitioner, which has held a valid CFS licence since 2015, claimed an otherwise unblemished operational history. The company also argued that the suspension had brought its business to a standstill and sought urgent judicial relief.

The Customs Department, on the other hand, asserted that the suspension was both legal and necessary given the gravity of the offence, the nature of the cargo (poppy seeds being a contraband item), and the involvement of CFS staff in facilitating the smuggling. The government counsel submitted that "immediate action" under Regulation 11(2) should be interpreted as action taken promptly after establishing prima facie involvement in the offence not necessarily on the exact date of the incident.

Justice Abdul Quddhose, after hearing arguments from both sides, observed that while the matter involved serious allegations, the petitioner should not be deprived of its right to conduct business without a fair hearing.

The Court did not quash the suspension order but instead directed the customs authority to reconsider it after granting the petitioner one personal hearing and an opportunity to file a detailed explanation.

The judge stated that such a step was essential in the interest of justice, particularly considering the company’s long-standing licence and its claim of an unblemished record until the current incident.

The Court specifically refrained from expressing any opinion on the merits of the allegations or the legality of the customs authority’s interpretation of Regulation 11(2). It instead left the issue open for reconsideration by the respondent authority, to be completed within four weeks following the petitioner’s submission of a written representation.

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