Madras HC quashes Customs Order for Violating 90-Day Limitation Under CBLR [Read Order]

The Madras High Court has quashed an order passed by the Commissioner of Customs for revoking the license of a customs broker, holding that the action was initiated beyond the mandatory 90-day limitation period prescribed under the Customs Brokers Licensing Regulations, 2018 (CBLR).

M/s.ACS Shipping & Logistics, the petitioner, is a licensed customs broker whose license was revoked by the respondent, the Commissioner of Customs, Tuticorin. The dispute arose from an order dated 25.02.2022 which also forfeited their security deposit and imposed a penalty of Rs.50,000.

The action was based on the petitioner's role as a customs broker for M/s.J.Tex India, an exporter who had fraudulently availed IGST refunds. The fraud, which occurred between June and September 2018, was investigated by the DRI. Following the investigation, the Mumbai Customs Commissionerate, on 18.11.2020, issued a prohibitory order against the petitioner, noting their lack of due diligence. A copy of this order was marked to the Tuticorin Commissionerate. However, the respondent only issued a show cause notice on 14.09.2021 and passed the final impugned order on 25.02.2022.

The petitioner challenged the order, arguing it was time-barred. The primary contention was that the respondent failed to initiate action within the statutorily prescribed 90-day period from receiving an "offence report."

Counsel for the petitioner argued that the prohibitory order from Mumbai dated 18.11.2020, which was marked to the respondent, qualified as an "offence report" under the CBLR. Therefore, the show cause notice issued in September 2021 was well beyond the 90-day limitation period. Per contra, the respondent's counsel argued that the prohibitory order was not the offence report and that the limitation period should be counted from a later date (June 2021) when they claimed to have received the actual report, making their action timely.

Justice G.R.Swaminathan analyzed Regulation 17(1) of the CBLR, 2018, which mandates that action must be initiated within 90 days of receiving an "offence report." The Court clarified that an "offence report" is any official communication detailing a broker's misconduct. Consequently, the prohibitory order from Mumbai dated 18.11.2020 was held to be a valid offence report.

The Court placed the burden on the respondent to prove the date of receipt of this report. Since the respondent failed to provide any evidence to show it was received much later than November 2020, they could not establish that the action was initiated within the 90-day limit.

Accordingly, the Court held that the impugned order was time-barred and therefore illegal. The proceedings were quashed, and the writ petition was allowed, with no costs imposed.

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