No CBLR Violation Proven under Regulations 10(b),10(d) & 10(n): CESTAT Sets Aside Revocation of Customs Broker License [Read Order]

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside the revocation of the Customs Broker (CB) license of Jaiswal Import Cargo Services Ltd., and held that no violation of Regulations 10(b), 10(d), and 10(n) of the Customs Brokers Licensing Regulations, 2018 (CBLR, 2018) was established, and that the revocation order was unsustainable.

The appellant-assessee, M/s Jaiswal Import Cargo Services Limited, had filed a warehousing Bill of Entry No. 3673416 dated 09.12.2022 on behalf of Tanu Trading for cosmetic imports, which were intended for re-export.

Based on intelligence that the goods were diverted to the local market for home consumption instead of being deposited in the bonded warehouse, the Commissioner of Customs revoked the CB license, forfeited the security deposit, and imposed a penalty, alleging failure to comply with obligations under Regulations 10(b), 10(d), and 10(n) of the Act.

The Department argued that the appellant failed to ensure customs work was handled by its authorized employees, did not advise the importer about mandatory requirements under the Drugs and Cosmetics Act, 1940, and relied only on KYC documents without proper verification It was alleged that the CB permitted unauthorized persons to handle customs clearance and also neglected due diligence in verifying Importer Exporter Code (IEC) and Goods and Services Tax Identification Number (GSTIN) details.

The appellant contended that its role was limited to filing the warehousing Bill of Entry based on a Triple Duty Bond duly executed by the importer, which was Risk Management System (RMS) facilitated and allowed automatic “out of charge” clearance.

The appellant also argued that the goods were handed over to the importer’s representative at the Container Freight Station (CFS) gate, and the diversion was beyond the CB’s responsibility. It was further argued that the CB had advised the importer regarding the requirement of a Drug Controller’s No Objection Certificate (NOC), and all KYC and IEC details had been duly verified from official government portals.

The Tribunal examined each allegation.

On Regulation 10(b), the tribunal held that the CB had fulfilled its duty as the documents were handled by an authorized employee, and subsequent clearance by others could not be attributed to the CB.

On Regulation 10(d), the tribunal observed that the warehousing Bill of Entry was filed specifically for re-export, that the CB was aware that clearance for home consumption could not be sought without a Drug Controller’s NOC, which was later obtained.

On Regulation 10(n), the tribunal held that all KYC documents submitted were valid, and there was no requirement for physical verification under CBLR, 2018. Relying on precedents, the Bench reiterated that a CB is not an inspector of the importer’s business and cannot be held liable for fraud committed after clearance.

Holding that there was no evidence of connivance or violation, the Bench comprising Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) set aside the revocation order.

The appellant was represented by Vidushi Shubham, while the Revenue was represented by Mukesh Kumar Shukla.

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