2026-VIL-1687-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs Broker – Revocation of licence founded on an offence report – Customs Brokers Licensing Regulations, 2018 – Appellant, a Customs Broker, filed a shipping bill for an exporter, and prohibited red sanders logs concealed in the export consignment were detected on examination by the investigating branch - Penalty under Section 114(i) was imposed on the Appellant and its proprietor for aiding and abetting the attempted export, and that order was treated as the offence report for suspension, inquiry under Regulation 17 and revocation of licence with forfeiture of security deposit and penalty - The First Appellate Authority later set aside the penalties, holding that no statement or evidence showed that the Appellant or its proprietor were knowingly involved in the attempted smuggling - Whether the action under the Regulations survives when the offence report on which it was based has been set aside - HELD - Since the action under the Regulations was based on the order treated as the offence report and that premise was set aside by the Appellate Authority, the order does not have any existence. The allegation of aiding and abetting has been held to be non-existent. The edifice for initiating action under the Regulations, including the impugned order, is not sustainable, particularly when there is no role for the Appellant in the activities of the exporter - Customs Broker – Obligation to obtain authorisation from the client – Regulation 10(a) of Customs Brokers Licensing Regulations, 2018 – Licensing authority held that the Appellant violated Regulation 10(a) because it did not meet the exporter personally, received the documents through an intermediary and the freight forwarder, and did not verify whether the exporter had issued the authorisation to the intermediary - Appellant contended that it received all export documents from the exporter's representative and nothing appeared suspicious - Whether the Appellant violated Regulation 10(a) - HELD - The exporter had addressed a letter of authority to the Customs authorities authorising the Appellant to act as its agent for clearance, and there was no document to prove that the necessary authorisation was not obtained. Accepting documents through an intermediary or logistics operator is not barred by the Regulations, and obtaining authorisation does not mean that it should be obtained directly, as held in K.S. Sawant & Co. - The finding of violation of Regulation 10(a) is not sustainable - Customs Broker – Obligation to advise the client to comply with the Act and to inform the Customs authorities – Regulation 10(d) of Customs Brokers Licensing Regulations, 2018 – Licensing authority held that the Appellant had no direct contact with the exporter to advise compliance and did not bring the misdeclaration to the notice of the Customs authorities - Whether the Appellant violated Regulation 10(d) - HELD - The attempted illegal export was found only on specific investigation and physical examination by the investigating branch. The Customs authorities themselves were not aware of the non-genuineness of the documents or the concealment till the physical examination detected it. There was therefore no possibility for the Appellant to be aware of the misdeclaration or to bring it to the notice of the Deputy Commissioner or Assistant Commissioner, and it cannot be faulted for not advising its client - The violation of Regulation 10(d) is not sustainable - Customs Broker – Verification of identity and functioning of the client – KYC obligation – Regulation 10(n) of Customs Brokers Licensing Regulations, 2018 – Licensing authority held that the Appellant never met the proprietor of the exporter and was not diligent in the KYC verification - Appellant had obtained the KYC form with enclosures, and verified the existence of the exporter through the GST registration certificate, the PAN card and Aadhaar card of the proprietor and a bank account verification letter - Whether the Appellant violated Regulation 10(n) and whether revocation of licence, forfeiture of security deposit and penalty are sustainable - HELD - Circular No. 9/2010-Customs dated 08.04.2010 prescribes that verification of any two of the specified documents is sufficient for fulfilling the obligation under Regulation 10(n). The Appellant obtained the KYC documents and submitted them to the Department. Following Perfect Cargo and Logistics, there is no legal basis for the alleged violation. A Customs Broker is not an officer of Customs with expertise to identify misdeclaration, and it would be far too onerous to expect it to verify the genuineness of the Importer Exporter Code for each transaction, as held in Kunal Travels - There is no violation of Regulations 10(a), 10(d) and 10(n). The revocation of licence, forfeiture of security deposit and penalty are set aside, and the appeal is allowed
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