Commissioner Of Customs (Airport And General) vs Freight Logistics

Court
Delhi High Court

$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Date of decision: 14.10.2026

# CNR No. DLHC010517082024
+ CUSAA 68/2024
COMMISSIONER OF CUSTOMS (AIRPORT AND
GENERAL) .....Appellant
Through: Ms. Anushree Narain, SSC with
Mr. Apurv Yadav, Adv.
versus

FREIGHT LOGISTICS .....Respondent
Through: Dr. Prabhat Kumar, Mr. Pralabh
Mathur and Mr. Karan Kanwal,
Advs.
CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
HON'BLE MS. JUSTICE SHAIL JAIN

AVNEESH JHINGAN, J. (ORAL)
1. This appeal is filed under Section 130 of the Customs Act, 1962
(for short ‘the Act’) against the order dated 02.02.2024 passed by the
Customs, Excise and Service Tax Appellate Tribunal, New Delhi
(hereinafter ‘the tribunal’).
2. The brief facts are that the respondent holds a custom broker
license valid up to 28.08.2027. The Directorate of Revenue
Intelligence (DRI) received an input regarding a syndicate attempting
to export mask/fabric of mask to China by mis-declaring it as ‘packing
material’. The shipment of the goods covered by the shipping bill
no.2619886 dated 11.05.2020 was put on hold. The shipping bill was
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filed by the respondent naming M/s Ala Foodstuff Pvt. Ltd.
(hereinafter ‘the exporter’) as the exporter. The goods were declared
as pouch packing material but upon examination, were found to be
non-woven fabric to be used for manufacturing of masks, a prohibited
item for export. The goods were seized vide memo dated 13.05.2020.
2.1 The respondent was made party for failure to obtain
authorization from the exporter and to verify the KYC documents. On
21.05.2020 the exporter denied having issued the shipping bill. It was
stated that the exporter is involved in exporting rice to middle east
countries and had never exported goods to China.
2.2 The case set up by the respondent is that the documents were
checked by the employee-Shri Kumud Kumar Choudhary (hereinafter
‘the employee’) who inadvertently failed to verify the authorization.
The Show Cause Notice (SCN) dated 28.01.2021 was issued to the
respondent for violating the Rule 10(a),(e) and (n) of Custom Broker
Licensing Regulations, 2018 (for short ‘CBLR’), for revocation of
license, for forfeiture of the security under Rule 14 read with 17 of
CBLR and imposition of penalty under Rule 18 read with 17 of
CBLR.
2.3 The order-in-original (OIO) dated 22.07.2021 passed by the
Commissioner of Customs attributed the active role to the employee
and Shri Pushpraj Yadav for exporting the goods by a mis-declaration
and no role of the respondent came out in investigation. The license
was not revoked but the security deposit was forfeited and penalty of
Rs.50,000/- was imposed. Both the appellant and the respondent
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preferred appeal before the tribunal. The appeal of the appellant
seeking revocation of the license was dismissed. The appeal of the
respondent was partly accepted. The appeal to the extent of setting
aside forfeiture of security was allowed but penalty was upheld.
2.4 On 20.08.2024 in the appeal filed by the appellant the following
proposed substantial questions of law were admitted:
“A. Whether the Tribunal passed the order without
considering the contents of the facts and merits of the ease
and not appreciating Rule 13(12) of Customs Brokers
Licensing Regulations, 2018 ["CBLR, 2018"]?
B. Whether the Tribunal passed the order without
considering the contents of the facts and merits of the case
and not appreciating Rule 14 of CBLR, 2018?”
3. Learned counsel for the appellant submits that the respondent
had violated Rule 13(12) of CBLR warranting revocation of license
under Rule 14 of CBLR. The contention is that by shifting the blame
on the employee the respondent cannot escape from the obligations
stipulated in the license and the CBLR.
3.1 Reliance is on the decision of the Supreme Court in
Commissioner of Customs v. K.M. Ganatra & Co. ( 2016) 4 SCC 687
and the decision of this Court in NITCO Logistics Pvt. Ltd. v.
Commissioner of Customs (Airport and General) 2025:DHC:8952-
DB to contend that in case violation is established the tribunal ought
not exercise discretion to avoid revocation of the license.
4. Per contra factual findings are recorded by the tribunal that the
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respondent had no active role in the attempted export and it was the
employee along with Shri Pushpraj Yadav who manipulated the things
for exporting the prohibited items. Further the argument is that the
respondent has not gone scot-free and was penalized for the violation
of the terms of CBLR.
5. The undisputed facts are that during investigation it was
specifically recorded that the active role was played by the employee
and Shri Pushpraj Yadav who was running a forwarding firm in the
name of POL Enterprises. Shri Pushpraj Yadav forwarded the export
and KYC documents. The respondent failed to verify the receipt of the
authority letter and the address of the exporting firm located at
Amritsar.
6. The OIO noted that the role of the respondent had not come
anywhere in the investigation and immediate actions were taken to
terminate the services of the employee and for lodging an FIR. The
Commissioner of Customs after considering the facts and
circumstances and the material available came to the conclusion that
revocation of the license was not warranted and a lesser penalty would
suffice. The tribunal upheld the factum of the respondent not
complying with the obligations casted under the license and the
CBLR. However, the tribunal factoring into the investigation report,
the findings of the Commissioner of Customs viz-a-viz the role and
conduct of the respondent decided the question of proportionality of
the punishment and benefit of doubt was given to the respondent. It
was held that the respondent had acted diligently and no delay or mala
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fide can be attributed to the respondent. It was taken note of that
shifting the blame to the employee may not exonerate the respondent
in totality but there was a presumption that the act was not deliberate
or intentional, the punishment of revocation of licence and forfeiture
of the security would be disproportionate.
6.1 A finding of fact was recorded that in view of the nature of
violation by the respondent and having not played any active role the
upholding of imposition of penalty of Rs.50,000/- shall suffice.
Further that for every violation of the CBLR the revocation of license
cannot be resorted to. These very findings recorded for setting aside
the forfeiture of security were made basis to hold that it was not a case
warranting revocation of license and the appeal of the appellant before
the tribunal was dismissed. The question that there was violation of
the Rule 13(12) and Rule 14 of the CBLR was decided in favour of
the appellant, the interference was only made to the extent of quantum
of punishment and needs no adjudication.
7. The reliance of the learned counsel of the appellant on the
decision of the Supreme Court in K.M. Ganatra & Co. (supra) does
not enhance the case of the appellant. It was a case of repeated
violation by the Custom House Agent (CHA ) and is not applicable to
the present case as there are no such allegations of repeated violations.
In the decision of NITCO Logistics Pvt. Ltd. (supra), this Court dealt
with a matter wherein the employee of the custom broker had
indulged in similar dubious export transactions and in that background
it was held that the custom broker is to exercise supervision and due
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diligence and cannot allow continuous misuser.
8. The tribunal gave a factual finding with regard to the
proportionality of the punishment viz-a-viz the violation of the terms
of CBLR. The finding recorded suffers from no factual or legal error
much less perversity. No substantial questions of law arise for
interference in the impugned order.

9. The appeal is dismissed.
10. All pending applications stand disposed of.



AVNEESH JHINGAN, J

SHAIL JAIN, J
OCTOBER 14, 2026
‘ha’
Reportable: Yes
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