CESTAT Restores Customs Broker’s Licence After Betelnut Classification Dispute, Says Choosing A Plausible Tariff Heading Was No CBLR Breach

Anubhav Cargo Movers, a licensed Customs Broker, filed two Bills of Entry in 2020 and 2021 for boiled betelnuts imported by M/s. Anil Enterprises, classifying the goods under Customs Tariff Item (CTI) 2106 90 30.

The goods were cleared.

In 2022, the Department issued a notice proposing reclassification under CTI 0802 80 and recovery of differential duty.

Following adjudication, the Commissioner treated the adjudication order as an offence report and initiated proceedings under the Customs Brokers Licensing Regulations, 2018 (CBLR).

The Commissioner ultimately revoked the licence, forfeited the security deposit, and imposed a penalty of ₹50,000 for alleged breaches of Regulations 10(d) and 10(e).

The Customs Broker appealed.

Section 17 of the Customs Act, 1962 requires an importer to self-assess duty and empowers the proper officer to verify and, where necessary, re-assess the goods; a contrary re-assessment may be subject to a speaking order, and assessment may also be challenged through the statutory procedures identified in the Act.

Regulations 10(d) and 10(e) of the CBLR require a Customs Broker to advise its client to comply with the law and report non-compliance to the appropriate Customs officer, and to exercise due diligence regarding information it imparts to the client.

A disagreement over tariff classification, without more, does not establish a Customs Broker’s wrongdoing: the Broker is not required to anticipate a later decision by Customs or to predict which classification an adjudicating authority may ultimately adopt.

The Tribunal treated classification as part of the assessment process, in which the importer makes a self-assessment subject to verification and re-assessment by the proper officer.

It found that the competing headings—one referring to betel-nut product known as “Supari” and the other to arecanuts—were both plausible, and that the Department’s later adoption of one classification did not, by itself, prove misconduct by the Broker.

The Bills of Entry also contained instructions to verify the classification, and the goods were nevertheless given out of charge.

Because the Broker was not required to foresee the Department’s later view or advise its client on that basis, the Tribunal found no breach of Regulation 10(d); it likewise found no failure of due diligence under Regulation 10(e).

It set aside the impugned order, allowed the appeal with consequential relief, and directed the Commissioner to take the necessary steps to enable the appellant to file documents on ICEGATE immediately.