Licence revocation was disproportionate for an inadvertent compliance lapse without active involvement in the attempted export.

The respondent, a licensed customs broker, filed a shipping bill for goods declared as pouch-packing material. On examination, the goods were found to be non-woven fabric intended for mask manufacture and prohibited for export. The exporter denied authorising the shipment. The investigation attributed the active role in the attempted export to the respondent’s employee and another person, but found that the respondent had failed to verify the exporter’s authorisation and address.

The Commissioner declined to revoke the licence, forfeited the security deposit, and imposed a penalty of ₹50,000. On cross-appeals, the Tribunal set aside the forfeiture but upheld the penalty; it dismissed the Department’s appeal seeking revocation.

The Department appealed under Section 130 of the Customs Act, 1962.

1. Whether the Tribunal erred in declining to revoke the respondent’s customs broker licence despite the violation attributed to it under the CBLR, 2018.

2. Whether the Tribunal erred in setting aside forfeiture of the security deposit, having regard to the respondent’s breach and the proportionality of the penalty.

Section 130 of the Customs Act, 1962 provides for an appeal on a substantial question of law.

Under the Customs Brokers Licensing Regulations, 2018, the customs broker’s obligations include the duties invoked in the proceedings under Rule 13(12); Rule 14 was relied upon in relation to revocation, while the order-in-original addressed security forfeiture and penalty under Rules 17 and 18.

The Court applied proportionality in reviewing the sanction: a breach does not automatically require licence revocation or security forfeiture, and the sanction must be assessed in light of the broker’s role and the circumstances of the violation.

Commissioner of Customs v. K.M. Ganatra & Co., (2016) 4 SCC 687, concerned repeated violations; NITCO Logistics Pvt. Ltd. v. Commissioner of Customs (Airport and General), 2025:DHC:8952-DB, concerned similar dubious transactions and the broker’s duty of supervision and due diligence.

The Court accepted that the respondent had failed to verify the authority letter and the exporter’s address, and that this constituted a breach of its obligations.

However, the investigation and the Commissioner’s findings attributed the active role in the attempted export to the employee and another person, not to the respondent itself. The Tribunal was entitled to consider those findings, the respondent’s conduct, and the nature of its lapse when assessing the appropriate sanction. It did not treat the employee’s conduct as wholly exonerating the respondent; rather, it concluded that the ₹50,000 penalty sufficed and that revocation and forfeiture would be disproportionate.

The cited precedents did not require a different result: K.M. Ganatra involved repeated violations, while NITCO Logistics involved continuous misuse that was not established here.

The Tribunal’s factual assessment disclosed no perversity or legal error warranting appellate interference.

It dismissed the appeal, leaving undisturbed the setting aside of the security forfeiture and the refusal to revoke the licence; the ₹50,000 penalty remained in force.