Permitting paid use of a Customs Broker licence and filing without exporter authorisation justifies revocation.

The appellant held Customs Broker Licence No. R-94/97 and operated at the Air Cargo Complex, New Delhi.

On 12.12.2019, a Shipping Bill was filed in the name of M/s Deepnidhi International for export of goods declared as “decorative iron material,” valued at ₹66,000, to Sweden.

Upon examination, the consignment was found to contain approximately 1,158 kilograms of Red Sanders, the export of which required permission under CITES and was treated as prohibited.

Investigation revealed that the Shipping Bill had been filed in Deepnidhi’s name without obtaining its authorisation or even contacting it, and that the documents had been supplied by Mohit Taneja of M/s Soleado Impex.

The appellant’s G-card holder, Devender Kumar, operated from separate premises. In his statement, the appellant admitted receiving ₹10,000 per month from Devender Kumar and lending his Customs Broker licence and dongle to him for consideration.

Proceedings were initiated under the Customs Brokers Licensing Regulations, 2018 (“CBLR, 2018”). The Commissioner revoked the licence, forfeited the entire security deposit of ₹75,000 and imposed a penalty of ₹50,000 by order dated 02.08.2021.

The CESTAT dismissed the appellant’s appeal by Final Order No. 58517/2024 dated 27.08.2024. The appellant challenged that order before the High Court under Section 130 of the Customs Act, 1962.

1. Whether the CESTAT’s findings that the appellant violated Regulations 10(a), 10(d), 10(e) and 10(n) of the CBLR, 2018 were perverse or legally erroneous so as to warrant interference under Section 130 of the Customs Act, 1962?

2. Whether the appellant’s admitted act of permitting his G-card holder to use his Customs Broker licence and dongle for consideration amounted to an impermissible sale or transfer of the licence in violation of Regulation 1(4) of the CBLR, 2018?

3. Whether revocation of the licence, forfeiture of the security deposit and imposition of penalty were so disproportionate to the established misconduct as to require interference by the High Court?

The Court applied Regulation 1(4) of the CBLR, 2018, which provides that a Customs Broker licence is granted in favour of the licensee and “no licence shall be sold or otherwise transferred”.

It applied Regulation 10(a), requiring the Customs Broker to obtain authorisation from every company, firm or individual by whom the Broker is employed.

It applied Regulation 10(n), requiring verification of the correctness of the IEC and GSTIN and of the client’s identity and functioning at the declared address through reliable, independent and authentic information.

Regulation 10(e), concerning due diligence regarding information imparted by the Broker to a client, was held to require identification of specific incorrect information imparted to the client.

The Court distinguished Kunal Travels (Cargo) v. Commissioner of Customs (Import & General), which holds that a Customs Broker is not an investigator responsible for verifying every declaration made by an authorised client.

It relied on Commissioner of Customs v. K.M. Ganatra & Co., 2016 (332) E.L.T. 15 (S.C.), for the principle that a Customs Broker occupies a position of responsibility and must strictly and diligently comply with regulatory obligations.

The Court also applied the doctrine of proportionality, referring to Nitco Logistics Pvt. Ltd. v. Commissioner of Customs (Airport & General), while holding that proportionality depends on the nature and cumulative effect of the misconduct and the aggravating or mitigating circumstances.

The Court held that the finding regarding the appellant’s parting with his licence and dongle was supported by his own statement and his admission before the CESTAT that he received ₹10,000 per month from Devender Kumar.

The absence of transfer of proprietary title was immaterial because Regulation 1(4) prohibits not only sale but also “otherwise transfer”; lending the licence and dongle for consideration enabled another person to conduct Customs transactions using the appellant’s credentials and therefore violated the regulation.

The fact that Devender Kumar was a G-card holder did not authorise the appellant to part with the use of the licence for consideration.

The Shipping Bill was filed in Deepnidhi’s name without any authorisation and without the appellant contacting that entity. This was materially different from a case where an authorised client supplies subsequently incorrect information.

The appellant instead accepted instructions from a third party to use another exporter’s name and proceeded without obtaining that exporter’s authority, establishing violations of the applicable obligations under Regulations 10(a), 10(d) and 10(n).

Merely verifying the IEC or GST particulars online did not establish authorisation or discharge the separate duty to verify the client’s identity and functioning.

The Court further held that proof of the appellant’s knowledge of the Red Sanders was unnecessary to establish these independent regulatory breaches; absence of incriminating material from his premises therefore did not exonerate him.

However, Regulation 10(e) could not independently be sustained because the CESTAT had not identified any specific incorrect information imparted by the appellant to a client.

On proportionality, the Court considered the cumulative circumstances: the appellant knowingly permitted use of his licence and dongle for monthly consideration; the Shipping Bill was filed without the named exporter’s authorisation; and the transaction involved an attempted export of approximately 1,158 kilograms of prohibited Red Sanders.

These factors distinguished the case from one involving an employee’s unauthorised misuse of credentials and justified the severe disciplinary consequences.

The punishment was therefore not shockingly or manifestly disproportionate.

It upheld the violations relating to the appellant’s unauthorised parting with the use of his licence and dongle and the filing of the Shipping Bill without the exporter’s authorisation, while observing that the finding under Regulation 10(e) could not independently be sustained.

Nevertheless, the remaining violations were sufficient to sustain the disciplinary action.

The revocation of the Customs Broker licence, forfeiture of the ₹75,000 security deposit and imposition of the ₹50,000 penalty were upheld as proportionate.

The appeal was dismissed and pending applications were closed.