Customs broker's license revocation quashed for denying cross-examination rights under Regulation 17(4) CBLR 2018

The Delhi HC quashed the revocation of a customs broker's license and penalty imposed by the Commissioner of Customs. The Court held that the petitioner was denied the right to cross-examine witnesses whose statements formed the basis of proceedings, violating Regulation 17(4) of CBLR 2018. The inquiry officer failed to record reasons for declining cross-examination permission as mandatorily required. The Court found the customs broker cannot be held liable merely because exporters became untraceable after export orders were issued and goods exported. The Commissioner erroneously accepted findings regarding violations of Regulations 10(d), 10(m), 10(n), and 10(q) of CBLR 2018, resulting in serious prejudice to the petitioner.

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Issues Involved:

1. Revocation of Custom Broker License and imposition of penalty.
2. Alleged violations of Customs Broker Licensing Regulation, 2018.
3. Denial of the right to cross-examination.
4. Maintainability of the writ petition despite alternative remedy.
5. Compliance with procedural timelines under CBLR, 2018.

Summary:

1. Revocation of Custom Broker License and Imposition of Penalty:
The petitioner, a Custom House Agent (CHA), challenged the Order-in-Original dated 29.06.2022, which revoked their Custom Broker License, forfeited the security deposit, and imposed a penalty of Rs. 50,000/-. The petitioner was involved in the clearance of 23 shipping bills of ball-bearings filed by nine exporters, with five exporters found to be non-existent.

2. Alleged Violations of Customs Broker Licensing Regulation, 2018:
The petitioner was accused of violating Regulations 10(d), 10(m), 10(n), and 10(q) of the Customs Broker Licensing Regulation, 2018. The Inquiry Officer found the petitioner guilty of these violations, which included failing to verify the genuineness of the exporters and not advising clients to comply with the Customs Act. The Commissioner of Customs agreed with these findings and issued the impugned order.

3. Denial of the Right to Cross-Examination:
The petitioner argued that the impugned order violated principles of natural justice as they were denied the right to cross-examine witnesses whose statements were relied upon by the Inquiry Officer. The court recognized the right to cross-examination under Regulation 17(4) of CBLR, 2018, and cited precedents affirming that denial of this right vitiates the adjudication order. The court found that the Inquiry Officer did not provide reasons for denying cross-examination, resulting in serious prejudice to the petitioner.

4. Maintainability of the Writ Petition Despite Alternative Remedy:
The respondent contended that the writ petition was not maintainable as the petitioner had not exhausted the remedy of appeal before CESTAT under Regulation 19 of CBLR, 2018. The court, however, noted that the controversy was purely legal and did not involve disputed facts, making the writ petition maintainable despite the availability of an alternative remedy.

5. Compliance with Procedural Timelines under CBLR, 2018:
The court examined the procedural timelines under Regulation 17 of CBLR, 2018, and Circular No. 09/2010/Customs dated 08.04.2010. The court found that the timelines for issuing the Show Cause Notice, completing the inquiry, and passing the final order were not adhered to, rendering the proceedings procedurally flawed.

Conclusion:
The court allowed the writ petition, quashing and setting aside the impugned order dated 29.06.2022, which revoked the Custom Broker License and imposed a penalty on the petitioner. The court held that the Commissioner of Customs erred in accepting the Inquiry Officer's findings and that the denial of the right to cross-examination resulted in serious prejudice to the petitioner.

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