High Court overturns revocation of Customs Broker License & forfeiture of deposit as disproportionate.

The High Court set aside the Commissioner's order revoking the appellant's Customs Broker License and forfeiting the security deposit. The Court found that the revocation, forfeiture, and penalty were disproportionate, considering the circumstances where the appellant admitted to a mistake during a confusing lockdown period, and the exporter was aware of the classification issue. The Court noted the confusion regarding the classification of 'Glucose Test Strips' and the appellant's failure to inform the exporter did not justify the severe actions taken. The appeal was partly allowed, and the penalty challenge was not pursued further.

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Issues Involved:
1. Jurisdiction of the Commissioner to revoke the Customs Broker License.
2. Justification of revoking the Customs Broker License, forfeiting the security deposit, and imposing a penalty.
3. Classification of 'Glucose Test Strips' under the Customs Tariff Act.
4. Compliance with Regulation 10(e) of the Customs Brokers Licensing Regulations, 2018 (CBLR, 2018).

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commissioner to Revoke the Customs Broker License:
The appellant argued that the Commissioner lacked jurisdiction to revoke the license under Regulation 14 of the CBLR, 2018, since the suspension of the license had already been revoked. The Tribunal, however, sustained the revocation order. The High Court noted that the Commissioner's order revoking the suspension did not restrict the Commissioner from concluding proceedings regarding revocation of the license.

2. Justification of Revoking the Customs Broker License, Forfeiting the Security Deposit, and Imposing a Penalty:
The appellant contended that the revocation of the license, forfeiture of the security deposit, and imposition of a penalty were disproportionate and not justified. The High Court observed that the appellant had candidly admitted to a mistake due to confusion during the lockdown period and that the exporter was aware of the classification issue and had corresponded with the department. The Court found that the Tribunal had not examined whether the action under Regulation 14 was justified, considering the material facts.

3. Classification of 'Glucose Test Strips' under the Customs Tariff Act:
The appellant had classified 'Glucose Test Strips' under CTH 90279090, while the respondent argued that the correct classification was under ITC HS code 38.22, making the goods restricted for export under Notification No. 59/2015-20 dated 04.04.2020. The High Court noted that the goods were correctly described as 'Glucose Test Strips' and that there was some confusion regarding their classification at the material time. The Court acknowledged that the goods fell within the restricted items under the notification but also noted the subsequent amendment that clarified the restriction.

4. Compliance with Regulation 10(e) of the Customs Brokers Licensing Regulations, 2018 (CBLR, 2018):
The Inquiry Officer found that the appellant violated Regulation 10(e) by failing to exercise due diligence in classifying the goods correctly. The High Court referred to the case of Kunal Travels (Cargo) v. CC (I & G), which stated that due diligence under Regulation 10(e) pertains to the information imparted to the client, not necessarily to background checks of the consignment. The Court found that the exporter was fully aware of the classification issue and had corresponded with the department, and thus, the appellant's failure to inform the exporter about the correct classification could not be considered sufficiently grave to justify revocation of the license.

Conclusion:
The High Court set aside the impugned order and the Commissioner's order dated 11.06.2021, to the extent that it revoked the appellant's license and forfeited the security deposit. The appeal was partly allowed, and the challenge to the levy of the penalty was not pressed by the appellant's counsel.

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