2025 (11) TMI 1732 - AT - Customs

Customs broker license revocation quashed as CBLR action collapses after pre-carting LEO allegations withdrawn in offence reports

CESTAT set aside the revocation of the customs broker license, forfeiture of security deposit, and penalty imposed under CBLR. The proceedings were ... Revocation of Customs Broker License - forefeiture of security deposit - levy of penalty - conspiracy with exporters and Customs officers and ensured that “Let Export Orders (LEO) in respect of the shipping bills filed by it were issued before the goods were even brought into the customs area - HELD THAT:- It is found that the very allegation that the LEOs were issued before the export goods were even carted in the offence reports which formed the basis of the current proceedings has been dropped. Therefore, these proceedings under the CBLR and the impugned order cannot be sustained. The impugned order is set aside and the appeal is allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether proceedings under the Customs Brokers Licensing Regulations, 2018, alleging violation of Regulations 10(d), 10(e), 10(f) and 10(i), could be sustained when based entirely on show cause notices under the Customs Act, 1962, in which the core allegation regarding improper grant of Let Export Orders was subsequently dropped. 1.2 Whether the revocation of the Customs Broker's licence and forfeiture of security deposit could legally stand once the foundational allegation in the offence reports stood negated in the proceedings under the Customs Act. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Sustainability of CBLR proceedings when based on offence reports in which core allegation was dropped Interpretation and reasoning 2.1 The proceedings under the Customs Brokers Licensing Regulations, 2018 were initiated by treating several show cause notices issued under the Customs Act, 1962 to exporters, the Customs Broker and Customs officers as 'offence reports'. 2.2 The basis of these offence reports was the allegation that the Customs Broker had conspired with exporters and Customs officers to secure Let Export Orders prior to carting of export goods into the customs area, thereby enabling exporters to claim a higher rate of duty drawback available before 01.10.2017. 2.3 It was recorded that, in all such show cause notices under the Customs Act, the charges against the Customs officers who had actually issued the Let Export Orders were dropped by the competent authority. 2.4 The Tribunal noted that, once the charges relating to the alleged improper issuance of Let Export Orders had been dropped in those proceedings, the very allegation that Let Export Orders were issued before carting stood negated in the offence reports forming the sole basis of the CBLR proceedings. 2.5 As the alleged factual foundation of misconduct (premature issuance of Let Export Orders leading to higher drawback) did not survive, the continuation or sustenance of disciplinary action under CBLR on the same factual premise was held to be untenable. Conclusions 2.6 The Tribunal held that, since the central allegation in the offence reports had been dropped, the proceedings under the Customs Brokers Licensing Regulations, 2018, alleging violation of Regulations 10(d), 10(e), 10(f) and 10(i), could not be sustained. Issue 2: Validity of revocation of licence and forfeiture of security deposit Interpretation and reasoning 2.7 The revocation of the Customs Broker's licence and forfeiture of the security deposit under the impugned order rested solely on the alleged violation of Regulations 10(d), 10(e), 10(f) and 10(i), which in turn depended entirely on the allegation that Let Export Orders were issued before carting of goods. 2.8 With the Tribunal finding that this foundational allegation no longer subsisted, the basis for treating the conduct as a violation of the cited regulations also ceased to exist. Conclusions 2.9 The Tribunal held that the impugned order revoking the Customs Broker's licence and forfeiting the security deposit was unsustainable in law, set it aside, and allowed the appeal with consequential relief.