Natural justice requires communicating adverse material and granting opportunity to rebut before revoking a licence.

Commissioner's revocation of a customs broker licence was set aside because the Commissioner disagreed with an inquiry report favourable to the broker but did not record or communicate the adverse material or reasons for disagreement nor afford the broker an opportunity to respond; the Tribunal applied the principle from Him Logistics that disagreement with an inquiry report requires communicating reasons/adverse material so the broker can rebut, and held the failure amounted to a breach of natural justice, resulting in quashing of the revocation order.

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Issues: Whether the Commissioner of Customs could lawfully disregard an inquiry report favourable to the customs broker without communicating the reasons/adverse material for disagreement and without affording the broker an opportunity to respond, and whether the impugned order revoking the customs broker licence should be set aside on that ground.

Analysis: The Tribunal examined the inquiry officer's detailed report which exonerated the broker on alleged violations of Regulation 10(d), 10(e), 10(q) and Regulation 13(12) of the Customs Broker Licence Regulations, 2018, recording specific findings of compliance and absence of proof of violations. The Commissioner, however, disagreed with that report and revoked the broker's licence without communicating the reasons or the adverse material forming the basis of disagreement, and without providing the broker an opportunity to make representations. The Tribunal applied the principle from the Delhi High Court decision in Him Logistics which holds that while a Commissioner is not bound to accept an inquiry report favourable to a broker, if the Commissioner intends to disagree he must record and communicate the adverse material/reasons for disagreement so that the broker can rebut or explain before an adverse order is passed. The Tribunal found that this procedure was not followed in the present case and that failure amounted to a breach of natural justice.

Conclusion: The Commissioner's order revoking the customs broker licence is set aside for failure to communicate reasons/adverse material and to afford opportunity to the broker to reply; the appeal is allowed and the impugned order dated 12.09.2024 is quashed.

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