2026 (3) TMI 420 - AT - Customs

Right to fair hearing: Commissioner must disclose reasons and allow response before adverse licence action.

Where an inquiry officer's report exonerates a licence-holder but the Commissioner proposes an adverse conclusion, principles of natural justice require ... Failure to communicate reasons for disagreement with inquiry report - principles of natural justice - violation of the provisions of regulations 10 (a), (d), (e) and (n) of the Customs Broker License Regulation 2018 - Revocation of the Customs Broker licence - forfeiture of the security deposit and recovery of penalty - Whether it was open to the Commissioner to disagree with the findings recorded by the Inquiry Officer without providing reasons to the appellant for such disagreement and further providing an opportunity to the appellant to reply. Failure to communicate reasons for disagreement with inquiry report - HELD THAT: - The Tribunal held that although the Commissioner is not bound to accept an inquiry report that is favorable to the customs broker, the principles of natural justice require that if the Commissioner intends to disagree with such a report he must communicate the adverse material or reasons for his disagreement to the broker so that the broker may rebut, qualify or explain the same. The Tribunal relied on the decision in Him Logistics [2015 (11) TMI 380 - DELHI HIGH COURT] which expressly held that non-communication of the reasons or adverse material, followed by taking adverse action, constitutes a failure of the principles of natural justice. In the present case the Inquiry Officer had recorded that contraventions could not be proved, the Commissioner disagreed but did not communicate any reasons or adverse material to the appellant and no opportunity to reply was given. That omission vitiated the impugned order. [Paras 7, 9, 10] Impugned order set aside for failure to communicate reasons for disagreement with the inquiry report and for breach of the principles of natural justice. Final Conclusion: The appeal is allowed; the order revoking the customs broker licence is set aside for breach of natural justice because the Commissioner disagreed with an exoneratory inquiry report without communicating adverse reasons or material and without giving the appellant an opportunity to reply. Issues: Whether the Commissioner, upon disagreeing with an Inquiry Officer's report favourable to the licensee, is required to communicate the reasons or adverse material for such disagreement and provide the licensee an opportunity to reply before passing an adverse order.Analysis: The issue was examined in light of the procedural scheme governing inquiries under the Customs Broker License Regulation, 2018 and settled principles of natural justice. Where an inquiry report exonerates a licensee but the Commissioner proposes to reach an adverse conclusion by disagreeing with that report, fairness requires that the Commissioner disclose the adverse material or reasons on which the disagreement is based so the licensee can rebut, qualify or explain the same. The tribunal applied the principle established in the cited precedent holding that the Commissioner is not bound to accept an inquiry report but must communicate reasons for disagreement and afford the affected party an opportunity to respond before imposing adverse consequences.Conclusion: The impugned order, which revoked the customs broker licence without communicating reasons for disagreement with the Inquiry Officer's favourable report and without giving an opportunity to reply, is set aside. Relief is granted in favour of the appellant.