2026 (3) TMI 447 - AT - Customs

Immediate suspension under Regulation 16 requires recorded necessity and procedural compliance; continued suspension set aside and inquiry to be completed.

Immediate suspension of a customs broker's licence under Regulation 16 is permissible only in appropriate cases with recorded reasons demonstrating ... Appropriateness for immediate suspension of the customs broker's licence under Regulation 16 of CBLR, 2018 - until completion of pending inquiry proceedings under Regulation 17 ibid - requirement to record reasons when continuing suspension - necessity of evidential basis to implicate a Customs Broker before suspension - non-transferability of licence - violations of Regulations 1(4) and 10(a), 10(b), 10(d) and 10(e). Appropriateness for immediate suspension under Regulation 16 of CBLR, 2018 - requirement to record reasons when continuing suspension - Continued suspension of the appellant's Customs Broker licence under Regulation 16 of CBLR, 2018 was legally unsustainable - HELD THAT: - The Tribunal held that Regulation 16 permits suspension only in appropriate cases where immediate action is necessary and where an enquiry is pending or contemplated, and that the licensing authority must give a post-decisional hearing and record reasons when continuing suspension. The impugned order failed to demonstrate the appropriateness of immediate suspension or to record reasons justifying continued suspension. The adjudicating order also lacked an evidential foundation linking the appellants to the alleged over debiting and mis declaration: the evidential materials did not establish that the appellants handled the impugned imports, and the show cause notice implicating the importer and others was issued after the suspension decision. The Tribunal further applied the Board's instruction No.24/2023 cautioning against routine or mechanical use of suspension and found that the licensing authority did not apply its mind to the statutory tests in Regulation 16 and the procedural requirements of Regulation 17.[Paras 7, 8, 9] We are not examining the allegations of violation of various Regulations under CBLR against the appellants, as it is pre-mature inasmuch as the licensing authority i.e., Commissioner of Customs is yet to finally pass a speaking order under Sub-regulation (8) of Regulation 17 of CBLR, 2018. We are also therefore not expressing our opinion on any of the alleged violations of Regulation 10 ibid, as there is an independent inquiry proceeding that is required to be conducted by the jurisdictional Customs Commissionerate as licensing authority and on which a speaking order is required to be passed by him in terms of Regulation 17 of CBLR. The impugned order of continued suspension was set aside for lack of recorded reasons and absence of evidential basis; the licensing authority was directed to complete the Regulation 17 inquiry expeditiously and the appellants were permitted to resume business as Customs Broker pending that inquiry. Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order of continued suspension for failure to satisfy the statutory requirements of Regulation 16 and for want of evidential basis, directed the licensing authority to complete the Regulation 17 inquiry expeditiously, and permitted the appellant to resume Customs Broker business immediately. Issues: (i) Whether the immediate suspension of the customs broker's licence and its continuation under Regulation 16 of the Customs Brokers Licensing Regulations, 2018 was legally sustainable; (ii) Whether the alleged violations of Regulations 1(4) and 10(a), 10(b), 10(d) and 10(e) of the Customs Brokers Licensing Regulations, 2018 justify invocation and continuation of suspension under Regulation 16.Issue (i): Whether the immediate suspension and its continuation under Regulation 16 of the Customs Brokers Licensing Regulations, 2018 was legally sustainable.Analysis: Regulation 16 permits suspension in appropriate cases where immediate action is necessary and when an inquiry is pending or contemplated; it requires recording reasons and affording post-decisional hearing as per the regulation. CBIC Instruction No.24/2023 emphasises that suspension must not be routine or mechanical and mandates recording reasons demonstrating appropriateness. The impugned order did not evidentially demonstrate appropriateness nor record reasons justifying immediate suspension and its continuation; inquiry proceedings under Regulation 17 had not been completed and the procedural steps mandated by Regulation 17 were not followed prior to the continued suspension.Conclusion: The immediate suspension and its continuation under Regulation 16 were not legally sustainable. The conclusion is in favour of the appellants.Issue (ii): Whether the alleged violations of Regulation 1(4) and Regulation 10(a), 10(b), 10(d) and 10(e) justify invocation and continuation of suspension under Regulation 16.Analysis: Regulation 1(4) prohibits transfer of licence; Regulation 10 sets obligations including obtaining authorization, transacting through authorised employees, advising clients and exercising due diligence. The licensing authority must base suspension on evidential findings showing the broker's role in the alleged violations. The adjudicating order reached conclusions on these alleged violations before completion of an independent inquiry under Regulation 17 and without adequate evidential record establishing the broker's involvement; the show-cause process and inquiry mandated by Regulation 17 were yet to be completed.Conclusion: The impugned order fails to establish that the alleged violations justified immediate suspension and its continuation. The conclusion is in favour of the appellants.Final Conclusion: The impugned order continuing suspension of the customs broker's licence is set aside and the appellants are entitled to resume business; the licensing authority is directed to complete inquiry proceedings under Regulation 17 expeditiously.Ratio Decidendi: Immediate suspension under Regulation 16 of the Customs Brokers Licensing Regulations, 2018 is permissible only in appropriate cases with recorded reasons demonstrating necessity; continuation of suspension requires compliance with the procedural and evidential mandates of Regulation 16 and Regulation 17, including post-decisional hearing and completion of inquiry steps before sustaining suspension.