2026 (3) TMI 480 - AT - Customs

Immediate suspension of a customs broker licence requires recorded reasons and an evidential Regulation 17 inquiry before continuation.

Regulation 16 permits immediate suspension of a customs broker licence only in appropriate cases where immediate action is necessary and must be supported ... Appropriateness test for Immediate suspension of the Customs Broker licence and its continuation under Regulation 16 - illegal clearance of imported goods by over debiting of SIL licenses - procedure for inquiry under Regulation 17 - mis-declaration of the goods - Failure to fulfill due diligence in discharging their obligations as required - non-transferability of CB license​​​​​​​ - violations of Regulation 1(4) and sub-regulations (a), (b), (d) and (e) of Regulation 10 - non- reasoned order. Immediate suspension under Regulation 16 - procedure for inquiry under Regulation 17 - HELD THAT: - The Tribunal held that Regulation 16 permits suspension only in appropriate cases where immediate action is necessary and requires reasons to be recorded; Regulation 17 prescribes the detailed inquiry steps that must follow. The licensing authority's order continuing suspension did not evidentially demonstrate appropriateness nor record the requisite reasons, and proceeded to conclude violations before the inquiry under Regulation 17 was conducted. The Tribunal found no material before the Commissioner justifying immediate continuation of suspension (noting the later-issued SCN that excluded the appellants), and observed that CBIC Instruction No.24/2023 requires suspension not to be exercised mechanically and mandates recording of reasons. Because the statutory preconditions for invoking and continuing suspension under Regulation 16 were not satisfied and the prescribed inquiry process under Regulation 17 was not followed, the continued suspension was unlawful; the inquiry must now be completed expeditiously under Regulation 17. [Paras 7, 8, 9] Continued suspension under Regulation 16 set aside for failure to demonstrate appropriateness and record reasons; inquiry under Regulation 17 to be completed expeditiously and the Customs Broker permitted to resume business forthwith. Final Conclusion: The Tribunal set aside the impugned continued suspension order as legally unsustainable for lack of recorded reasons and evidential basis under Regulation 16, directed completion of the Regulation 17 inquiry expeditiously (preferably within six months), and allowed the Customs Broker to resume business with immediate effect. Issues: (i) Whether the immediate suspension of the appellants' Customs Broker licence and its continuation under Regulation 16 of the Customs Brokers Licensing Regulations, 2018 was legally sustainable; (ii) Whether the alleged violations of Regulation 1(4) and sub-regulations (a), (b), (d) and (e) of Regulation 10 of the Customs Brokers Licensing Regulations, 2018 justified invoking and continuing suspension under Regulation 16.Issue (i): Whether the immediate suspension and its continuation under Regulation 16 of CBLR, 2018 was legally sustainable.Analysis: Regulation 16 permits suspension only in appropriate cases where immediate action is necessary and requires reasons to be recorded and a post-decisional hearing with a reasoned order either revoking or continuing suspension. CBIC Instruction No.24/2023 emphasises that suspension must not be mechanical or routine and that reasons for appropriateness must be recorded. The licensing authority's order continuing suspension must demonstrably show factual and evidential basis establishing appropriateness before invoking Regulation 16. In the present case, the adjudicating authority continued suspension on the basis of an offence report but did not record evidential findings establishing the appellants' role nor demonstrate why immediate suspension was necessary; subsequent procedural steps under Regulation 17 had not been completed and the SCN issued to parties clarifying involvement was dated after the continuation order.Conclusion: The continuation of immediate suspension under Regulation 16 was not legally sustainable and is set aside; conclusion is in favour of the assessee.Issue (ii): Whether the alleged violations of Regulation 1(4) and Regulation 10(a),(b),(d) and (e) justified immediate suspension under Regulation 16.Analysis: Regulation 1(4) prohibits transfer of licence and Regulation 10 prescribes obligations of a customs broker; Regulation 17 prescribes the inquiry procedure to examine and determine violations. Where the licensing authority has not followed the procedural and evidential steps required to establish that the broker rented out the licence or failed obligations, and where inquiry under Regulation 17 was yet to produce a speaking adjudication, the factual basis to treat the appellants as culpable was absent. The record did not contain reasoned findings showing the appellants' involvement in over-debiting SIL or mis-declaration sufficient to satisfy the appropriateness threshold for suspension.Conclusion: The framed allegations did not, on the record before the licensing authority, justify invocation or continuation of immediate suspension; conclusion is in favour of the assessee.Final Conclusion: The impugned order continuing suspension dated 12.11.2025 is set aside and the appellants are permitted to resume business as customs broker with immediate effect; the Tribunal remands completion of inquiry under Regulation 17 to the licensing authority for expeditious consideration.Ratio Decidendi: Immediate suspension under Regulation 16 of the Customs Brokers Licensing Regulations, 2018 is permissible only in appropriate cases where immediate action is necessary, and must be supported by recorded reasons and evidential findings demonstrating appropriateness; absent such recorded justification and compliance with Regulation 17 inquiry procedure, continuation of suspension is unlawful.