TaxTMI 
TaxTMI 
2026 (6) TMI 194
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.... 10(n) and 10(j) of the CBLR, 2018. The proceedings arise out of Bill of Entry No.7045785 dated 25.07.2023 filed by the appellant on behalf of M/s. Reloyn Tradex Trading Private Limited for clearance of goods declared as "Slaked Lime" under CTH 25222000. The department alleged that the importer was non-existent/fictitious and that the appellant failed to verify the antecedents and functioning of the importer at the declared address and failed to properly supervise its employees. Following investigation by SIIB officers at JNCH, Mumbai, suspension order dated 25.09.2024 was issued under Regulation 16(1) of CBLR, 2018, followed by Show Cause Notice No.02/2024 dated 20.11.2024 proposing revocation of licence under Regulation 17(1) for alleged violation of Regulations 10(n) and 10(j). After inquiry proceedings and submission of Inquiry Report dated 11.02.2025, the Commissioner passed the impugned order revoking the licence, forfeiting the security deposit and imposing penalty of Rs.50,000/-. 2. Aggrieved by the said order, the present appeal has been filed before this Tribunal. 3. The Ld. Advocate Shri A.K. Jayaraj appeared for the Appellant and the Ld. Authorized Representatives....
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.... of Customs, Mumbai reported in 2008 (221) ELT 252 (Tri.-Mumbai), wherein it was held that a Customs House Agent cannot be penalized merely because the importer subsequently turns out to be non-genuine when the documents furnished appeared valid on their face. 4.3 The Ld. counsel submits that the entire proceedings are substantially founded upon statements recorded during investigation and conclusions drawn by departmental officers. However, despite repeated requests made during the inquiry proceedings under Regulation 17(4) of CBLR, 2018, effective opportunity of cross-examination of the persons whose statements were relied upon was denied. Reliance is placed upon the judgment of the Hon'ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise reported in 2015 (324) ELT 641 (SC), and the judgment of the Hon'ble Delhi High Court in Naman Gupta v. Commissioner of Customs, Airport & General reported in 2024 (388) ELT 40 (Del.), to contend that denial of cross-examination in proceedings founded upon statements and investigative materials causes serious prejudice and renders the proceedings violative of principles of natural justice. 4.4 The Ld. counsel fu....
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....blishing deliberate misconduct. 4.8 On the basis of the aforesaid submissions and the decisions relied upon, the learned counsel prayed that the impugned order dated 13.05.2025 revoking the Customs Broker licence, forfeiting the security deposit and imposing penalty be set aside in toto with consequential reliefs. 5. Per contra, the Ld. Authorized Representatives appearing for the Revenue reiterated the findings contained in the SCN, inquiry report and impugned order and further submitted that: - 5.1 That the Customs Broker failed to discharge the mandatory obligations cast under Regulation 10(n) of the CBLR, 2018 relating to verification of antecedents, IEC particulars, identity and functioning of the importer at the declared address. 5.2 That investigation revealed that the importer was non-existent and not functioning at the declared premises and that the appellant failed to exercise due diligence before undertaking Customs clearance activities. 5.3 That the appellant also violated Regulation 10(j) by failing to properly supervise the activities of its employees and authorized representatives. 5.4 The Revenue relies heavily upon the Delhi High Court judgment in....
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....epartment alleged that the importer was non-existent at the declared address and that the appellant Customs Broker failed to discharge obligations under the CBLR, 2018, leading to suspension proceedings and issuance of Show Cause Notice No.02/2024 dated 20.11.2024 proposing revocation of licence. The appellant consistently disputed the allegations and sought cross-examination of the persons whose statements, verification reports and investigative findings were relied upon by the department. However, such requests were not granted. Since the impugned proceedings are substantially founded upon those statements and investigation reports, the appellant contended that denial of cross-examination caused serious prejudice. We find considerable force in the said contention. 11. The appellant had specifically sought opportunity to cross-examine Shri Manish Ramesh Kanade, the G-card holder whose statement recorded under Section 108 of the Customs Act was heavily relied upon by the department, as well as the persons whose verification reports and investigative findings formed the basis of the allegation that the importer was non-existent. In his statement, Shri Kanade stated that KYC docum....
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....dly undertaken by the investigating authorities. The right of cross-examination assumes even greater significance in cases where findings are inferential in nature and arise from investigative conclusions rather than direct documentary-based admissions. The appellant has specifically disputed the investigative conclusions and has asserted that the importer possessed valid statutory registrations including IEC, GSTIN and PAN at the relevant point of time. In such circumstances, the appellant was fully entitled to test the basis, methodology and correctness of the investigation allegedly conducted to conclude that the importer was fictitious or non-functional. 14. The Revenue contended that proceedings under the CBLR are regulatory proceedings and therefore strict rules of evidence applicable to criminal trials are not attracted. While there can be no dispute regarding the said proposition, it is equally well settled that principles of natural justice are not excluded merely because proceedings are administrative or quasi-judicial. In fact, the greater the civil consequence, the greater the obligation upon adjudicating authorities to ensure procedural fairness. Revocation proceedi....
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....nces leads us to conclude that the proceedings suffered from material procedural infirmity. 19. The appellant has also rightly relied upon the decision in Naman Gupta v. Commissioner of Customs, Airport & General reported in 2024 (388) ELT 40 (Del.), wherein the Delhi High Court specifically held that denial of cross-examination in CBLR proceedings causes serious prejudice where the inquiry officer relies upon statements and verification reports without permitting effective rebuttal. The ratio of the said judgment squarely applies to the present case because the inquiry findings substantially proceed upon investigative conclusions and statements which the appellant was denied opportunity to effectively test through cross-examination. 20. We are conscious that every denial of cross-examination may not automatically vitiate adjudication. However, where statements and investigative findings form the foundational basis of adverse action and where such materials are disputed, denial of cross-examination assumes substantial significance. In the present case, the findings of violation under Regulations 10(n) and 10(j) have been substantially inferred from the investigative record re....
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....ticulars, identity of the client and functioning of the client at the declared address using reliable, independent and authentic documents or information, whereas Regulation 10(j) casts an obligation upon the Customs Broker not to refuse access to, conceal, remove or destroy any record pertaining to transactions as a Customs Broker. The foundation of the department's case is that M/s. Reloyn Tradex Trading Pvt. Ltd., on whose behalf the impugned Bill of Entry was filed, was allegedly found non-existent at the declared address and therefore the appellant must necessarily be presumed to have failed in discharge of obligations under Regulations 10(n). At the very outset, it becomes necessary to emphasize that proceedings under the Customs Brokers Licensing Regulations are quasijudicial proceedings carrying extremely serious civil consequences. Revocation of a Customs Broker licence does not merely amount to imposition of regulatory discipline but results in virtual civil death of the broker's profession and business accumulated over years of commercial functioning. Therefore, allegations warranting revocation must necessarily be established through cogent, reliable and convincing evid....
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....v. Principal Commissioner of Customs reported in 2023 (385) ELT 404 (Tri.-Kolkata), Raid International Services Ltd. v. Commissioner of Customs reported in 2023 (386) ELT 567 (Tri.-Kolkata), Triveni Cargo v. Commissioner of Customs (Airport & General), New Delhi reported in 2024 (389) ELT (Tri.-Del.), Him Logistics Pvt. Ltd. v. Commissioner of Customs reported in 2016 (338) ELT 725 (Tri.-Del.) and Kunal Travels (Cargo) v. Commissioner of Customs (I&G), IGI Airport, New Delhi reported in 2017 (354) ELT 447 (Del.). These decisions consistently hold that: - i. physical verification of premises is not mandatory under Regulation 10(n); ii. verification through IEC, GSTIN and other Government-issued credentials constitutes substantial compliance; iii. Customs Brokers cannot sit in judgment over Government registrations issued by statutory authorities; and iv. subsequent non-traceability of importers/exporters does not automatically establish violation by the Customs Broker. 28. Particularly instructive is the reasoning in Jyoti Customs Broker Services Pvt. Ltd., 2023 (6) TMI 201 - CESTAT KOLKATA wherein the Tribunal held that the Circular No. 9/2010....
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....nterest in the transaction. 31. We find substantial support for the aforesaid view from the decision relied upon by the appellant in Thawerdas Wadhoomal v. Commissioner of Customs, Mumbai reported in 2007 (9) TMI 102 - CESTAT, Mumbai, which was subsequently affirmed by the Hon'ble Bombay High Court by dismissal of the departmental appeal as reported in 2008 (7) TMI 953 - Bombay High Court wherein it was held that a Customs House Agent filing documents on the basis of materials furnished by clients cannot be visited with penal consequences where the documents appeared genuine and where there was no evidence of conscious involvement. Equally, several judicial pronouncements have consistently held that the obligations of a Customs Broker must be interpreted reasonably and pragmatically having regard to the nature of trade facilitation functions discharged by such intermediaries. 32. The Revenue has strongly relied upon the judgment of the Hon'ble Delhi High Court in Commissioner of Customs v. Shiva Khurana reported in 2019 (367) ELT 550 (Del.) and the judgment of the Hon'ble Andhra Pradesh High Court in H.B. Cargo Services v. Commissioner of Customs reported in 2011 (268) ELT 44....
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....IIB officers revealed that the containers contained white coloured powder packed in jumbo bags and no concealment was reportedly found during the examination process, as specifically referred to by the appellant in the statement of facts filed in appeal. The impugned order substantially proceeds upon the singular circumstance that the importer was allegedly not functioning at the declared address. In our considered view, cannot, by itself, establish deliberate or conscious violation of Regulation 10(n), particularly when the Customs Broker had verified the statutory registrations and KYC particulars through official sources. We also find considerable substance in the appellant's submission that the standards now sought to be imposed by the department are neither expressly prescribed in the Regulation nor uniformly practicable in trade operations. A Customs Broker handling transactions across multiple Customs stations cannot realistically be expected to physically inspect and verify every importer's premises in the absence of suspicious indicators. The law does not compel performance of impossibilities. 35. We also find force in the appellant's submission that the allegation rela....
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....icance because when the investigating authorities themselves required repeated laboratory examinations to ascertain the exact nature and classification of the imported product, it becomes unsafe to infer that the appellant Customs Broker possessed prior knowledge regarding the alleged misdeclaration. The department's own uncertainty regarding the composition and classification of the goods substantially weakens the allegation of conscious involvement or connivance on the part of the appellant. 40. We further find merit in the appellant's submission that no evidence has been produced establishing mens rea, active facilitation, pecuniary gain or deliberate collusion by the appellant in the alleged import irregularity. The jurisprudence governing revocation of Customs Broker licences consistently emphasizes that extreme punishment such as revocation cannot be sustained in the absence of evidence demonstrating conscious and deliberate misconduct. Mere procedural lapses, inferential assumptions or subsequent irregularities attributable to the importer cannot justify civil consequences of such severity. 41. The appellant's reliance upon Commissioner of Customs (Imports), Chennai v.....