TaxTMI 
TaxTMI 
2026 (6) TMI 588
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.... Sheva. The appeal No. 85820 of 2026 has been filed against order dated 13.04.2026 for immediate suspension of the appellant CFS for forwarding as a Custom Cargo Service Provider (CCSP). Subsequently, post-decisional hearing had been given on 16.04.2026 and 04.05.2026, and order dated 05.05.2026 has been passed by the learned Commissioner of Customs, and thus earlier order of 13.04.2026 has merged with the order dated 05.05.2026. Therefore, the appeal No. C/85820/2026 has become infructuous and accordingly it is dismissed and disposed of. 2.1 Briefly stated, the facts of the case are that the appellants herein was appointed as a 'custodian' of ICTPL/Globicon CFS under Section 45(1) and 141(2) of the Customs Act, 1962 and also as a Customs Cargo Service Provider (CCSP) duly approved by the Commissioner of Customs (General), JNCH, Nhava Sheva under Regulation 10 of Handling of Cargo in Customs Areas Regulations (HCCAR), 2019 vide Notification No.12/2016 dated 23.12.2016. The CCSP license for the appellants was renewed from time to time by the Commissioner of Customs (General), JNCH and the latest approval as a CCSP was issued by Public Notice No.67/2023 dated 08.08.2023. 2.2 In....
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....them as follows: CCTV coverage having blind spots; manipulation of hazardous cargo; unauthorised container seal breaking; compromised perimeter security and that the repeat offences penalized in formal adjudications, issues flagged in statutory audits not addressed by them etc. DRI had informed the jurisdictional Commissioner of Customs, vide their letter dated 12.04.2026 that these vulnerabilities at ICTPL/Globicon CFS have lead to the deliberate illegal attempt to remove the restricted goods i.e., "Fireworks/ Firecrackers" of Chinese Origin. 2.4 On the above basis, the Commissioner of Customs, being the licensing authority had found that these are serious allegations involving failure to prohibit unauthorised access into their premises; failure to keep a record of each activity or action taken in relation to the movement or handling of imported goods; failure to prevent clandestine removal of the imported goods; failure to ensure safety and security of premises and cargo; and failure to ensure that the container selected for scanning is properly scanned, all of which are the failure to fulfil the responsibilities entrusted upon the appellant CFS under Regulations 5(1)(n), clau....
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....s no blind spots or this was out of coverage area in the CFS. The outsourcing of various services by the CFS having been done without obtaining permission of the Commissioner of Customs is devoid of merits as they had submitted a list of vendors providing various services vide their letter dated 13.02.2023 to the customs authorities. He further submitted that neither at the time of renewal of CCSP of the CFS nor in the annual audit/inspection of the appellant's CFS was there any mention about any deficiency or illegality in the operational practices of the CFS. 3.3 He further stated that the appellant candidly submits that due to the involvement and misconduct of certain individuals, the prescribed procedures may have been compromised in the peculiar facts of the present case. However, he stated that such isolated compromise or circumvention of a system by errant individuals cannot lead to the conclusion that the CFS itself operated without any process, supervision, or control mechanism. He stated that the appellant CFS had been co-operating with the investigation agency and submitted all the details, documents sought for by them, including CCTV footage. About 19 persons who are....
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....ich require the licensing authority to stop operations instantly to prevent damage to secure the Revenue's interests. 4.2 He further stated that the practice adopted by the appellant such as, cutting the seal of the container without the presence of Customs officer, offloading of cargo from the container without the filing a B/E or the permission of the Customs officer, bypassing scanning of goods even when marked for scanning are potential risks to revenue, through substitution. Bypassing of scanning would undoubtedly incentivize mis-description of goods and smuggling of high-valued items as well as import of prohibited/objectionable goods. Entry of vehicles and labourers without adequate checks further provide considerable leeway to substitution as well as pilferage of cargo. All the risks enumerated above were incident in the case of appellant CFS. In particular, the involvement of Chinese-origin Fireworks that are prohibited and potentially hazardous escalates this from a simple revenue matter to a security breach. Therefore, he stated that the sanctity of the customs area and essentiality of Customs control also stands breached; Within a short period of 10 days, the violati....
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....by Revenue, the learned Advocate stated that in the present case, the facts clearly demonstrate that systems and procedures did exist; the vehicles had entered with valid documents; labour entry was documented and regulated; and the alleged incident remained confined within the Customs area itself. Therefore, he stated that the sweeping allegation that the CFS functioned with unrestricted access and absence of control is factually incorrect, legally unsustainable, and liable to be rejected. He further submitted that, the learned Special Counsel is therefore impermissibly attempting to improve upon and supplement the impugned order by introducing entirely new factual allegations and legal grounds during arguments. It is a settled law that an adjudication order must stand or fall on the reasons contained therein and the deficiencies in the order cannot subsequently be cured by way of oral submissions or additional arguments advanced by counsel. The respondent cannot travel beyond the findings contained in the impugned order nor can fresh allegations be introduced at the appellate stage to justify the order retrospectively. Such an exercise is legally impermissible and liable to be re....
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....r action under HCCAR, 2009, the Customs Act, 1962, and any other provisions of the law." 7.1 Learned Commissioner of Customs in the impugned order dated 05.05.2026 had come to the following conclusions and given his findings for passing the aforesaid order. "15. The submissions made by M/s ICTPL have been carefully considered. The findings of investigation by DRI so far has also been considered. At the outset, it is observed that the case involves grave allegations relating to organized smuggling of prohibited/restricted goods, i.e., firecrackers of Chinese origin, through deliberate misdeclaration and systematic manipulation of processes within the Container Freight Station (CFS). The modus operandi, as brought out by the Directorate of Revenue Intelligence (DRI), clearly demonstrates that the illegal activities were not incidental or isolated lapses, but involved a coordinated sequence of actions requiring active facilitation within the CFS. xxx xxx xxx xxx 26. I find that the contention raised by the authorised representative that the CFS cannot be held liable for the acts of its staff and employees on the principle of vicarious liability is not acceptabl....
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.... CFS, in two separate instances, allowed entry of goods on the 19th of April (6 days after the suspension) for the goods covered under Bills of Entry dated the 13th, i.e., of the date of the issuance of the suspension order, which was not permissible, particularly as the Public Notice had clearly prohibited such action by the CFS. This conduct demonstrates a blatant disregard for the regulatory directions issued by the competent authority. It reflects a casual and negligent approach towards compliance, indicating that the CFS continues to function with a lackadaisical attitude, showing little concern for adherence to statutory orders. Such actions clearly establish that there has been no substantive improvement in their operations post-suspension, and that their claims of corrective measures remain merely on paper without being substantiated by actual conduct. xxx xxx xxx xxx 30. In view of the above, it is evident that the violations are not merely procedural lapses but constitute serious breaches involving active collusion, systemic failure, and compromise of cargo security and revenue safeguards. The facts on record prima facie establish that M/s ICTPL has failed to ....
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....also issued various instructions to the field formations and trade in the form of Standing Orders and Public Notices concerning various issues such as the procedure for putting on hold containers held in their custody by Port/ICD/CFS on the basis of certain intelligence; procedure for container scanning division; Procedure to be followed to check the status of container for scanning; Procedure for Sealing of containers marked as 'Suspicious' consequent upon scanning with Customs Seal etc. Further, import of Firecrackers/Fireworks covered under Indian Trade (Harmonised System) Classification [(ITC(HS)] code 36041000 is 'restricted' and no person can import fireworks without a licence / authorisation from the Directorate General of Foreign Trade (DGFT) and Petroleum and Explosives Safety Organisation (PESO) under the Explosive Rules, 2008. 8. The case of the Revenue is that the appellant ICTPL/Globicon CFS has contravened the following: (i) Regulation 5(1)(n) concerning safety and security of the cargo; and access control for prohibiting unauthorised access into the licensed CFS premises; (ii) Regulation 6(1)(b) by falsely recording the status of the container....
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....CCAR, 2009 which have been alleged to have been violated and those relating to approval, suspension, procedure for suspension etc. are extracted and given below: "Regulation 5. Conditions to be fulfilled by Customs Cargo Service provider - The Customs Cargo Service provider for custody of imported goods or export goods and for handling of such goods in a customs area shall fulfill the following conditions, namely:- (1) Provide the following to the satisfaction of the 2[Principal Commissioner of Customs or Commissioner of Customs, as the case may be], namely : (i) Infrastructure, equipment and adequate manpower for loading, unloading, stacking, handling, stuffing and de-stuffing of containers, storage, dispatch and delivery of containers and cargo etc., including :- xxx xxx xxx xxx (n) security and access control to prohibit unauthorized access into the premises, and (o) such other equipment or facilities as the Board or Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may specify having regard to the screening, examination, custody and handling of imported or export goods in a customs ar....
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....Customs Cargo Service provider already approved on or before the date of coming into force of these regulations, shall be deemed to be approved as a Customs Cargo Service provider under these regulations for a period of five years from the date of compliance with the conditions of these regulations as stipulated in regulation 4. (2) The Principal Commissioner of Customs or Commissioner of Customs, as the case may be shall review the approval granted under sub regulation (1) before the expiry of the initial period of approval of two years or five years, as the case may be, and may extend such approval to a further period of five years at a time. Provided that the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, for reasons to be recorded in writing, may order for review of the approval granted to any Customs Cargo Service provider before the completion of the period of approval. Provided further that in case of Customs Cargo Service provider authorised under Authorised Economic Operator Programme', the approval granted under sub-regulation (1) may be extended for a further period of ten years at a time. Regulat....
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.... he may also put any question to any person tendering evidence, for or against the Customs Cargo Service provider, for the purpose of ascertaining the correct position. (4) The Customs Cargo Service provider shall be entitled to cross-examine the persons examined in support of the grounds forming the basis of the proceedings and where the Assistant Commissioner of Customs or Deputy Commissioner of Customs declines to examine any person on the grounds that his evidence is not relevant or material, he shall record his reasons in writing for so doing. (5) At the conclusion of the aforesaid inquiry, the Assistant Commissioner of Customs or Deputy Commissioner of Customs shall prepare a report of the inquiry recording his findings. (6) The Principal Commissioner of Customs or Commissioner of Customs, as the case may be] shall furnish to the Customs Cargo Service provider a copy of the report of the Assistant Commissioner or Deputy Commissioner of Customs and shall require the Customs Cargo Service provider to submit within the specified period not being less than thirty days any representation that he may wish to make against the findings of the Assistant Comm....
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....ds under their custody, disposal of uncleared, unclaimed or abandoned goods within the prescribed time limit, payment of cost recovery charges of the customs officers posted in the facility are applicable to the persons who handle imported or export goods in the capacity of an approved custodian/ CFS. On the other hand, responsibilities for publishing or display of the schedule of charges for the activities undertaken in respect of imported/ export goods shall apply to both categories of persons. These responsibilities have been specified with the overall objective of expeditious clearance of goods, reduction of dwell time, transaction cost and to safeguard revenue. 9.3 As regards regulation of receipt of containers having import/export goods and its handling in CFS, under Regulation 7(2) ibid, it has been provided that the Commissioner of Customs may consider suspending the entry of imported/export goods in a CFS for a temporary period of fifteen days, taking into account the factors such as congestion of containers/ goods in a CFS, efficiency in handling the goods, delay in clearance of the goods etc., Similarly in respect of conditions and responsibilities to be fulfilled by ....
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.... the Customs Act and HCCAR, we proceed to examine the various allegations levelled against the appellant ICTPL/Globicon CFS in the following paragraphs for the purpose of Regulation 11 ibid. 9.5 As regards Regulation 5(n) ibid relating to 'Security and access control to prohibit unauthorized access into the premises' from the details submitted by Revenue, it is evident that there were four trucks bearing registration numbers viz., MH 04 KU 3433; MH 04 HY 8524; MH 46 AF 6002 and TG 08 V 2891 which had entered into the appellants CFS premises on 11.04.2026 /12.04.2026; while the truck bearing TG 08 V 2891 alone was authorised by a Customs Broker M/s Capricorn Logistics for entering into the appellants CFS for transporting the export cargo. Further, it is stated by Revenue that Let Export Order (LEO) for such export cargo had been given by the customs official at 17.33 Hrs. on 11.04.2026; and even such truck had entered at 18.25 Hrs. after grant of LEO. Thus, Revenue claims that there was free entry for vehicles without proper verification, as well entry of persons without proper verification and daily passes, and this posed serious threat to safety and security of goods stored in ....
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....the aforesaid incident including in the area of grounding of containers in the CFS, seal cutting of containers, gate exit of vehicles and visitor verification, in order to ensure that the safety and security of the import/export cargo is enhanced eliminating individual discretion. Considering the accumulating containers of more than 14000 TEUs in the last 24 days which are normally handled at their CFS and the growing congestion at terminal gates, operational delays in export gate-in and import container evacuation, they pleaded that continued suspension of their operation is affecting their business which employ more than 800 direct and outsourced employees and the operation of CFSs at JN port. 9.7 In terms of the functions carried out in a Container Freight Station (CFS), it is only an approved customs area located in the jurisdiction of a Commissioner of Customs exercising control over a specified Customs port, airport, LCS/ICD. A CFS cannot have an independent existence and has to be linked to a Customs station within the jurisdiction of the Commissioner of Customs. It is an extension of a Customs station set up with the main objective of decongesting the ports. In a CFS onl....
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....DRI with the customs broker M/s Capricorn Logistics Private Limited., who had explained about the clarification given by them explaining their position with respect to the above incident that happened at appellant CFS, and have also mentioned that they had filed a police complaint against one Shri Sandeep Shukla. The aforesaid extent of investigation with various persons involved indicate that there is an elaborate investigation required to bring forth the persons involved in the smuggling gang and it is still under progress. 9.8 Furthermore, in the 'Visit Report' of the Customs team headed by the Assistant Commissioner of Customs on the appellant ICTPL/Globicon CFS conducted on 18.12.2025, there is no mention about the 'existing provision for security and access control' being inadequate to prohibit unauthorised access into the premises. Even in the earlier inspection conducted by the Customs authorities on 08.01.2025, there is no specific remarks about the security and access control of the appellants CFS premises. Therefore, we find that there is no official record in the form of 'Inspection Report' with respect to continuous evaluation of appellant ICTPL/Globicon CFS working....
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....ted 08.01.2025 stating that CCTV coverage should be installed sought to cover the stuffing area of LCL Hazardous cargo, the appellants had stated that they had placed order for supply and installation of camera on 04.11.2025 itself. Therefore, we find no specific case has been made out by the facts available as on date to state that the 'security and access control' have been inadequate. On the other hand, it is only due to specific intelligence and alert watch of smuggling activity and coordinated efforts of DRI, that timely action has been taken by them in preventive illegal removal of 'fire crackers/fire works' from the customs area. Therefore, it is essential that once DRI's investigation is completed, then entire picture of the modus operandi of smuggling of firecrackers/ fireworks and all the persons involved in illegal activities would be brough to the fore. 10.2 On the issue of alleged violations under clauses (b), (f), (g), (i) and (q) of Regulation 6 of HCCAR, we find that the responsibilities prescribed in the said Regulation 6 ibid apply to both categories of persons i.e., all Custodians appointed under Section 45 ibid and persons who provide various services, both c....
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....tion of false recording of 'scanning' as though it had been completed by the appellant CFS, bears no significance when authentic data is available. Further, in respect of second case vide order dated 08.05.2025, wherein the appellant had been imposed with penalty for commencing operations in unauthorized area of 1355 SQM, subsequently vide CFS Notification No.1/2025 dated 11.07.2025 the Commissioner of Customs had specified the same area as part of the appellant's CFS in exercise of the powers vested with him/her under Section 8(a) ibid. Therefore, it is not clear that whether these allegations of past cases stands proved or otherwise, unless a detailed inquiry is conducted and a factual report is available duly substantiated by evidences. Since we had examined the present case on the basis of facts available on record, we are not taking into account the comparison with the other case of D.P. World Multimodal Logistics vide order dated 28.08.2025 at this stage, where favourable order was passed by the learned adjudicating authority. Further, since the factual matrix of the each of the case would depend primarily on the facts peculiar to it, the various case laws cited by both sides....