TaxTMI 
TaxTMI 
2026 (7) TMI 534
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....rusted with the custody of a DRU-seized container containing 304 Red Sanders logs weighing about 9430 kg. Investigation revealed that the said seized container with Red Sander Wood had been clandestinely removed from the CFS customs area through forged gate passes and an empty container brought from outside got substituted. Following the recovery of the container and initiation of criminal proceedings against the persons involved, the Department commenced action under Regulation 12(1) of HCCAR, 2009 proposing revocation of custodianship of the CFS. The adjudicating authority, while holding the respondent as guilty of violation of HCCAR and supervisory lapses, declined to revoke the custodianship, but revoked the suspension and imposed a penalty of Rs.50,000/- under Regulation 12(8) of HCCAR, 2009 of HCCAR, 2009. 3. Aggrieved by the said decision to the extent it refrained from revoking the custodianship approval granted to the respondent, the Department has preferred the present appeal. 4.1 The Ld. Authorized Representative Ms. Rajini Menon appearing for the Department submitted that the impugned order suffers from serious legal infirmity insofar as the adjudicating authority....
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....e rival submissions, the records of the case, the Show Cause Notice, the impugned Order-in-Original, the Review Order passed under Section 129D of the Customs Act, the police investigation records relied upon by both sides and the various judicial precedents cited before us. The following issues arise for determination: - i. Whether the Respondent committed violations of HCCAR, 2009 warranting revocation of custodianship approval? ii. Whether the Respondent can be held vicariously liable for the illegal removal of the seized container and whether the impugned order warrants appellate interference? 7. We now proceed to examine the issues framed for determination sequentially. 8. The first issue for consideration is the extent of responsibility of a Customs Cargo Service Provider for goods kept under Customs control and whether the facts of the present case warrant the extreme consequence of revocation of custodianship. 9. At the outset, it is necessary to note that the Handling of Cargo in Customs Areas Regulations, 2009 were framed to ensure safe custody and secure handling of goods kept in any customs area. A custodian acts as an extended arm of the Cust....
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....s necessarily requires consideration of the nature of the breach, the conduct of the custodian and the surrounding circumstances. 15. We find that the adjudicating authority considered the recovery of the goods, the outcome of the police investigation, the absence of evidence against management and the corrective measures adopted thereafter. These factors are directly relevant in determining whether revocation was warranted. 16. The Department has emphasized that Red Sanders is a prohibited commodity and that the container with contained valuable seized goods kept in the CFS. We fully agree that the nature of the cargo aggravates the seriousness of the incident. At the same time, proportionality remains an integral component of administrative adjudication. Revocation is not intended to be outright punitive but should act as a deterrent against any serious violation of rules and procedures. Therefore, before revocation is ordered, the authority must be satisfied that continuation of the custodianship would be inconsistent with protection of revenue, security of goods and proper administration of Customs law. In this regard, the doctrine of proportionality should also guide the....
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....the evidence establishes deliberate involvement or connivance of the Respondent in the illegal removal of the container. In the absence of such evidence, employee's misconduct or supervisory lapses alone cannot justify revocation of the custodianship of the CFS and as a customs area. 21. The records disclose that immediately after detection of the irregularity, the Respondent lodged a complaint before the police authorities, furnished CCTV footage, gate records and other operational documents and fully cooperated with the investigation. The investigation resulted in recovery of the container and Red Sanders logs and identified the individuals allegedly involved. Significantly, no material emerged indicating participation, knowledge or connivance on the part of the Respondent's management. 22. We agree that absence of criminal prosecution against the management does not by itself exonerate the Respondent under HCCAR. At the same time, mere occurrence of a criminal act within the customs area does not automatically establish complicity of the custodian. The Review Order appears to equate supervisory failure with participation in the offence. In our view, there is a clear di....
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....odianship irrespective of the surrounding facts. 26. Accordingly, we conclude that the illegal removal of the seized container cannot be attributed to the Respondent in a manner warranting revocation of custodianship and that the findings recorded by the adjudicating authority on this aspect do not call for any interference. 27. Further, having held that the Respondent committed violations of HCCAR, 2009 but that no deliberate involvement or complicity has been established, the issue is whether the impugned order warrants appellate interference. The scope of such interference is limited and a reasoned exercise of discretion cannot be disturbed merely because another view is possible. We find that the adjudicating authority has duly considered the forged gate pass, substitution of the container, deficiencies in supervision and other attendant circumstances, recorded violations of HCCAR and imposed penalty accordingly. The impugned order therefore cannot be said to suffer from any infirmity warranting interference solely on the ground that the Department seeks a harsher consequence. 28. The grievance of the Department is essentially that once such findings were recorded, rev....
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....mmissioner of Customs (General) v. D.S. Cargo Agency, 2024 (14) Centax 119 (Del.), Commissioner of Customs (Airport & General) v. Transworld Cargo & Travels, 2023 (10) Centax 122 (Del.) and Commissioner of Customs (Airport & General) v. Entire Logistics India Pvt. Ltd., 2026 (38) Centax 137 (Del.) in support of the proposition that the consequence to be imposed under HCCAR must depend upon the facts and circumstances of each case, including the nature of the violation, the extent of involvement established against the custodian and the principle of proportionality. The said decisions lend support to the view that revocation is not an automatic consequence of every violation and that the appropriateness of such action must be assessed on the facts of each individual case. 33. We fully agree that the cargo involved, namely Red Sanders, is a prohibited commodity and that its unauthorized removal constituted a serious breach warranting penal action. However, the gravity of the goods involved cannot substitute for evidence regarding the Respondent's own role or automatically justify revocation of custodianship. The adjudicating authority rightly distinguished between negligence a....