TaxTMI 
TaxTMI 
2026 (7) TMI 667
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....n 7(2) of Customs Brokers Licensing Regulations (CBLR), 2018. 2.2 During an investigation conducted by Directorate of Revenue Intelligence, Mumbai Zonal Unit (DRI MZU), on improper availment of export benefits by overvaluation of export goods on the basis of fake/ bogus export documents relating to export consignments of 59 export firms, including M/s Fashion Hub; M/s Ocean International; M/s Haji International and M/s N.S. Inc., it was found that the appellant CB had handled such exports in respect of 990 Shipping Bills (S/Bs) out of the total 1343 S/Bs filed by these exporters. Further, enquiry was held by DRI with the Consulate General of India, Dubai, UAE on overvaluation of export goods. In a reply letter dated 08.03.2018, it was reported by the said Consulate General that from scrutiny of the documents provided by Federal Customs Authority, Dubai, it appeared that the goods have been cleared with unit values much lower than what was declared to customs authorities in India at the time of export. On the basis such investigation conducted by DRI, Mumbai, number of Show Cause Notices (SCNs) were issued by the Commissionerate of Customs, Air Cargo Complex, Mumbai against the e....
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....ceed, there would be no purpose to taking up the others as the outcome there would be irrelevant. If the first were to fail in appeal, we would, unless and until one contrary outcome emerged, be engaged in enlarging upon the merit of each mirroring the chain that the licencing authority, unabashedly, took recourse to. For reasons that shall be forthcoming, it does not befit the dignity of an appellate authority to 'play with bones' that the licencing authority presumed to do and little realizing the reflection that it portrays of management of the institution of 'customs brokers' in the jurisdiction. We would have to prioritize the four appeals which would have all the appearances of a game of roulette whatever be the rationale in their ordinal. That is not a game that dispensing of justice should be engaged in. 4. It is disconcerting to notice that, in the short space of just 18 days, the licensing authority found it to possible and, even more, necessary to revoke the same licence and the same security deposit four times thrice the licence. We are unable to conceive of any logic of thought or soundness of reasoning that reveals a purpose to such repeated extinguishment of....
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....ng detailed investigation on various exporters and recording statements from them and other persons concerned. The statements of the appellant CB's partner Shri Nuvaid Merchant were recorded on 20.11.2018, 27.11.2018, 16.12.2021 and 29.12.2021, in respect of four different exporters by the investigation. In these statements, the appellant CB had clearly stated that they taken all the necessary KYC documents from their clients and submitted the same before the customs authorities concerned; the appellant does not have any warehouse to store the export goods; they scrutinize the export documents and prepare check list, verify RITC etc. Learned Counsel further stated the investigation was conducted by DRI in the year 2017 and thereafter transferred the investigation to SIIB (Exports), ACC, Mumbai which had resulted in issue of impugned order. However, he stated that as per CBLR, 2018, any CB is only required to maintain the records and accounts relating to imports/exports for a period of 5 years and therefore they were unable to produce further documents in respect of the above case involving exports of 10 years back transactions to prove their non-involvement in the alleged overvalua....
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....horised Representative (AR) reiterated the findings made by the Principal Commissioner of Customs (General) in the impugned order and submitted that all the violations under Regulation 10 ibid, has been examined in detail by the Principal Commissioner. Thus, learned AR had justified the action taken by the Principal Commissioner of Customs (General) in revocation of the appellant's CB license and for imposition of penalty, forfeiture of security deposit in the impugned order. 5. We have heard both sides and perused the case records. 6.1 The issue involved herein is to decide whether the appellant Customs Broker has fulfilled all his obligations as required under CBLR, 2018 or not. The specific sub-regulations which were alleged to have been violated by the appellants are Regulations 10(a), 10(d), 10(e), 10(f), 10(k), 10(n) and 10(q) of CBLR, 2018, and hence there are certain distinct charges framed against the appellants. We find that Regulation 10 ibid, provides for the obligations that a Customs Broker is expected to fulfill during their transaction with Customs in connection with importation and export of goods. These regulations are extracted and given below as follows: ....
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.... is complying with all the rules, regulations and notification pertaining to the impugned exports. (iii) the CB did not advise the exporters about the mandatory compliance for exports and eligibility for drawback claims which resulted in such fraudulent exports; (iv) the appellant CB failed to bring such non-compliance by the exporters to the notice of the customs department. The relevant paragraphs of the impugned order, providing the above conclusions which form the basis for revocation of appellant CB's license and for imposition of penalty and forfeiture of security deposit are extracted and given below: "90. Having perused the facts of all the four cases, I find that it is a matter of fact that the exporters M/s. Fashion Fab, M/s. Ocean International, M/s. Haji International and M/s. N.S. Inc. have overvalued the export goods and claimed/availed undue Drawback in violation of the Drawback Rules. Also, the most of the export consignments of the said exporters have been filed and handled by the CB M/s. Merchant & Sons (CB No. 11/678) as already discussed above. 91. Having perused the Inquiry Reports, all dated 12.12.2023, I find that the CB....
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....ng Bills of the exporter M/s. Fashion Fab; 381 Shipping Bills of the exporter M/s. Ocean International; 429 out of 699 Shipping Bills of the exporter M/s. Haji International and 155 out of 238 shipping Bills of the exporter M/s. N.S. Inc. were filed and handled by the charged CB M/s. Merchant & Sons (CB No. 11/678). Also as per investigation records, the exporter has procured the export goods from Domestic Tariff Area (DTA) through Mr. Suhel Ansari and without payment of application taxes and duties. Also, I do not find any visible evidence which could indicates that CB has not co-operated with the Customs and worked in compliance of the obligations casted upon them under CBLR, 2018. The facts of the case indicates that the CB had worked in completely negligent manner and blindly relied only on the documents provided by the exporter and the CB himself/themselves did not exercised due diligence with respect to the fact that whether the exporter is complying with all the rules, regulation and Notifications pertaining to the impugned exports. I have also perused the defence submission dated 23.06.2025 of the CB, submitted by their advocate at the time of personal hearing. However, und....
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....in the customs House and was supposed to safeguard the interests of both the importers and the Customs department. A lot of trust is kept in CB by the Government Agencies and to ensure made under CBLR, 2013 and therefore rendered themselves liable for penal action under CBLR, 2013 (now CBLR, 2018)". 94.2 Similarly, in case of M/s Cappithan Agencies Versus Commissioner Of Customs, Chennai-Viii, (2015(10) LCX 0061), the Hon'ble Madras High Court had found that:- "The very purpose of granting a licence to a person to act as a Customs House Agent is for transacting any business relating to the entry or departure of conveyance or the import or export of goods in any customs station. For that purpose, under Regulation 9 necessary examination is conducted to test the capability of the person in the matter of preparation of various documents determination of value procedures for assessment and payment of duty, the extent to which he is conversant with the provisions of certain enactments, etc. Therefore, the grant of licence to act as a Custom House Agent has got a definite purpose and intent. On a reading of the Regulations relating to the grant of licence to act as ....
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....nt accordingly. Though the CHA was accepted as having no mens-rea of the noticed mis-declaration/under-1 valuation or mis-quantification but from his own statement acknowledging the negligence on his part to properly ensure the same, we are of the opinion that CH definitely has committed violation of the above mentioned Regulations. These Regulations caused a mandatory duty upon the CHA, who is an important link between the Customs Authorities and the importer/exporter. Any dereliction/lack of due diligence since has caused the Exchequer loss in terms of evasion of Customs Duty, the original adjudicating authority has rightly imposed the penalty upon the appellant herein." 95. I find that the principal of natural justice has been complied with as ample opportunities of personal hearing were granted to the CB by the IO. Nevertheless, in the PH held on 24.06.2025, the Advocate of the CB submitted their written defence submission dated 23.06.2025. Therefore, I have proceeded to decide the case on the basis of records, IO report and submissions of the CB. 96. In a regime of trade facilitation, a lot of trust is placed on the Customs Broker who directly deals with the ....
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.... by M/s. Merchant & Sons (PAN No. AAEFM0675K) (CB No. 11/678) is ordered to be revoked under Regulation 14 of the CBLR, 2018 (erstwhiel Regulation 18 of CBLR, 2013). (iv) I hereby order that the CB surrender the original License as well as all the 'F', 'G' & 'H' cards issued there under immediately. This order is passed without prejudice to any other action which may be taken or purported to be taken against the Customs Broker and their employees under the Customs Act, 1962, or any other act for the time being in force in the Union of India." 7.1 Firstly, on the facts of the case, we find that the appellants CB having filed various S/Bs in respect of the exports undertaken by M/s Fashion Hub; M/s Ocean International; M/s Haji International and M/s N.S. Inc., on whose exportation of goods, certain irregularities have been found out under the Customs Act, 1962, the jurisdictional customs authorities have initiated separate show cause proceedings against the respective exporters and the appellant CB, vide SCNs dated 15.11.2002, 25.10.2022, 14.12.2022 and 24.12.2022. These SCNs have been treated as 'offence report' in terms of Regulation 17 ....
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....ence submission dated 23.06.2025 which was reiterated at the time of personal hearing, no specific date on which personal hearing having been conducted has been mentioned in the impugned order. Further, such submissions made by the appellant CB have neither been discussed with respect to any fact or documentary evidence to establish the violation of various sub-regulations of Regulation 10 ibid. Instead, the learned Principal Commissioner had simply accepted the inquiry officer's reports on the basis that such inquiry officer had conducted a meticulous exercise to examine and appreciate the evidence on record and came to a categorical finding that the appellant CB was guilty of non-performance of statutory duties cast upon him under the various sub-regulations 10(a), 10(d), 10(e), 10(f), 10(k), 10(n) and 10(q) of CBLR, 2018. Thus, it is very clear that the learned Principal Commissioner, as a licensing authority, had not independently examined the various allegations levelled against the appellant CB, before passing the impugned order in adjudication of the inquiry proceedings, as provided for under Regulation 17 ibid. 7.3 Furthermore, it is also on record at paragraph 87 of the....
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....provision of law that supposedly made the impugned goods offending. Accordingly, the Tribunal had set aside the Order of the Principal Commissioner in suspending the appellant's CB license. 8.2 The relevant paragraphs in the said order are extracted and given below: "6. We find that, insofar as the charges are concerned, the impugned order has put together unrelated facts and rendered findings that, consequently, are illogical and untenable. It is seen that the charge of not having advised the client to comply with Customs Act, 1962 and rules and regulations thereof is not founded on any allegation that advice sought had not been rendered and nor is there an allegation that 'customs broker' is expected to explain the entirety of the law to the client; either the allegation is vague or the obligation is vague with neither contingency furthering the case against the appellant. It is, probably, owing to this conceptual commotion that the licencing authority has proceeded to uphold the charge on the supposition that exporter could not have executed overvalued exports without collusion from the appellant. That bridging of supposition with breach of obligation is too far-fetc....
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....iration which prompted the licencing authority to refer to this mandate was not tested by offering opportunity at any stage to explain irrelevance of its contents to 'free shipping bills' filed for exports by the appellant or to explain that it had indeed been provided. This is tantamount to introduction of evidence after conclusion of all proceedings in which appellant had participated and is, this, untenable basis for upholding the charge of having breached regulation 10(f) of Customs Broker Licencing Regulations, 2018. 9. The allegation that the appellant had failed to maintain records and accounts has been upheld on the findings that appellant had not responded to summons and had failed to furnish details called for. The contention of appellant right from the beginning had been that no summons had even been issued to them in connection with investigation into the exports of M/s World Wide Export and, at no stage, did the inquiry officer or the licencing authority ever counter this response with any record to the contrary. Indeed, as we have noted supra, it is moot if the suspension would have been revoked in such circumstances. In any case, this obligation does not per....
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....n. There is no case that the goods had not been exported or evidence even that the impugned goods had not been manufactured out of duty paid inputs. The drawback involved in all the exports during the said period by M/s World Wide Export is not of such high order as to warrant penalties and detriments that were heaped upon them in the impugned order and those handled by the appellant were not under any claim at all. In these circumstances, we find ourselves unable to uphold the impugned order which is set aside to allow the appeal." 8.3 Therefore, in the present appeal before us too, the findings of the learned Principal Commissioner in respect of charges against Regulations 10(d), 10(e), 10(f), 10(k) and 10(n) of CBLR, 2018 do not sustain, on the same analogy adopted by the Tribunal in the case referred above on similar exports. 9.1 As regards the allegation against the Regulation 10(a) ibid, the appellants had submitted that during the time of recording his statement on 29.12.2021, they have provided the KYC details and the authority letter given by the exporter. Further, Shri Nuvaid Merchant partner of the appellant CB had also given on various dates viz., on 20.11.2018, 2....
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....surely not from the importer. Therefore, the authorisation submitted is not a valid one". This finding is based on a presumption. Obtaining an authorisation from the importer does not mean that the same should be obtained directly; so long as the concerned import documents were signed by the importer, it amounts to authorisation by the importer and, therefore, it cannot be said that there has been a violation of Regulation 13(a). ... The question now is whether revocation of licence is warranted for such a violation. In our view, the punishment should be commensurate with the gravity of the offence. Revocation is an extreme step and a harsh punishment, which is not warranted for violation of Regulation 13(b). Accordingly, we are of the view that forfeiture of security tendered by the appellant CHA is sufficient punishment and revocation is not warranted. Accordingly, we set aside the order of the revocation and direct the Principal Commissioner of Customs (General) to restore the CHA licence subject to the forfeiture of entire security amount tendered by the CHA." 9.3 Therefore, in the absence of any document to prove the claim of having not obtained necessary authorisation from....
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.... some goods, the rate could be on per piece basis and on some goods, the duty could be as a percentage of FOB with a value cap and in such cases even if the FOB value is higher, drawback will be paid only on that amount. The appellant had filed the Shipping Bills as per the documents provided to it by the exporter. According to the Revenue, by filing Shipping Bills with over-invoiced export values, the appellant violated Regulation 11(d). To consider this assertion of the Revenue, we examine the significance of the value in the export documents and who can determine it and if the appellant had any right to determine the value of the goods being exported. xxx xxx xx xxx 9. The value of the imported goods in the Bill of Entry is determined as per Section 14 of the Act read with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The value of export goods in the Shipping Bill is determined as per Section 14 read with Customs Valuation (Determination of Value of Export Goods) Rules, 2007. Section 14 states that for the purpose of Customs Tariff Act, 1975 (under which the rates of import and export duties are prescribed) or any other law for the time be....
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....he overseas buyer. The Customs Broker is a stranger to this contract and has no locus standi with respect to the transaction value. Any value determined under the Customs Act is a part of assessment which is the prerogative of the importer/exporter (self-assessment) or the proper officer (re-assessment). The Customs Broker has neither any authority nor any power to determine or re-determine the value for customs purposes either. The Customs Broker also has no authority to inspect or examine the goods and so the possibility of the Customs Broker suspecting that the goods may have been over valued also does not arise." 10.1 We also find that the Hon'ble High Court of Delhi has held in the case of Kunal Travels (Cargo) Vs. Principal Commissioner of Customs (I&G), IGI Airport, New Delhi reported in 2017 (354) E.L.T. 447 (Del.), have held that the appellants CB is not an officer of Customs who would have an expertise to identify mis-declaration of goods. The relevant portion of the said judgement is extracted below: "The CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect to clearance of goods through custom....