TaxTMI 
TaxTMI 
2026 (8) TMI 736
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....Directorate of Revenue Intelligence (hereinafter referred to as "DRI") got information that a container imported in the name of M/s. C.K. International, mis-declared to contain "Household Items and Cleaning Product", had reached M/s. ICTPL Globicon CFS on 9.4.2026 and the goods contained therein were being unauthorisedly removed from the Customs area by the members of the syndicate. Upon which, the DRI officers rushed to the CFS and secured the container and the imported goods, which were in the process of being transferred to another vehicle/truck. The examination conducted on 12.4.2026 revealed that the entire consignment actually comprised of Chinese origin "Fireworks/Firecrackers", having a market value of approx. Rs.3.99 Crores. 4. Preliminary investigation by DRI indicates that the smuggling and subsequent attempted clandestine removal of the firecrackers from the CFS was orchestrated by a syndicate, which allegedly included a person named Sandeep Shukla-employee of the appellant herein and holds a company ID in the name of the appellant but neither possesses a 'G' card nor an 'H' card as mandated by CBLR for the customs related works. 5. For the aforesaid alleged mis-d....
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....nsion order dated 22.4.2026 cannot be improved upon in the impugned order dated 20.5.2026 continuing the suspension. According to learned Senior counsel, the alleged illegal acts were committed by the said Mr. Sandeep Shukla outside the course of his employment which was not part of his duties. The appellant had only authorised one vehicle to be permitted to enter the CFS in the light of the email issued by the appellant's Andheri office and to submit the checklist alongwith the cargo, whereas the said Mr. Shukla fraudulently presented a tampered copy of checklist and fabricated letter in furtherance of his criminal agenda and sought permission for three vehicles and five persons. He further submits that for the aforesaid illegal acts of Mr. Shukla, whose service has been terminated by the appellant, the appellant cannot be held liable. Whatever acts had been committed by him were entirely outside his employment, without authorization and wholly for his personal benefit and therefore the appellant cannot be held vicariously liable for his alleged acts. According to learned Senior counsel it is settled law that a customs broker cannot be penalized for the acts of its employee, if th....
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....lidity of the impugned order, we consider it appropriate to examine that issue at the threshold before adverting to the merits of the allegations. In order to deal with the aforesaid submission the Regulations 16 & 17 are extracted as under:- "Regulation 16. Suspension of License (1) Notwithstanding anything contained in regulation 14, the Principal Commissioner or Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the license of a Customs Broker where an enquiry against such Customs Broker is pending or contemplated: PROVIDED that where the Principal Commissioner or Commissioner of Customs may deem fit for reasons to be recorded in writing, he may suspend the license for a specified number of Customs Stations. (2) Where a license is suspended under sub-regulation (1), the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, shall, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs Broker whose license is suspended and may pass such order as he deems fit either revoking the suspension or continuing it as the case may be, withi....
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....ms or Assistant Commissioner of Customs, as the case may be, shall prepare a report of the inquiry and after recording his findings thereon submit the report within a period of ninety days from the date of issue of a notice under sub-regulation (1). (6) The Principal Commissioner or Commissioner of Customs shall furnish to the Customs Broker a copy of the report of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, and shall require the Customs Broker to submit, within the specified period not being less than thirty days, any representation that he may wish to make against the said report. (7) The Principal Commissioner or Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if any, made by the Customs Broker, pass such orders as he deems fit either revoking the suspension of the license or revoking the license of the Customs Broker within ninety days from the date of submission of the report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, under sub-regulation (5): PROVIDED that no order for revoking the license shall be passed unles....
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....r in every case. This aspect is to be kept in view by the Commissioner of Customs in the course of considering a proposal to suspend the licence of a customs broker. Before doing so, the Commissioner should also take the care also of recording his/her reasons as to why it is considered an appropriate case where immediate action of suspension is necessary. Hindi version follows. (Tribhuwan Yadav) OSD, Customs VI" 12. Subsequently Instruction No.20/2024-customs [F.NO.520/ 01/2023-Cus.VI, dated 3.9.2024 was also issued by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, stating that the competent authority must ensure the strict compliance of detailed procedure and timelines as prescribed under Regulations 16 and 17 of CBLR, 2018 while contemplating any action against a Customs Broker under CBLR, 2018. 13. Regulation 14 deals with the normal procedure for revocation of license or imposition of penalty on a Customs broker, whereas Regulation 16 starts with a non obstante clause giving it an overriding effect over Regulation 14. 14. Regulation 16 constitutes an exception to the ordinary procedure prescribed for discipli....
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....t, by itself, justify invocation of Regulation 16 unless the authority records reasons demonstrating why immediate preventive intervention cannot await the regular inquiry contemplated under Regulation 17. The issuance of the suspension order dated 22.04.2026 after 11 days of the alleged incident raises doubt about the necessity for any urgent intervention. 16. This legislative intent stands reinforced by CBIC Instruction No. 24/2023 dated 18.07.2023, wherein the Board expressly observed that suspension of a Customs Broker's licence should not be resorted to routinely or mechanically and that the Commissioner must carefully examine whether the facts genuinely warrant immediate suspension. The Board further emphasised that reasons justifying such immediate action must be specifically recorded. The subsequent Instruction No. 20/2024 dated 03.09.2024 reiterates that the authorities must scrupulously adhere to the procedure and timelines prescribed under Regulations 16 and 17. Though these Instructions do not override the statutory Regulations, they faithfully reflect the legislative scheme and reinforce the discipline expected in the exercise of an extraordinary statutory power and....
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....o the statutory timeline would have been the natural consequence. The postponement of the hearing beyond the prescribed period by the respondent itself belies the existence of such compelling urgency. While the gravity of the allegations cannot be underestimated, statutory safeguards cannot be sacrificed even in serious cases. The rule of law demands equal fidelity to both substantive powers and procedural safeguards. 21. In our considered opinion, therefore, the mandatory requirement contained in Regulation 16(2) stood violated. Once the statutory timeline was breached for reasons entirely attributable to the respondent, the continuation of suspension ceased to have the sanction of law. The impugned order dated 20.5.2026, passed after a hearing conducted beyond the prescribed period, is consequently rendered unsustainable. 22. Although elaborate submissions were advanced by the learned Senior Counsel on the merits of the allegations, including the applicability of vicarious liability, the scope of Regulation 13(12), the alleged absence of any material justifying immediate suspension and the livelihood of 1200 employees, we consciously refrain from expressing any opinion on t....