Delhi High Court Quashes Suspension Of License, Issued To Customs House Agent, Finding Order Illegal

The Delhi High Court has held that there was proper verification on the part of the Customs House Agent (CHA) with regard to the genuineness of the Importer-Exporter Code (IEC) as well as GSTIN.

The bench of Justice Yashwant Varma and Justice Dharmesh Sharma observed that mere allegations that some other person was importing goods in the name of the importers, whose names were mentioned in the Bills of Entry, did not render the identity of the importer doubtful, especially when there was apparently an arrangement with mutual consent of the importer and the beneficial owner. In the circumstances, there was no basis for the adjudicating authorities to pass the impugned order, thereby suspending the license of the CHA based on the statements of the importers, which were otherwise also retracted.

During the course of the investigation, the statement of Mr. Suresh Kumar Aggarwal, a partner of the respondent/CB/CHA, was recorded on January 15 and 22, 2018.

The assessee had facilitated clearance work for certain imported goods on a commission basis without verifying the IEC numbers used for the imports and having due knowledge that the mastermind was Mr Yusuf Pardawala, who was the real beneficiary or the beneficial owner.

A show cause notice was issued to the assessee, proposing that the clearance of imported goods at the customs ports by the respondent was in violation of various provisions of the Customs Broker License Regulations, 2018.

The SCN was confirmed on the grounds of violation of regulations 10(a), 10(d), and 10(n) of the CBLR, and consequently, the license of the respondent was revoked, invoking powers under regulations 14 and 17(7) of the CBLR. The security deposit made by the assessee was also forfeited, and a penalty was imposed.

The assessee appealed before CESTAT. The tribunal held that the mere suspension of the license and later its revocation under Regulation 16 of the CBLR did not preclude the Commissioner (Appeal) from conducting an inquiry against the CB/CHA in terms of the powers under Regulations 14 and 17 of the CBLR. An action under Regulation 16 is immediate in nature, depending on the seriousness and gravity of the alleged offence, whereas Regulation 17 prescribes a complete procedure for hearing the party concerned.

CESTAT, on appreciation of the evidence brought on record, found that the case of the appellant that CHA was in violation of regulations 10(a), 10(d), and 10(n) of CBLR was not made out, and consequently the impugned order as well as the penalty imposed were set aside.

The department contended that although there was no direct evidence so as to bring out connivance with regard to undervaluation on the part of the CHA, nonetheless the CHA was liable to be prosecuted for imposition of a penalty under Section 114AA.

The court, while dismissing the appeal of the department, noted that CESTAT neither committed any patent illegality nor any manifest error in appreciating the evidence on the record.

Counsel For Appellant: Anish Roy

Counsel For Respondent: Prabhat Kumar

Case Title: Commissioner of Customs Versus ICS Cargo

Citation: 2023 LiveLaw (Del) 1064

Case No.: CUSAA 51/2023

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