Nitco Logistics Pvt Ltd Vs Commissioner of Customs Airport And General (Delhi High Court)
Conclusion:While the Customs Broker was negligent in exercising due supervision over its employee, permanent revocation of licence was an excessive penalty. Applying the principle of proportionality, the revocation was modified to a limited period of four years with specific monetary deposits and compliance conditions.
Held:.Assessee-company was a registered custom broker who was granted a license in the year 1989 for working as a Customs Housing Agent (hereinafter, ‘CHA’) at various customs ports/stations. An investigation revealed misuse of Import Export Code (IEC) of M/s Hiba Enterprises by its Senior Manager, Mr. Ajay Sharma, for exporting goods without proper KYC verification. Assessee contended that the employee acted independently and was subsequently terminated. Customs Department held assessee liable for lack of supervision and due diligence under the Customs Broker Licensing Regulations, 2018, leading to revocation of its licence and forfeiture of security. CESTAT upheld the revocation. It was held that while the employee was directly complicit in the fraudulent acts, assessee as a Customs Broker, failed to exercise adequate control and supervision. However, applying the principle of proportionality laid down in Ashiana Cargo Services v. CC (I&G) and CC v. Jaiswal Import Cargo Services Ltd., permanent revocation was held disproportionate. The Court restricted the revocation period to four years (till 21.12.2025), directed assessee to deposit ₹10 lakh (₹5 lakh with Customs, ₹3 lakh with DHCBA, and ₹2 lakh with DHC Bar Clerks’ Association), and allowed consideration of renewal of licence effective from 1 January 2026, subject to filing a due diligence framework for future operations. Assessee was also directed to submit a detailed Due Diligence Document as to the manner in which it intended to supervise its employees in future, the system and framework that was being put in place for ensuring adequate supervision and proper verification of documents, etc. and file the same with the Customs Department.
