CESTAT Sets Aside Customs Broker License Revocation for Procedural Delays

M Dharamdas & Co Vs Commissioner of Customs (General) (CESTAT Mumbai)

Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Mumbai has set aside the revocation of the customs broker license of M Dharamdas & Co and the forfeiture of its security deposit, citing procedural delays by customs authorities. The case involved allegations of misconduct in handling crane imports, leading to proceedings under Customs House Agents Licensing Regulations (CHALR), 2004. However, the final order was issued under the Customs Brokers Licensing Regulations (CBLR), 2013, which replaced the earlier regulations.

During the proceedings, the appellant pointed out significant delays, including a 109-day gap between the offense report and initiation of proceedings, 356 days between initiation and completion of the inquiry, and a total duration of 493 days, exceeding the deadlines stipulated in both the 2004 and 2013 regulations. No justification was provided by the licensing authority for these delays. The tribunal referenced the AB Paul & Company v. Principal Commissioner of Customs (General) case, which relied on the Bombay High Court judgment in Principal Commissioner of Customs (General), Mumbai v. Unison Clearing P Ltd [2018 (361) ELT 321 (Bom)]. The court held that while regulatory timelines are directory, authorities must justify delays and cannot use the directory nature as a shield in the absence of contributory negligence by the customs broker.

The CESTAT found that there was no evidence of delay caused by the appellant and that the lack of adherence to regulatory timelines amounted to a breach of procedural mandates. Since the licensing authority failed to justify the delay, the tribunal ruled that the revocation order was not tenable under the law. It was determined that the disciplinary framework exists to ensure oversight but must be applied fairly, with adherence to prescribed timelines unless exceptional circumstances are demonstrated.

Based on these findings, CESTAT Mumbai set aside the revocation order and allowed the appeal without examining the merits of the misconduct allegations. The ruling reinforces that procedural fairness is essential in regulatory enforcement and that authorities must justify any deviation from stipulated timelines. The decision was pronounced on December 12, 2024.

FULL TEXT OF THE CESTAT MUMBAI ORDER

This appeal of M/s M Dharamdas & Co lies against revocation of customs broker licence¹ and forfeiture of security deposit for breach of regulation 12, 13(b), 13(d), 13(e), 13(f), 13(i), 19(1) and 19(8) of Customs House Agents Licensing Regulations, 2004 in the handling of imports of ‘cranes’ and for which proceedings were initiated. Though the proceedings were initiated in show cause notice dated 9^th October 2012 imputing alleged misconduct under the erstwhile Regulations, the licencing authority has drawn upon the empowerment under Customs Brokers Licensing Regulations, 2013 which had, since, been notified.

2. Learned Counsel for the appellant while making elaborate submissions on the report of the enquiry authority which had held only some of charges to be proved also pointed out the gap of 109 days between the offence report and the initiation of proceedings, that of 356 days between the initiation of proceedings and completion of enquiry and that, notwithstanding the lapse of only 28 days thereafter for the issuance of the order now impugned before us, the entire proceedings spanning 493 days had exceeded deadlines stipulated in the Customs House Agents Licensing Regulations, 2004 as well as in the successor regulations. It is seen from the impugned order that the licensing authority had not offered any justification for deviation from the timelines stipulated in the said Regulations. In this connection, our attention has been drawn to the order² of the Tribunal in AB Paul & Company v. Principal Commissioner of Customs (General), disposing of appeal³ challenging order⁴ of Principal Commissioner of Customs (General), Mumbai, which drew upon the judgement of the Hon’ble High Court of Bombay in Principal Commissioner of Customs (General), Mumbai v. Unison Clearing P Ltd [2018 (361) ELT 321 (Bom)], to hold that

‘14. Though the said decision has categorically held that time-lines in the Regulations are to be deemed as ‘directory’, the context is not without significance. It was held that setting aside of revocation, at the appellate level, by resort to ascertainment of conformity with time-lines, would defeat the intent of Regulations that is substantively elaborate in enacting framework for supervisory oversight of customs brokers. Nonetheless, the Hon’ble High Court of Bombay also noted that, without justification for delay in completion of proceedings demonstrated by findings on the contributory negligence of the notice-broker, the licencing authority is not permitted to take shelter behind ‘directory’ nature of the time­lines. Impliedly, the time-lines are deemed to be directory at the appellate stage and an order of detriment under the authority of Regulations is, in circumstances of non-adherence to times lines, not tenable in the absence of justification for delay. ‘

3. There being no justification offered for the undue delay in initiation of proceedings under the regulations as well as in concluding the enquiry thereof, the lack of adherence to stipulations that are directory only to the extent that the delay had occurred at the instance of the customs broker is a breach of the mandate of the regulations.

4. On this ground, we set aside the impugned order and allow the appeal without going to the merit.

(Order pronounced in the open court on 12/12/2024)

Notes: 

¹ [no. 11/100]

² [final order no. A/85907/2023 dated 2^nd June 2023]

³ [customs appeal no. 86451 of 2022]

⁴ [order-in-original no. 11/CAC/PCC(G)/SJ/SBS Adj. dated 13^th May 2022]