Cappithan Agencies Vs Commissioner of Customs (Supreme Court of India)
The Supreme Court dismissed the Special Leave Petition filed against the judgment of the Kerala High Court, holding that no grounds existed to interfere with the High Court’s decision. Consequently, the High Court judgment—affirming the revocation of a Customs Broker’s licence and related penalties—stands confirmed.
The High Court had examined a challenge to the CESTAT’s order upholding the Commissioner’s revocation of the appellant’s Customs Broker licence under the Customs Brokers Licensing Regulations (CBLR), 2018, and the imposition of penalty and forfeiture of security deposit. The revocation stemmed from the appellant’s role in clearing consignments declared as diplomatic cargo, one of which was found to conceal 30.245 kg of gold during an inspection on 05.07.2021. The appellant had filed the Bill of Entry for the consignment. Following an offence report dated 08.10.2021, a show cause notice was issued on 28.12.2021 alleging violations of Regulations 10(a), (d), (e), (m), and (n), and proposing revocation and penalty.
After enquiry proceedings, including an enquiry report dated 29.07.2022 and the appellant’s responses, the Commissioner found violations and revoked the licence on 25.10.2022. The CESTAT dismissed the appellant’s challenge. Before the High Court, the appellant raised issues related to denial of cross-examination, non-supply of documents, violation of time limits under Regulation 17(5), and improper reliance on documents outside the show cause notice.
On cross-examination, the Tribunal had found that (i) the appellant did not seek cross-examination in the interim reply, (ii) the later request was unjustified since no statements of the officers were relied upon in the show cause notice, and (iii) the officers’ conduct was irrelevant to determining the appellant’s breach of duties as a Customs Broker. The High Court found this reasoning unassailable, holding that cross-examination was not required when no statements from such officers formed the basis of the case.
On the issue of time bar under Regulation 17(5), the Tribunal noted that the show cause notice was issued within the prescribed 90 days from receipt of the offence report. Although the enquiry report was not submitted within 90 days from notice, the appellant’s licence had not been suspended and he continued operating; hence, no prejudice was caused. The Tribunal treated the timeline as directory in the specific circumstances. The High Court upheld this view, finding no illegality in treating the timeline flexibly when no prejudice occurred.
With respect to non-supply of documents, the High Court agreed with the Tribunal that under the Regulations the appellant was entitled only to documents relied upon in the show cause notice and the enquiry report. Since both were supplied and the appellant could respond, no violation of natural justice occurred.
Addressing the core allegations, the Tribunal had upheld findings that the appellant violated multiple obligations under Regulation 10. Bills of Entry declared the consignor as the Ministry of Foreign Affairs, Abu Dhabi, whereas airway bills showed the consignors were private individuals. These mis-declarations facilitated clearance as diplomatic cargo, and the Tribunal held they could not be treated as oversight given the repeated pattern and the appellant’s knowledge of procedures. Statements recorded during investigation showed that the appellant acted on the instructions of an individual (Sarith) who was no longer employed by the UAE Consulate, yet the appellant neither verified the authenticity of documents nor alerted Customs. Documents and statements indicated a broader smuggling operation involving at least 136.828 kg of gold, including the seized amount.
The Tribunal found that the appellant failed to advise compliance, report irregularities, exercise due diligence, verify client identity, and ensure correctness of declarations. These lapses constituted violations of Regulations 10(d), 10(e), (m), and (n), and amounted to abetting smuggling.
The High Court reviewed additional material, including an affidavit filed by the Department explaining why licence revocation must continue. The affidavit asserted that the appellant mis-declared consignor details to appear as genuine diplomatic consignments, acted with mens rea, and failed to report evident irregularities. It emphasised the position of trust held by Customs Brokers and the gravity of offences involving 167.073 kg of smuggled gold. The Department stated that earlier proceedings under the CBLR were unrelated to this case.
The High Court held that the relationship between Customs and a Customs Broker is built on trust; once that confidence is lost, reinstatement cannot be claimed as a matter of right. Considering the nature of violations, the appellant’s conduct, and the Department’s stand, the Court found no reason to interfere with the Tribunal’s order. It dismissed the appeal and answered all questions of law in favour of the Department. The Supreme Court’s later dismissal of the SLP confirmed the finality of this outcome.
Read High Court Judgment: Cappithan Agencies Vs Commissioner of Customs (Kerala High Court); Cus. Appeal. No. 1 of 2024; 12/06/2025
