Case Law Details
Falcon Air Cargo & Travels Pvt. Ltd. Vs Commissioner of Customs (CESTAT Delhi)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi allowed the appeal filed by a Customs Broker against the order dated 30.05.2025 passed by the Commissioner of Customs revoking the Customs Broker License and forfeiting the security deposit. The Commissioner had held that the Customs Broker violated Regulations 10(d), 10(e), and 10(n) of the Customs Broker Licensing Regulations, 2018.
With regard to Regulation 10(d), the Commissioner observed that although the exporter’s authorization letter stated that the Customs Broker had advised compliance with the provisions of the relevant Acts, the letter did not specify the scope or contents of such advice. CESTAT rejected this finding and held that the regulation only required the Customs Broker to advise the client to comply with the law, which had already been stated in the authorization letter. The Tribunal observed that it was not necessary for the authorization letter to describe the detailed nature or scope of the advice given.
Regarding Regulation 10(e), the Commissioner held that the Customs Broker failed to exercise due diligence because the exporter had earlier faced suo moto cancellation of GST registration on 25.04.2023 before obtaining fresh GST registration on 12.06.2023, shortly before the export transaction dated 15.06.2023. The Commissioner also referred to the exporter’s billboard photograph not displaying the GST TIN number. However, CESTAT noted that the Commissioner did not dispute that the exporter possessed a valid GST registration on the date of export. The Tribunal held that once the GST registration was valid on the relevant transaction date, the earlier cancellation became immaterial for determining compliance under Regulation 10(e).
On Regulation 10(n), the Commissioner held that the Customs Broker failed to properly verify the correctness of the GST identification details and functioning of the exporter because the broker did not take note of the earlier GST cancellation before fresh registration was granted. CESTAT rejected this reasoning and held that since the exporter possessed valid GST registration on the relevant date, there was no violation of Regulation 10(n). The Tribunal also noted that in separate proceedings under the Customs Act, the Joint Commissioner had already recorded a categorical finding in an order dated 19.03.2025 that the Customs Broker had not violated Regulation 10(n).
In view of these findings, CESTAT held that the order revoking the Customs Broker License and forfeiting the security deposit could not be sustained. The Tribunal set aside the order dated 30.05.2025 and directed restoration of the Customs Broker License forthwith.
FULL TEXT OF THE CESTAT DELHI ORDER
This appeal has been filed by a Customs Broker to assail the order dated 30.05.2025 passed by the Commissioner of Customs (Airport & General)1 by which the Customs Broker License of the appellant has been revoked and the amount of security has been forfeited.
2. A perusal of the order indicates that a finding has been recorded by the Commissioner that the appellant had violated the provisions of regulations 10(d), 10(e) and 10(n) of the Customs Broker Licensing Regulations, 20182.
3. Regulation 10(d) requires the Customs Broker to advise his client to comply with the provisions of the Customs Act, allied Acts and the rules and regulations made thereunder.
4. The finding recorded by the Commissioner is that though the authorization letter issued by the exporter mentions that “we have been advised by the CB/CHA to comply with the provisions of the Acts….” but this authorization letter does not specify the nature, scope or content of the advice given by the appellant to the client.
5. It is not possible to accept the finding recorded by the Commissioner. The regulation requires the Customs Broker to advise his client to comply with the provisions of the Act. This is what has been stated in the authorization letter. It was not necessary to write in the authorization letter about the scope and contents of the advice. The finding recorded by the Commissioner regarding violation of section 10(d) of the 2018 Regulations cannot, therefore, be sustained.
6. Regulation 10(e) requires the Customs Broker to exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage.
7. The finding recorded by the Commissioner is that the exporter had obtained GST Registration on 12.06.2023 and as the high value export was made on 15.06.2023, the Customs Broker should have also seen that the GST number of the expoter had earlier been suo moto cancelled on 25.04.2023. The Commissioner also noticed that the photograph submitted by the appellant of the bill board of the exporter displayed the name, mobile number, email ID of the exporter only and the GST TIN number was not indicated.
8. The Commissioner has not doubted that the exporter had taken GST registration on 12.06.2023 and the export was made subsequently. In such circumstances, when on the relevant date, the importer had the GST registration, it is immaterial whether it was cancelled earlier by the exporter. It cannot, therefore, be alleged that the appellant had not complied with the provisions of 10(e) of 2018 Regulations.
9. Regulation 10(n) of the 2018 Regulations requires the Customs Broker to verify the correctness of the importer/ exporter port number, goods and service tax identification number and functioning of the client at the declared address by using reliable, independent, authentic documents.
10. The Commissioner has held that the appellant had violated the provisions of regulation 10(n) of the 2018 Regulations for the reason that the appellant should have taken care to find out that the exporter had earlier suo moto cancelled the GST Registration on 25.04.2023 and had, subsequently, obtained the fresh registration on 12.06.2023.
11. Once the exporter had the GST Registration on the relevant date, it cannot be said that the appellant had violated the provisions of regulation 10(n) of the 2018 Regulations. It also needs to be noted that in the matter of issuance of the show cause notice to the exporter and the appellant under the provisions of the Customs Act, a categorical finding has been recorded by the Joint Commissioner in the order dated 19.03.2025 that the Customs Broker (the appellant) had not violated the provisions of regulation 10(n) of the 2018 Regulations.
12. The order dated 30.05.2025 passed by the Commissioner cannot, therefore, be sustained. It is, accordingly, set aside and the appeal is allowed. The Customs Broker License of the appellant shall be restored forthwith.
(Order dictated in the Open Court)
Notes:
1 the Commissioner
2 2018 Regulations
Author Bio
