The Delhi High Court has dismissed the Customs Department’s appeal holding that the department failed to produce any evidence to substantiate its allegations that the customs broker had committed KYC-related lapses under Regulations 10(d) and 10(e) of the Customs Broker Licensing Regulations (CBLR), 2018.

The bench of Justice Anil Kshetarpal and Justice Shail Jain has observed that the department could not point to any material on record establishing that the customs broker had failed to discharge its statutory obligations, despite the exporter subsequently being found non-existent during physical verification. 

The appeal was filed by the Commissioner of Customs (Airport and General), New Delhi under Section 130 of the Customs Act, 1962, challenging the CESTAT’s Final Order dated October 6, 2025.

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The dispute arose after the Customs Department revoked the Customs Broker Licence and imposed a penalty, alleging violations of the Customs Broker Licensing Regulations, 2018 (CBLR, 2018). The department claimed that the broker had failed to comply with its obligations while handling exports involving a readymade garments exporter.

However, the CESTAT had found that the department failed to produce any evidence establishing the alleged violations and consequently set aside the revocation of the licence.

The Tribunal observed that the department merely presumed violations because the readymade garments industry is considered sensitive and prone to risk.

It further noted that reliance had been placed on a report of the Special Investigation and Intelligence Branch (SIIB), which stated that the exporter was found non-existent during physical verification. Nevertheless, the Tribunal held that this alone did not establish that the customs broker had failed to fulfil its statutory obligations under Regulations 10(d) and 10(e) of the CBLR, especially when all Know Your Customer (KYC) documents had been duly obtained.

According to the Tribunal, there was no evidence demonstrating that the customs broker had knowledge that the exporter was non-existent.

The Court observed that despite referring to the Order-in-Original, the Customs Department was unable to point to any material on record substantiating the allegations against the customs broker. It also recorded the department’s admission that this was the first occasion on which such allegations had been levelled against the respondent.

The department relied upon the Supreme Court’s judgment in Commissioner of Customs v. K.M. Ganatra & Co. (2016) to justify the revocation.

The High Court, however, distinguished the precedent, noting that the Supreme Court case involved repeated violations by the customs house agent. In contrast, the present case involved no previous misconduct making the earlier decision factually distinguishable.

The Court reiterated that an appeal under Section 130 of the Customs Act is maintainable only where a substantial question of law arises.

Since the Tribunal had appreciated the evidence correctly and the department failed to demonstrate any legal error warranting interference, the Court concluded that no substantial question of law existed. Accordingly, it dismissed the appeal along with all pending applications.

The customs broker informed the Court that despite obtaining relief from the CESTAT, the customs broker licence had still not been restored.

Taking note of this submission, the High Court directed the Customs Department to take appropriate steps, in accordance with law, for restoration of the respondent’s licence now that the departmental appeal has been dismissed.

The customs broker was represented by Advocate Akhil Krishan Maggu.

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