The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that a customs broker (CB) has an obligation as the appointed agent to transact Customs formalities and is responsible for their clients’ Export Fraud.

The bench of Dr. Rachna Gupta (Judicial  Member) and Hemambika R. Priya (Technical Member) has observed that once the goods were seized by the Department, the exporters did not come forward to claim the goods. It is a matter of concern that when the goods were seized, no one came forward to claim the said goods, clearly evidencing the attempt of the exporters to defraud the government. This should have been a warning to the appellant CB that the export goods obviously did not belong to the exporters on paper. Though there is no collusion of the appellant CB in the attempt of the exporters to defraud the Government, the appellant CB plays a crucial role in international trade. 

The appellant is a Customs Broker engaged in the clearance of import and export of goods. The Appellant filed two S/Bs for the Exporters at ICD, Tughlakabad.

The department found that the exporters had mis-declared the quantity and value of the goods, in order to avail higher amount of drawback and other incidental export benefits. 

A Show Cause Notice proposing revocation of Appellant’s License for alleged violation of provisions of Regulation 10(a), 10(b), 10(d), 10(e), 10(m) & 10(n) of Customs Broker Licensing Regulation. The Commissioner confirmed the violation of Regulations 10(a), 10(b) & 10(n) of the Regulations.

The adjudicating authority has held that even though the appellant had procured the authorisation letters of the exporters, they were not obtained from the exporters directly by the appellant.

The appellant contended that he accepted that he did not meet the exporter but the documents were received through Sh. Ram Pratap, who was the appellant’s friend, and acquainted with one of the exporters. Rule 10(a) does not cast any responsibility on the appellant CB to obtain the authorisation from the exporter directly. It only requires the appellant to have the authorisation from the firm/company etc, which was available with the appellant. Therefore, the violation of 10(a) cannot be upheld.

The tribunal held that the revocation of the CB license and the forfeiture of security deposit cannot be sustained.

However, the CESTAT reduced the penalty from Rs 50,000 to Rs 25,000. 

Case Details

Case Title: Uniyal Cargo Movers Pvt Ltd Versus Commissioner of Customs

Case No.: CUSTOMS APPEAL NO. 52237 OF 2022

Date: 09.04.2025

Counsel For Appellant: Reena Rawat

Counsel For Respondent: Rajesh Singh

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