The Madras High Court has dismissed a customs broker’s writ petition challenging an adjudication order concerning duty-free imports of gold dore bars from Guinea, holding that he could not seek protection merely by claiming that he had submitted documents supplied by the importer.
The bench of Justice N. Senthilkumar noted the statements concerning the failure to verify the genuineness of the origin certificates and non-compliance with the prescribed procedure. The Court found no ground to interfere in writ jurisdiction, but permitted the petitioner to challenge the adjudication order through an appeal.
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The petitioner/assessee was the manager and F-card holder of M/s Saro International Freight System, a partnership concern holding a customs broker licence. He had filed bills of entry on behalf of M/s Precious Metal Refiners for imports of gold dore bars stated to originate in Guinea, a Least Developed Country.
According to the petitioner, the bars had a purity below 95% and fell under Customs Tariff Heading 7108 1200. These partially refined bars were intended for manufacturing standard refined gold bars with purity of 99.5% or above.
The importer claimed benefits under the Duty Free Tariff Preference scheme through Notification No. 96/2008-Cus., dated August 13, 2008. On that basis, a nil rate of Basic Customs Duty and Agriculture Infrastructure and Development Cess was claimed.
Following searches at the importer’s premises and the recording of statements, the department questioned the authenticity of the origin documents supporting the exemption claim. The investigation concerned certificates of origin and related documents obtained through Dubai-based intermediaries.
The petitioner maintained that he acted on the information, documents and declarations furnished by the importer. His role, he argued, was to facilitate the filing of bills of entry and clearance of the imported goods.
In his reply dated March 18, 2026, to the proposal for a penalty under Section 114AA of the Customs Act, he stated that all documents received from the importer had been submitted to the department and uploaded through the e-Sanchit facility on the ICEGATE portal.
He specifically referred to mining assay certificates issued by M/s Siramamba Mining SARLs Company. According to him, these certificates had been uploaded along with the bills of entry and referred to in their descriptions.
The petitioner further submitted that samples had been drawn and sent for testing on September 1, 2023. He claimed to have obtained the importer’s authorisation, exercised due diligence, verified relevant particulars and disclosed information without withholding any material.
He contended that he had not furnished false information warranting a penalty under Section 114AA.
The petitioner challenged Order-in-Original No. 1375/2026, dated April 18, 2026, insofar as it concerned him. He alleged that the adjudicating authority had failed to consider his reply and denied him a fair opportunity to participate in the proceedings.
His counsel relied on decisions recognising exceptions to the rule concerning alternative statutory remedies. These included breach of natural justice, infringement of fundamental rights, absence of jurisdiction, challenges to statutory validity and failure to act in accordance with the governing enactment.
The petitioner also cited judgments addressing the limits of liability of customs house agents and customs brokers, along with the Customs Brokers Licensing Regulations, 2018.
The customs department defended the adjudication order as a detailed decision that considered the show cause notice, the replies and the evidence gathered during the Directorate of Revenue Intelligence investigation.
It relied on a Central Forensic Science Laboratory report dated June 3, 2024, which found that certain signatures and stamps appearing on the certificates of origin had been reproduced.
The department referred to findings that the importer had obtained origin-related documents entirely through a Dubai-based intermediary without independent verification.
According to the adjudication order reproduced in the judgment, the importer’s directors did not know whether the gold had actually been mined in Guinea. No direct communication had been established with the Guinea-based supplier or miner, and the importer had admitted that it had not undertaken due diligence under Section 28DA of the Customs Act.
The department also relied on non-compliance with the procedure referred to in the judgment under Rule 6 of CAROTAR and Rule 20 of the applicable Rules of Origin.
The underlying adjudication concerned five bills of entry covering consignments with a total assessable value of ₹173,51,01,693.
The adjudicating authority confirmed differential customs duty of ₹25,64,48,030 against M/s Precious Metal Refiners Pvt. Ltd., together with applicable interest. This represented the Basic Customs Duty and AIDC payable if the exemption was unavailable.
The authority invoked the extended limitation period under Section 28(4), finding that the circumstances went beyond a bona fide mistake in claiming an exemption. It treated the unsupported origin declarations and failure to undertake verification as suppression of material facts.
The adjudication order also adjusted ₹10.98 crore deposited by the importer pursuant to an earlier High Court order against the confirmed demand. The goods were held liable to confiscation under Sections 111(m) and 111(q) of the Customs Act.
The ₹25.64 crore duty demand was against the importer and formed the background to the broker’s challenge; it was not described as a duty demand against the petitioner personally.
The High Court examined earlier decisions concerning penalties imposed on customs house agents for failures in discharging their professional functions.
It referred to Commissioner of Customs (Exports) v. I. Sahaya Edin Prabhu, which addressed the distinction between penalties under the Customs Act and action under the licensing regulations for breaches of an agent’s duties.
The Court also discussed tribunal decisions, including Access World Wide Cargo v. Commissioner of Customs, Bangalore. In that case, the tribunal had set aside a penalty where the department failed to establish mala fide and wilful misrepresentation by a customs broker who filed shipping bills using documents supplied by the exporter.
However, the High Court did not find the petitioner’s reliance on his agency role sufficient to justify interference in the present case.
The Court noted that the petitioner, acting as an agent, and the importer’s directors had admitted that the genuineness of the certificates had not been verified.
In those circumstances, it held that the petitioner could not take inconsistent positions by seeking protection solely on the ground that he had furnished the importer’s documents and facilitated clearance.
The judgment acknowledged that the petitioner’s statement had subsequently been retracted. Nevertheless, the Court referred to the statements concerning non-compliance with the mandatory origin-related procedure and concluded that no ground had been established for interference with the adjudication order in the writ petition.
The ruling rests on the evidence and admissions discussed in this case. It does not declare that every incorrect exemption claim or every submission of an importer’s documents automatically makes a customs broker liable.
The High Court dismissed the writ petition as devoid of merits, while granting liberty to challenge the adjudication order by way of an appeal. It made no order as to costs and closed the connected miscellaneous petitions.
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