The Delhi High Court has upheld the revocation of a Customs Broker licence where the broker, despite holding its own valid licence, undertook clearance-related activities by using the credentials of another Customs Broker for filing a Bill of Entry.
The bench of Justice Anil Khetarpal and Justice Shail Jain observed that the consent or knowledge of the other licence-holder could not legitimise such an arrangement, as the statutory framework governing Customs Brokers does not permit one broker to undertake the functions of another by using the latter’s credentials.
The bench sustained the findings of violations under Regulations 10(a), 10(d), 10(e), 10(f) and 10(k) of the Customs Brokers Licensing Regulations, 2018 (CBLR), along with revocation of the Customs Broker licence, forfeiture of the security deposit and a penalty of Rs.50,000.
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The proceedings arose from the import of a consignment filed at ICD Jhattipur, Panipat. Although M/s Prakhar Gupta was shown as the Customs Broker in the Bill of Entry, the investigation revealed that the actual clearance-related activities had been undertaken by M/s Goodwings Maritime Private Limited, which itself held Customs Broker Licence, valid up to July 30, 2030.
The imported consignment consisted of several plant products, including 10,000 kg of dried root Crocus (Crocus Sativus L.), 2,720 kg of Gulgafiz (Gentiana Oliveri Griseb), 240 kg of Salab (Dactylorhiza Hatagirea) and 10,000 kg of Shikakal (Pastinaca Sativa Linn). Acting on intelligence, Customs authorities placed the consignment on hold and subjected it to examination. Samples were forwarded to the Regional Plant Quarantine Station, which reported that the goods could not be imported. The Wildlife Crime Control Bureau, however, opined that the goods did not attract the provisions of the Wildlife (Protection) Act, 1972.
The investigation subsequently focused not only on the nature of the imported goods but also on the identity of the Customs Broker who had actually handled the transaction.
During the investigation, the statement of Shri Sanjay Kumar, a G-Card holder associated with Goodwings Maritime, was recorded. He stated that he had been authorised by M/s Prakhar Gupta to remain present during examination of the goods and that he had been directed by the Director of Goodwings Maritime to attend the examination proceedings.
The statement of Shri Prakhar Gupta was subsequently recorded. Although he disputed having personally issued the relevant authorisation letter, he acknowledged that the Bill of Entry had been filed using his Customs Broker licence. He stated that the Bill of Entry had not been filed by him and that the work relating to the consignment had actually been undertaken by Goodwings Maritime.
He also referred to a verbal understanding under which papers could be filed in the name of his Customs Broker licence, although there was no written authorisation or agreement permitting Goodwings Maritime to undertake the work in his name.
The importer, in its communication to Customs, identified M/s Prakhar Gupta as its Customs Broker but stated that correspondence relating to the consignment had been conducted through Shri Awadhendra Yadav, who, according to the importer, worked with Shri Prakhar Gupta.
The Director of Goodwings Maritime, Shri Awadhendra Kumar, stated during investigation that the documents relating to the consignment had been received by him on behalf of M/s Prakhar Gupta and that he had filed the documents on behalf of that Customs Broker.
He further stated that the original authorisation letter had been signed by Shri Prakhar Gupta and handed over to an employee of Goodwings Maritime, who forwarded a scanned copy to the G-Card holder attending the examination. The Director also stated that employees of Goodwings Maritime, including Shri Sanjay Kumar and Ms. Sneha, also worked for M/s Prakhar Gupta and that both entities operated from the same premises. An agreement dated July 16, 2018 concerning the mutual handling and transaction of business was also produced during the investigation.
The investigation resulted in a separate Order-in-Original dated March 28, 2022, under which penalties of Rs.1 lakh each were imposed upon Shri Awadhendra Kumar and Shri Prakhar Gupta under Section 114AA of the Customs Act, 1962. The order was subsequently forwarded to the Commissioner of Customs (Airport & General) as the offence report for initiating proceedings under the CBLR against Goodwings Maritime.
The Customs Broker licence of Goodwings Maritime was suspended and the suspension was subsequently confirmed. A Show Cause Notice dated June 24, 2022 was thereafter issued proposing revocation of the licence for alleged violations of the CBLR.
An Inquiry Officer found violations of Regulations 10(a), 10(b), 10(d), 10(e), 10(f), 10(k) and 10(n). The Adjudicating Authority did not sustain the allegation under Regulation 10(b), but found violations of Regulations 10(a), 10(d), 10(e), 10(f), 10(k) and 10(n).
By Order-in-Original dated December 19, 2022, the Adjudicating Authority revoked the Customs Broker licence, ordered forfeiture of the entire security deposit and imposed a penalty of Rs.50,000.
Goodwings Maritime challenged the order before the CESTAT. However, the Tribunal dismissed the appeal on September 23, 2024 and upheld the findings of violation of Regulations 10(a), 10(d), 10(e), 10(f) and 10(k), finding no sufficient ground to interfere with the revocation, forfeiture or penalty.
Before the High Court, the Customs Broker contended that the CESTAT had erred in treating the transaction as misuse or sub-letting of another broker’s licence. It argued that the Bill of Entry had been filed using M/s Prakhar Gupta’s credentials with his knowledge, instructions and consent.
It was also argued that the importer was already a client of M/s Prakhar Gupta and that Goodwings Maritime had no independent motive or advantage in using his credentials. The appellant further contended that there was no deliberate misdeclaration or mala fide conduct and that the nature of the goods and their alleged prohibition could only be ascertained upon examination by the competent authorities.
The appellant additionally relied upon the fact that the CESTAT, Allahabad Bench, had separately set aside revocation of M/s Prakhar Gupta’s Customs Broker licence in relation to the same transaction. It argued that if the broker whose credentials had allegedly been used had obtained relief, continued revocation of its own licence would be unwarranted.
The appellant also relied upon proportionality, contending that it had no previous history of violations and that revocation was disproportionately severe. Reliance was placed upon the Delhi High Court’s decision in Ashiana Cargo Services v. Commissioner of Customs (I & G), which was affirmed by the Supreme Court.
The Customs Department argued that the investigation clearly established that the Bill of Entry was filed using M/s Prakhar Gupta’s credentials but that the actual clearance work was undertaken by Goodwings Maritime through its Director.
According to the Department, Goodwings Maritime could not escape responsibility merely because another Customs Broker’s name appeared in the Bill of Entry. Once it had actually undertaken the clearance-related activities, it was required to discharge the statutory obligations applicable to a Customs Broker.
The Department further submitted that the imported goods were prohibited and liable to confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962. The broker was therefore required to advise the importer regarding the applicable statutory requirements and, in case of non-compliance, bring the matter to the notice of the Deputy Commissioner or Assistant Commissioner of Customs.
The Department also alleged that the broker failed to inform the importer about restrictions applicable under Plant Quarantine laws and failed to maintain and produce the requisite records and documents concerning the transaction.
The High Court found that there was no real dispute regarding the manner in which the Bill of Entry had been filed. Although M/s Prakhar Gupta appeared as the Customs Broker on the Bill of Entry, the statements and other material on record established that the clearance-related activities were undertaken by Goodwings Maritime.
The Court noted that the importer had supplied relevant documents to the email address of Goodwings Maritime, that its employee and G-Card holder attended the examination and that its Director acknowledged receiving the documents and filing them on behalf of M/s Prakhar Gupta.
Rejecting the central defence, the Court held that even if M/s Prakhar Gupta had permitted the use of his Customs Broker credentials, such consent did not authorise Goodwings Maritime to undertake Customs Broker functions in a transaction without obtaining authorisation from the importer in its own name.
The Court observed that the very fact that the credentials of another Customs Broker had been consciously permitted to be used demonstrated that the use was not inadvertent.
The High Court emphasised the statutory structure governing Customs Brokers. It held that the CBLR does not contemplate one Customs Broker undertaking the functions of another Customs Broker by using the latter’s credentials.
A Customs Broker must transact business in accordance with the authorisation obtained from the importer and must independently discharge the obligations imposed by the CBLR. Therefore, the fact that the other broker participated in or consented to the arrangement could not absolve Goodwings Maritime of its own statutory responsibilities.
The Court also relied upon the manner in which the transaction was actually conducted. The importer had not directly contacted M/s Prakhar Gupta concerning the clearance. Instead, the relevant documents were sent to Goodwings Maritime and its personnel handled the clearance-related work.
The fact that both entities operated from the same premises and that employees of Goodwings Maritime were involved in the transaction further supported the finding that Goodwings Maritime had itself undertaken the Customs Broker functions.
The Court separately considered the nature of the imported goods. The Regional Plant Quarantine Station had reported that the goods could not be imported. They were consequently treated as prohibited and liable to confiscation under Sections 111(d) and 111(o) of the Customs Act.
The Court clarified that the Wildlife Crime Control Bureau’s conclusion that the Wildlife (Protection) Act did not apply did not alter the position arising from the Plant Quarantine authorities’ report.
The appellant’s argument that the prohibited nature of the goods could only be ascertained after examination was also not accepted as a complete answer to the violations.
The Court stressed that a Customs Broker is not merely a person who mechanically files documents supplied by an importer. A licensed Customs Broker is expected to exercise due diligence and advise the client regarding statutory requirements governing the import and clearance of goods.
Where goods are subject to restrictions or prohibition, the broker cannot simply proceed with the clearance by filing the Bill of Entry in the name of another Customs Broker.
The High Court upheld the finding under Regulation 10(a), observing that Goodwings Maritime had undertaken the transaction without obtaining authorisation from the importer in its own name and had filed the Bill of Entry using another Customs Broker’s credentials.
The findings under Regulations 10(d) and 10(e) were also sustained. Once Goodwings Maritime undertook the clearance-related activities, it was required to discharge the corresponding obligations of a Customs Broker, including advising the client about the applicable statutory requirements and notifying Customs authorities in the event of non-compliance.
The Court found that the record established that the goods were subject to restrictions under the Plant Quarantine regime and that the appellant proceeded with the filing despite those restrictions.
With regard to Regulation 10(f), the Court noted that the broker had an obligation to ensure that relevant information concerning orders, instructions and public notices relating to clearance was not withheld from the client. The record did not demonstrate that the importer had been adequately informed about the restrictions applicable to the goods.
The violation of Regulation 10(k), concerning maintenance of proper and up-to-date records and documents, was also upheld. The importer had stated that the documents were sent to the appellant’s email address, while the Director acknowledged collecting the original documents. However, those originals were not produced before Customs authorities when required.
The High Court rejected the argument that the appellant should receive relief because the CESTAT Allahabad Bench had separately set aside revocation of M/s Prakhar Gupta’s licence.
The Court held that the proceedings against the two Customs Brokers concerned their respective statutory obligations. Relief granted to one broker could not erase the independent conduct of the other broker established on the basis of the evidence in the present proceedings.
Thus, the Court treated the two regulatory proceedings independently rather than allowing the outcome of one broker’s case to automatically determine the fate of the other.
The Court acknowledged that the absence of previous misconduct could constitute a mitigating circumstance while considering proportionality. However, it held that the absence of earlier violations did not render the present violations inconsequential.
The Court found the conduct particularly significant because Goodwings Maritime was itself a licensed Customs Broker and nevertheless consciously undertook the transaction using the credentials of another Customs Broker. It was therefore not a case of a mere inadvertent or technical omission.
The appellant relied heavily on the principle of proportionality, particularly the judgment in Ashiana Cargo Services. The High Court accepted the general proposition that punishment imposed upon a Customs Broker must bear a reasonable relationship to the nature and gravity of the violation and that the serious civil consequences of licence revocation must be taken into account.
However, the Court concluded that the facts of the present case justified the punishment imposed.
According to the Court, the appellant did not merely commit an isolated lapse. It held its own Customs Broker licence but deliberately undertook clearance-related activities and filed the Bill of Entry using another broker’s credentials. The transaction also involved goods ultimately found to be prohibited for import.
The Court held that the use of another Customs Broker’s credentials in such circumstances had the effect of concealing the identity of the broker actually undertaking the transaction and undermining the regulatory framework governing Customs Brokers.
The appellant also argued that its licence had remained suspended for a substantial period and that this should be considered while determining the final consequence.
The High Court rejected the argument, explaining that suspension and revocation operate differently. Suspension is an interim regulatory measure pending adjudication, whereas revocation follows a finding that the Customs Broker committed violations warranting such action.
Therefore, the period during which the licence remained suspended could not, by itself, substitute for the final consequence of revocation where substantive violations concerning the manner in which Customs Broker activities were undertaken had been established.
The High Court also noted the limited scope of its jurisdiction under Section 130 of the Customs Act. Interference with the CESTAT’s findings would be warranted only where a substantial question of law arose.
In the present case, the Court found no such question. It specifically considered the deliberate use of another Customs Broker’s credentials, the appellant’s actual involvement in clearance, the nature of the goods and the violations of the CBLR sustained by the authorities.
Against that factual background, the Court held that revocation could not be characterised as shockingly or manifestly disproportionate.
The forfeiture of the security deposit and Rs.50,000 penalty also arose from the same established violations, and the Court found no independent ground to interfere with those consequences.
The Bench held that the findings of the CESTAT sustaining violations of Regulations 10(a), 10(d), 10(e), 10(f) and 10(k) of the CBLR did not warrant interference.
The consequential revocation of the Customs Broker licence, forfeiture of the security deposit and imposition of the Rs.50,000 penalty were accordingly upheld. The appeal and pending application were dismissed on August 14, 2026.
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