* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 01 December 2023

Judgment pronounced on: 30 January 2024
+ W.P. (C) 15808/2022
NAMAN GUPTA ..... Petitioner
Through: Mr. Prabhat Kumar, Mr. Karan
Dang and Ms. Swadha Gupta,
Advocates.
versus
COMMISSIONER OF CUSTOMS
AIRPORT AND GENERAL ..... Respondent
Through: Mr. Ajit Kumar Kalia, Sr.
Standing Counsel along with Mr.
Abhinav Kalia, Advocate.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT

RAVINDER DUDEJA, J.
1. This Writ Petition has been preferred by Custom House Agent
(CHA) against the Order-in-Original dated 29.06.2022 passed by
respondent, revoking the Custom Broker License of the petitioner,
forfeiting the entire security deposit and imposing penalty of Rs.
50,000/-.
2. BRIEF FACTS
Briefly stated, petitioner was granted license to operate as a
Custom Broker (CB), which was valid upto 19.12.2025. The instant
matter pertains to the previous exports of ball-bearings, investigation of
which, was initiated by SIB, ACC, Kolkata on the basis of four live

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 export consignments of unbranded ball-bearings on 24.09.2020 filed by
M/s Gupta Vyapar (IEC CTGPG 6543A). These four consignments
were highly over-valued for export to defraud to the exchequer by way
of getting very high Input Tax Credit (ITC) Refund and other export
related incentives. Thereafter, data pertaining to export of ball-bearings
was analyzed for the period 01.01.2020 to 12.09.2020, wherein, it was
found that a total of 35 consignments of similar/identical description
had been exported, out of which, 23 consignments had been cleared by
M/s Naman Gupta & Associates (hereinafter referred to as Custom
Broker). The total ITC claimed by such exporters was Rs. 3.3 crores
approximately, while total drawback claimed was to the tune of Rs.
36.62 lakhs. It was seen that petitioner was involved in the clearance of
23 shipping bills of ball-bearings filed by nine different exporters. Out
of nine exporters, five were found to be non-existent. Two exporters i.e.
M/s National Auto Parts and M/s Beam International were admitted to
have been involved in the export unintentionally. Two other exporters
M/s Theism Tradecom Private Limited and M/s Nitya Enterprises did
not appear to record their statements. Statements of Md. Ishtiyaque
Ahmad, Proprietor of M/s Beam International and Sh. Sanjit Ghosh,
Proprietor of M/s National Auto Parts were recorded under Section 108
of the Customs Act, 1962. Statement of Authorized Representative of
the petitioner was also recorded under Section 108 of the Customs Act,
1962. A purported offence report dated 11.08.2021 was forwarded by
the Deputy Commissioner of Customs, Air Cargo Complex, NSCBI
Airport, Kolkata, who initiated action against the petitioner for the
violation of Regulation 10(d), 10 (m), 10 (n) & 10 (q) of the Customs

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 Broker Licensing Regulation, 2018 (CBLR, 2018). On the basis of such
offence report and the relied upon documents forwarded by the
Customs Authorities including the statements recorded under Section
108 of the Customs Act, 1962 by the prohibition order dated
13.10.2021, the Principal Commissioner of Customs, (Airport & ACC),
Kolkata prohibited the petitioner from carrying out his duties as a
Custom Broker within the West Bengal Commissionerate. The
prohibition order was valid for a period of 30 days from the issuance
thereof and lost its force by efflux of time. On 01.12.2021, respondent
passed a purported order under Regulation 16 (1) of the regulations
suspending the C.B. License of the petitioner with immediate effect and
directed the petitioner to appear post-decisional hearing on 13.12.2021.
After considering the oral and written statements made on behalf of the
petitioner, by order dated 24.12.2021, respondent passed suspension
order under Regulation 16 (2) of the said regulations. Respondent
issued a Show Cause Notice dated 05.01.2022 under Regulation 17 (1)
of the regulations, requiring the petitioner to show cause within 30 days
from the date of the notice as to why he should not be held responsible
for the alleged contravention of provisions of Regulation 10 (d), 10 (m),
10 (n) & 10 (q) and why his Custom Broker License should not be
revoked and penalty be not imposed under Regulation 17 & 18 thereof.
Petitioner submitted reply to the Show Cause Notice dated 05.01.2022.
Petitioner through its Authorized Representative appeared before the
Inquiry Officer, appointed by the respondent in the said Show Cause
Notice. The Inquiry Officer submitted its report dated 04.04.2022, inter
alia, holding the petitioner guilty of violating the provisions of

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 Regulation 10 (d), 10 (m), 10 (n) & 10 (q). Petitioner then submitted a
detailed representation dated 09.04.2022 to the respondent
controverting each and every finding made by the Inquiry Officer in its
report dated 04.04.2022. He was granted personal hearing by the
respondent. Respondent agreed with the findings of the Inquiry Officer
that CB has failed to comply with the provisions of Regulation 10 (d),
10 (m), 10 (n) & 10 (q) of the CBLR, 2018 and accordingly passed the
following order dated 29.06.2022:-
(i) I hereby revoke the CB License No. R-36/DEL/CUS/2016
(PAN:AURPG7276R) valid upto 19.12.2025 of M/s Naman Gupta &
Associates;
(ii) I direct the CB to immediately surrender the Original CB License No.
R-36/DEL/CUS/2016 (PAN: AURPG7276R) valid upto 19.12.2025
along with all ‘F/G/H’ Cards issued there under;
(iii) I order for forfeiture of the whole amount of security deposit furnished
by them;
(iv) I impose a penalty of Rs. 50,000/- on M/s Naman Gupta & Associates.

3. GROUNDS OF CHALLENGE
The impugned order dated 29.06.2022 passed by the
Commissioner of Customs has been assailed, inter alia, on the ground
that the same is patently illegal and ex-facie violative of fundamental
principles of natural justice, inasmuch as, it ignored the fact that
petitioner was not granted the right to cross-examination of the
witnesses whose statements were relied upon by the Inquiry Officer in
coming to the finding of guilt of the petitioner. No reason has been
given to justify the denial of right of cross examination to the petitioner
as envisaged under Regulation 17 (4). The action of the Inquiry Officer
denying the right of the petitioner to cross examine the said witnesses,
has prevented the petitioner to raise credible defence against the

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 purported allegations made in the Show Cause Notice, thereby causing
prejudice to the petitioner, and as such, order dated 29.06.2022,
justifying such denial of the right of cross-examination, is illegal, mala
fide and violative of the fundamental principles of natural justice
offending Article 14 of the Constitution. The impugned order has also
been challenged on the ground that the same was passed beyond the
period of nine months as stipulated in Circular No. 9/2010 Customs
dated April 8, 2010 for completion of revocation proceedings under the
regulations. Show Cause Notice was also issued beyond the period of
90 days from the date of receipt of the offence report and therefore the
entire revocation proceedings initiated under Regulation 17 stood
vitiated and on that score, the impugned order is liable to be set
aside/quashed. Even though the respondent relied upon the statements
made by the exporters, it did not consider the letters of authorization
and payments made by them through banking mode of transfer. The
respondent completely disregarded the letters and emails written by the
petitioner to the exporters requiring them to comply with the provisions
of the Customs Act. Respondent also did not take into consideration
that the purported Inquiry made by the jurisdictional officials of the
GST department were carried out after six months from the date of the
report and there is no finding that the exporters were not in existence on
the dates of export. It is submitted that the genuineness of the Importer-
Exporter Code Number, GSTIN, Permanent Account Number and
Authorized Dealer Code were self-verified by the Indian Customs EDI
System at the time of uploading of shipping bills in the system and if
any anomaly is found in the details of such particulars of the exporter,

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 the shipping bill cannot be successfully uploaded in the system. The
successful uploading of the shipping bills of the exporters are the
conclusive proof of the facts that the Importer-Exporter Code Number,
GSTIN, Permanent Account Number and Authorized Dealer Code of
the exporters were genuine and they were very much in existence on
the date of the export. It has also been submitted that the KYC
documents submitted by the exporters are public documents issued by
the statutory authorities functioning under the Government of India.
Such documents were verified from the portal of the authorities and
petitioner had no reasons to disbelieve such documents as there is a
statutory presumption of its genuineness under Section 79 of the Indian
Evidence Act, 1872. It is submitted that the impugned order is an
outcome of the purported exercise to save the proper officer of customs,
inasmuch as, the proper officer of customs assessed the shipping bills
and issued “Let Export Orders” without raising any objection against
the value of the exported goods in any manner whatsoever and the
customs authorities are hell-bent to penalize the petitioner for the fault
of the proper officer of customs, despite the fact that as a Custom
Broker, petitioner has no role to assess the value of the goods in any
manner whatsoever. It is thus argued that the impugned order is an
unreasonable restriction on the constitutional right of the petitioner
granted under Article 19 (1) (g) of the Constitution.
4. The submission of the learned counsel for the respondent is that
the Writ Petition is not maintainable as petitioner has not exhausted the
remedy of appeal before learned CESTAT available under Regulation
19 of the CBLR 2018, and therefore, the petition is liable to be

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 dismissed on this ground alone. It is further submitted that Custom
Broker is a link between the revenue authorities and the
exporters/importers with an object of facilitating clearances and
therefore he is expected to safeguard the interest of both the
exporters/importers and the revenue authorities. It is argued that the
Custom Broker has been involved in violation of Regulation 10 (d), 10
(m), 10 (n) & 10 (q) laid down in CBLR, 2018. He failed to verify the
genuineness of Importer/Exporter Code Number, GSTIN, identity and
functioning of each of the exporters who are found to be non-existent or
not related to export/import business. The shipping bills were filed
without verifying the identity of the exporters or ascertaining the
veracity of the declarations made in the shipping bills. This was a
necessary precaution that the Custom Broker ought to have taken
before the documents were filed. This default shows the lack of due
diligence and serious misconduct on the part of Custom Broker. Had
the CB conducted proper verification as prescribed in the regulation, it
could have come to know before hand that “Exporters were not
Genuine”. It is submitted that merely collecting the KYC documents
cannot be treated as fulfillment of the obligations mandated under
CBLR, 2018 as few exporters were found to be non-existent during
investigation. Reliance has been placed on the statements of two
exporters recorded under Section 108 of the Customs Act in as much as
one of the exporters out of the two who appeared during the
investigation, clearly stated that the export was done without his
knowledge, while the other admitted that he was lured into the
fraudulent export in lieu of monetary benefits.

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 5. With regard to the limitation, it is submitted that the documents
required for initiating action against the petitioner were received by
respondent on 18.11.2021, while the impugned order was passed on
29.06.2022 and thus the final order was passed within the stipulated
time-line of nine months. It is thus submitted that the impugned Order-
in-Original is in accordance with the regulations laid down under
CBLR, 2018 and is within the ambit of reasonable restrictions and not
violative of Article 14 of the Constitution.
ANALYSIS & DECISION

6. Commissioner of Customs vide order dated 29.06.2022, revoked

the CB License of M/s Naman Gupta & Associates. Regulation 19 of
CBLR, 2018 provides that the Custom Broker, aggrieved by any such
order passed by the Principal Commissioner of Customs or
Commissioner of Customs, as the case may be, under Regulation 16 or
17 may prefer an appeal under Section 129A of the Customs Act,1962
to the Customs Central Excise & Service Tax Appellate Tribunal.
Admittedly, in this case, instead of filing an appeal, petitioner has
preferred to file writ petition before this court. Thus, the foremost
question for consideration is whether the writ petition is maintainable,
as an alternative remedy of appeal was available to the petitioner under
Section 129 A of the Customs Act, 1962 before CESTAT.
7. In the case of Godrej Sara Lee Ltd. Vs. Excise and Taxation
Officer-cum-Assessing Authority and Others 2023 SCC OnLine SC
95, the question for determination before the Apex Court was whether
the High Court was justified in declining interference on the ground of
availability of an alternative remedy of appeal to the appellant under
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 Section 33 of the VAT Act, which it had not pursued. While extracting
the scope of writ powers under Article 226 of the Constitution,
maintainability and entertainability of the writ petition, Court observed
as under:-
“4. Before answering the questions, we feel the urge to say a few
words on the exercise of writ powers conferred by Article 226 of
the Constitution having come across certain orders passed by the
high courts holding writ petitions as “not maintainable” merely
because the alternative remedy provided by the relevant statutes has
not been pursued by the parties desirous of invocation of the writ
jurisdiction. The power to issue prerogative writs under Article 226
is plenary in nature. Any limitation on the exercise of such power
must be traceable in the Constitution itself. Profitable reference in
this regard may be made to Article 329 and ordainments of other
similarly worded articles in the Constitution. Article 226 does not, in
terms, impose any limitation or restraint on the exercise of power to
issue writs. While it is true that exercise of writ powers despite
availability of a remedy under the very statute which has been
invoked and has given rise to the action impugned in the writ
petition ought not to be made in a routine manner, yet, the mere fact
that the petitioner before the high court, in a given case, has not
pursued the alternative remedy available to him/it cannot
mechanically be construed as a ground for its dismissal. It is
axiomatic that the high courts (bearing in mind the facts of each
particular case) have a discretion whether to entertain a writ
petition or not. One of the self-imposed restrictions on the exercise
of power under Article 226 that has evolved through judicial
precedents is that the high courts should normally not entertain a
writ petition, where an effective and efficacious alternative remedy is
available. At the same time, it must be remembered that mere
availability of an alternative remedy of appeal or revision, which the
party invoking the jurisdiction of the high court under Article 226
has not pursued, would not oust the jurisdiction of the high court and
render a writ petition “not maintainable”. In a long line of
decisions, this Court has made it clear that availability of an
alternative remedy does not operate as an absolute bar to the
“maintainability” of a writ petition and that the rule, which requires
a party to pursue the alternative remedy provided by a statute, is a
rule of policy, convenience and discretion rather than a rule of law.
Though elementary, it needs to be restated that “entertainability”
and “maintainability” of a writ petition are distinct concepts. The
fine but real distinction between the two ought not to be lost sight of.

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 The objection as to “maintainability” goes to the root of the matter
and if such objection were found to be of substance, the courts would
be rendered incapable of even receiving the lis for adjudication. On
the other hand, the question of “entertainability” is entirely within
the realm of discretion of the high courts, writ remedy being
discretionary. A writ petition despite being maintainable may not be
entertained by a high court for very many reasons or relief could
even be refused to the petitioner, despite setting up a sound legal
point, if grant of the claimed relief would not further public interest.
Hence, dismissal of a writ petition by a high court on the ground that
the petitioner has not availed the alternative remedy without,
however, examining whether an exceptional case has been made out
for such entertainment would not be proper.
8. That apart, we may also usefully refer to the decisions of this
Court reported in (1977) 2 SCC 724 (State of Uttar Pradesh v.
Indian Hume Pipe Co. Ltd.) and (2000) 10 SCC 482 (Union of India
v. State of Haryana). What appears on a plain reading of the former
decision is that whether a certain item falls within an entry in a sales
tax statute, raises a pure question of law and if investigation into
facts is unnecessary, the high court could entertain a writ petition in
its discretion even though the alternative remedy was not availed of;
and, unless exercise of discretion is shown to be unreasonable or
perverse, this Court would not interfere. In the latter decision, this
Court found the issue raised by the appellant to be pristinely legal
requiring determination by the high court without putting the
appellant through the mill of statutory appeals in the hierarchy.
What follows from the said decisions is that where the controversy is
a purely legal one and it does not involve disputed questions of fact
but only questions of law, then it should be decided by the high court
instead of dismissing the writ petition on the ground of an
alternative remedy being available.”

8. As may be seen in the present case, the controversy is purely

legal, not involving the disputed question of facts. The petition can be
decided only on the question of law and therefore despite an alternative
statutory remedy being available, the present writ petition is
maintainable.

9. Regulation 17 of CBLR, 2018 prescribes the procedure for

revoking the license or imposing penalty. The time limit (s) prescribed
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 under the CBLR, 2018 is mandatory and not directory and this Court in
a plethora of judgment has also repeatedly held so.

10. It is necessary to set forth the relevant regulations applicable to

the present case. Customs Broker Licensing Regulation, 2018 was
notified on 14.05.2018. The relevant extracts of regulations 17 (1), 17
(5) & 17 (7) are set forth below:-
17. Procedure for revoking license or imposing penalty:-

“(1) The Principal Commissioner or Commissioner of Customs

shall issue a notice in writing to the Customs Broker within a
period of ninety days from the date of receipt of an offence report,
stating the grounds on which it is proposed to revoke the license or
impose penalty requiring the said Customs Broker to submit within
thirty days to the Deputy Commissioner of Customs or Assistant
Commissioner of Customs nominated by him, a written statement of
defense and also to specify in the said statement whether the
Customs Broker desires to be heard in person by the said Deputy
Commissioner of Customs or Assistant Commissioner of Customs.

(5) At the conclusion of the inquiry, the Deputy Commissioner of

Customs or Assistant Commissioner of Customs, as the case may
be, shall prepare a report of the inquiry and after recording his
findings thereon submit the report within a period of ninety days
from the date of issue of a notice under sub-regulation (1).

(7) The Principal Commissioner or Commissioner of Customs

shall, after considering the report of the inquiry and the
representation thereon, if any, made by the Customs Broker, pass
such orders as he deems fit either revoking the suspension of the
license or revoking the license of the Customs Broker within ninety
days from the date of submission of the report by the Deputy
Commissioner of Customs or Assistant Commissioner of Customs,
under sub-regulation (5) : Provided that no order for revoking
the license shall be passed unless an opportunity is given to the
Customs Broker to be heard in person by the Principal
Commissioner of Customs or Commissioner of Customs, as the
case may be.”

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 11. In terms of regulations 17 (1), a show cause notice is to be issued
within 90 days from the date of receipt of the Offence report, while
regulation 17 (5) prescribes a time period of 90 days from the date of
issue of Show Cause Notice for submission of an Inquiry Report.
Regulation 17 (7) prescribes that within 90 days from the date of the
submission of the Inquiry Report and after consideration thereof, the
Principal Commissioner/Commissioner shall pass orders either
revoking the suspension of license or revocation of license of the
Customs Broker. Although, the said regulation does not prescribe an
overall time limit for completing the inquiry, Circular No.
09/2010/Customs dated 08.04.2010 issued by the Central Board of
Excise and Customs, Department of the Revenue, Ministry of Finance,
Govt. of India, inter alia prescribed time limits for procedures
governing the suspension/revocation of CB licenses. Para 7.1 of the
said circular, inter alia states that there shall be an overall time limit of
nine months from the date of receipt of the offence report for the
passing of a final order as follows:
“7.1. The present procedure prescribed for completion of regular
suspension proceedings takes a long time since it involves inquiry
proceedings, and there is no time limit prescribed for completion of
such proceedings. Hence, it has been decided by the Board to
prescribe an overall time limit of nine months from the date of
receipt of offence report, by prescribing time limits at various stages
of issue of Show Cause Notice, submission of inquiry report by the
Deputy Commissioner of Customs or Assistant Commissioner of
Customs recording his findings on the issue of suspension of CHA
license, and for passing of an order by the Commissioner of
Customs. Suitable changes have been made in the present time limit
of forty five days for reply by CHA to the notice of suspension, sixty
days time for representation against the report of AC/DC on the
grounds not accepted by CHA, by reducing the time to thirty days in
both the cases under the Regulations.”

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 12. On a perusal of the record, it is evident that the offence report
against the Customs Broker M/s Naman Gupta & Associates was issued
on 11.08.2021 (Annexure P-5). Once an offence be put is received, the
time period as provided in the CBLR commences. The Order-in-
Original dated 29.06.2022 takes note that copy of the offence report
dated 11.08.2021 against the subject CB was received from the Special
Investigation Branch on 18.11.2021 and Show Cause Notice was issued
on 05.01.2022. Inquiry was completed on 01.04.2022 and was
forwarded to the Commissioner of Customs vide letter dated
04.04.2022 (Annexure P-11).

FINDINGS OF COMMISSIONER (AIRPORT &

GENERAL) WITH REGARD TO REGULATION 10 (d), 10
(m), 10 (n) & 10 (q)

13. The Commissioner of Customs in his order dated 29.06.2022,

returned the following finding:-
“26. Now I proceed to discuss the violations of CBLR,
2018 by the Customs Broker firm:
Regulation 10(d) -advise his client to comply with the
provisions of the Act, other allied Acts and the rules and
regulations thereof and in case of non-compliance, shall
bring the matter to the notice of the Deputy Commissioner
of Customs or Assistant Commissioner ,of Customs, as the
case may be;
In this regard, I find that during investigation conducted
in the matter, six out of nine exporters were found to be
non-existent. The two exporters who appeared during
investigation clearly stated that they had never met the
CHA. Further, the exporters also denied having made any
payment to the Customs Broker though the CB has stated
that they have received payment from the exporters. In his
statement dated 04.03.2021, Shri Ravi Ranjan Prasad,
Power of Attorney holder of the CB stated that the
exporters had contacted him through their forwarders and
middleman. Hence the contention of the CB that they had

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 advised the exporters to comply with the provisions of
Customs Act, 1962 through letters and e-mails does not
appear credible. Further, no such letter has been
produced before this office by the CB. Therefore, I hold
that the CB has failed to comply with the provisions of
Regulation 10(d ) of CBLR, 2018.
Regulation 10 (m) – discharge his duties as a Customs
Broker with utmost speed and efficiency and without any
delay;
The CB had taken up the responsibility of clearance of goods
pertaining to exporters who were found to be non-existent or
those who were in no way involved in the export/import
business. Further, as admitted by the exporters who appeared
during investigation, the CB had never met their
clients/exporters. These facts are sufficient to prove that the
CB had not performed his duties efficiently and thereby,
violated provisions of Regulation 10(m) of CBLR, 2018.
Regulation 10 (n) verify correctness of Importer Exporter
Code (lEC) number. Goods and Services Tax
Identification Number (GSTIN), identity of his client and
functioning of his client at the declared address by using
reliable, independent, authentic documents, data or
information.
The CB in his written submission as well as during the
course of Personal Hearing have stated that they had
verified the genuineness and correctness of IEC and
GSTIN of the exporters and verified their existence at the
declared places of business, firstly, by visiting the web
portals of the DGFT and GST respectively and secondly,
by personally visiting the declared place of business of
each of the exporters thereby discharging their obligations
under Regulation 10 (n) of the said Regulations, 2018.
However, ongoing through the case records, I find that
many of the exporters were found to be non -existent
during investigation and few of them were nowhere
related to export business. If an exporter procures IEC,
GSTIN, PAN , Authorised Dealer Code fraudulently, then
Shipping Bills can be filed even if the exporter is non -
existent. I find that the two exporters who appeared for
tendering statement under Section 108 of the Customs Act,
1962 stated that they were not involved in the export of the
subject goods. Shri Sanjit Ghosh, so called proprietor of
M/s National Auto Parts Ltd. clearly mentioned in his
statement that “He does not operate the firm. However,
the address given was his home address and no such

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 firm was existing at that address”. The CB in his defence
in an attempt to dis-credit the statement of Shri Sanjit
Ghosh, has sought refuge in various technicalities like as
to why did not Shri Ghosh get his IEC registered if he had
no role in issuance of IEC. Similarly, if Sanjit Ghosh was
threatened, then why did he not file complaint. These
arguments may be valid but are not the subject matter of
these proceedings. CB cannot expect an exoneration of
failure to carry out proper identity check of the exporter
by resorting to fault finding in the conduct of the exporter.
Hence it emerges that the verification as mandated under
regulation 10(n) of the CBLR, 2018 was not done
properly. Had the CB conducted proper verification as
prescribed in the Regulation, they would have come to
know beforehand that the exporters were not genuine.
Thus, I find that the CB has failed to fulfill his obligations
under Regulation 10(n) of the CBLR , 2018.
Regulation 10(q) - co-operate with the Customs
authorities and shall join investigations promptly in the
event of an inquiry against them or their employees.
In his statement dated 04.03.2021, Shri Ravi Ranjan
Prasad , Power of Attorney holder of the CB stated that he
and his employees had visited declared place of business
of exporters and found them existent. However, most of the
exporters have been found to be non-existent and the two
exporters who appeared during investigation denied
having met the CB. Hence, it is apparent that the CB
tendered false statement u/s 108 of Customs Act, 1962 and
did not cooperate in the investigation . Therefore, I find
that the CB has violated the provisions of Regulation
IO(q) of CBLR, 2018.”

14. Findings are drawn mainly relying on the statements of two

exporters and reports of jurisdictional GST authorities that rest of the
exporters were non-existent. In his statement recorded under Section
108 of the Customs Act, 1962 Md. Ishtiyaque Ahmad, Proprietor of
M/s Beam International, inter alia, stated:-

i) The export made vide Shipping Bill No. 4042026 dated

24.07.2020 was his first and last export;
ii) One person of name Shri Santosh came to him with the
proposal to export goods such as ball bearings and leather goods by
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 using his IEC, GSTIN, Current Account and other necessary
documents;
iii) He invested around Rs. 25 lakhs for this purpose and was told
by Shri Santosh that he would manage all the export related process
and he would only have to sign some export related documents:
iv) He was promised that the money that would be received in his
current account, in the form of duty drawback and Input Tax Credit
(ITC), would be divided between them on equal basis;
v) He neither purchased nor saw the concerned export goods
under Shipping Bill No. 4042026 dated 24.07.2020;
vi) He never met any of the representatives of the concerned
CHA;
vii) He had not made any payments to the CHA or the Freight
Forwarder;
viii) He admitted his mistake and stated that he was willing to
return the drawback and IGST refund that he received in his
account.

15. Similarly, Sanjit Ghosh, Proprietor of M/s National Auto Parts

in his statement recorded under Section 108 of the Customs Act, 1962,
stated as under:-

i) He did not have any idea about the issuance of his IEC;
ii) He works as an employee in a sweet shop;
iii) One person named as LakhanMondal whom he met in a
birthday party of his friend took all his KYC details such as Aadhar
card, PAN card, Voter card in the guise of making arrangements
for him to go abroad for work;
iv) He does not operate the firm M/s National Auto Parts Ltd.
However, the address given was his home address and no such firm
was existing at that address;
v) He does not know any Customs Broker;
vi) He did not meet any representative of Customs Broker M/s
Naman Gupta & Associates in order to export consignment of ball
bearing covered under Shipping Bill No. 3781573 dated
13.07.2020;
vii) He did not file any shipping bill.
viii) In October 2020, initially an amount of Rs. 1,18,000 and next
day an amount of Rs. 13,30,000 was deposited in his account (these
amounts were credited as Drawback and IGST refund
respectively);

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 ix) He was threatened and coerced by one Shri Sunil Kumar
Agrawal to transfer the money in the account of Shri Sunil Kumar
Agrawal;
x) He is willing to return the rest of money (Rs. 1,33,000) to the
exchequer.

16. The Order-in-Original mainly relies upon the statements of the

above noted two exporters. The right of cross-examination has been
recognized under Regulation 17 (4) of the CBLR Regulations, 2018,
which requires Inquiry Officer to give reasons if he intends to deny
such right to the Customs Broker. Recognizing the right of cross-
examination, the Division Bench of this Court in the case of Flevel
International Vs. Commissioner of Central Excise 2015 SCC
OnLine Delhi 12173: (2016) 332 ELT 416 held as under:-

“42. It is settled law that the denial of an opportunity of

cross-examination of a witness whose statements have been
relied upon in the adjudication order would vitiate the
order of adjudication. In Basudev Garg v. Commissioner of
Customs 2013 (294) ELT 353 (Del), this Court referred to
Section 9D of the CE Act and noted that even while
upholding its constitutional validity in J & K Cigarettes Ltd.
v. Collector of Central Excise (2011) 22 STR 225 (Del), a
Division Bench of this Court had observed that the
circumstances under which the right of cross-examination
can be taken away would have to be ‘exceptional’. This
would include circumstances where the person who had
given the statement was dead or cannot be found or is
incapable of giving evidence or is kept out of the way by
adverse party or whose presence cannot be obtained
without an amount of delay or expense which, under the
circumstances, the Court considers unreasonable. It was
held by the Court in Basudev Garg (supra) that “it is clear
that unless such circumstances exist the noticee would have
a right to cross-examine the person whose statements are
being relied upon even in quasi judicial proceedings.”

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 17. In yet another case, the Division Bench of this Court in HIM
Logistics Pvt. Ltd. Vs. The Principal Commissioner of Customs,
2016 SCC On Line Del 1236, observed as under:-
“16. In the present case, it is an admitted fact that the
Respondent Department is placing considerable reliance on
the statements of Mr. Shyam Lal and Ms. Preeti, the
partners of the importer, in support of the case made out in
the SCN. The impugned order of the AA does not indicate
that any prejudice would be caused to the Department by
providing the Petitioner the right of cross-examination. On
the other hand the denial of such right would prejudice the
Petitioner since the said statements are adverse to the
Petitioner. In the circumstances, the denial of the
Petitioner’s right of cross-examination is held contrary to
the law explained in Basudev Garg (supra).”

18. In the present case, the petitioner questioned the integrity of the
statements of the two exporters recorded under Section 108 of the
Customs Act, 1962. Such statements were required to be tested through
cross examination. Despite specific request by the petitioner to cross
examine such witnesses, no attempt was made to secure their presence
in the adjudication proceedings. As per regulation 17 (4) of CBLR,
2018, if the Deputy Commissioner of Customs or Assistant
Commissioner of Customs declines the permission to examine any
person on the ground that his evidence is not relevant or material, he
needs to record the reasons in writing for doing so but the Inquiry
Officer assigned no reason what so ever. The Commissioner of
Customs ignored the error on the part of the Inquiry Officer to grant an
opportunity of cross examination of the exporters and rather observed
that the object behind cross examination of the witnesses appeared to be
to merely prolong/discredit the investigation and the denial of cross
examination by the Inquiry Officer has not impacted the objectivity of
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 the Inquiry. Such an observation, in our view is based on incorrect
understanding of regulation 17 (4) of CBLR, 2018. Provisions of
Regulation 17 (4) were given a complete go-by. Not allowing the
Customs broker an opportunity to cross examine the persons examined
in support of the grounds forming the basis of these proceedings has
resulted in serious prejudice to the petitioner.
19. As per reports of jurisdictional GST authorities, enquiries were
conducted at the addresses of the exporters in February, 2021 i.e. more
than six months from the date of export of the goods of the respective
exporters. The Commissioner of Customs failed to appreciate that there
was no specific finding of the jurisdictional GST authorities that such
exporters were not in existence on the date of export. Therefore, it
cannot be concluded that the exporters who engaged the petitioner to
handle the clearance of the goods, were not in existence on the date of
export. Moreover, once the IEC particulars as mentioned are verified
from the system as maintained by the Customs, there is no requirement
statutorily placed upon the CHA to undertake an independent exercise
in order to verify the details as furnished by the exporter. Reliance in
this regard may be placed upon the following observations rendered by
the Division Bench of this Court in Kunal Travels (Cargo) vs
Commissioner of Customs (Import & General) New Customs
House, IGI Airport, New Delhi [2017 SCC OnLine Del 7683]:-
“12. Clause (e) of the aforesaid Regulation requires
exercise of due diligence by the CHA regarding such
information which he may give to his client with
reference to any work related to clearance of cargo.
Clause (l) requires that all documents submitted, such as
bills of entry and shipping bills delivered etc. reflect the
name of the importer/exporter and the name of the CHA
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 prominently at the top of such documents. The aforesaid
clauses do not obligate the CHA to look into such
information which may be made available to it from the
exporter/importer. The CHA is not an inspector to weigh
the genuineness of the transaction. It is a processing
agent of documents with respect to clearance of goods
through customs house and in that process only such
authorized personnel of the CHA can enter the customs
house area. What is noteworthy is that the IE Code of the
exporter M/s H.M. Impex was mentioned in the shipping
bills, this itself reflects that before the grant of said IE
Code, the background check of the said
importer/exporter had been undertaken by the customs
authorities, therefore, there was no doubt about the
identity of the said exporter. It would be far too onerous
to expect the CHA to inquire into and verify the
genuineness of the IE Code given to it by a client for
each import/export transaction. When such code is
mentioned, there is a presumption that an appropriate
background check in this regard i.e. KYC etc. would
have been done by the customs authorities. There is
nothing on record to show that the appellant had
knowledge that the goods mentioned in the shipping bills
did not reflect the truth of the consignment sought to be
exported. In the absence of such knowledge, there cannot
be any mens rea attributed to the appellant or its
proprietor. Whatever may be the value of the goods, in
the present case, simply because upon inspection of the
goods they did not corroborate with what was declared
in the shipping bills, cannot be deemed as mis-
declaration by the CHA because the said document was
filed on the basis of information provided to it by M/s
H.M. Impex, which had already been granted an IE Code
by the DGFT. The grant of the IE Code presupposes a
verification of facts etc. made in such application with
respect to the concern or entity. If the grant of such IE
Code to a non-existent entity at the address WZ-156,
Madipur, New Delhi - 63 is in doubt, then for such
erroneous grant of the IE Code, the appellant cannot be
faulted. The IE Code is the proof of locus standi of the
exporter. The CHA is not expected to do a background
check of the exporter/client who approaches it for
facilitation services in export and imports. Regulation
13(e) of the CHALR 2004 requires the CHA to:“exercise
due diligence to ascertain the correctness of any

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 information which he imparts to a client with reference
to any work related to clearance of cargo or baggage”
(emphasis supplied). The CHAs due diligence is for
information that he may give to its client and not
necessarily to do a background check of either the client
or of the consignment. Documents prepared or filed by a
CHA are on the basis of instructions/documents received
from its client/importer/exporter. Furnishing of wrong or
incorrect information cannot be attributed to the CHA if
it was innocently filed in the belief and faith that its
client has furnished correct information and veritable
documents. The mis-declaration would be attributable to
the client if wrong information were deliberately
supplied to the CHA. Hence there could be no guilt,
wrong, fault or penalty on the appellant apropos the
contents of the shipping bills. Apropos any doubt about
the issuance of the IE Code to M/s H.S. Impex, it was for
the respondents to take appropriate action. Furthermore,
the inquiry report revealed that there was no delay in
processing the documents by the appellant under
Regulation 13(n).

20. It is thus evident from the legal position as enunciated in Kunal

Travels (supra), Customs Broker is entitled to proceed on the basis that
IEC has come to be generated in favour of the exporter after
appropriate background check having been conducted by the customs
authorities. The further details that may have been captured and form
part of IEC Registration of an importer are aspects which have to be
verified by the customs authorities themselves. Moreover, it is also not
the case of the De partment that IEC, GSTIN, PAN & Authorized
Dealer Code of the exporters were not genuine. In the aforesaid
backdrop the Court in Kunal Travels (supra) held that the obligation
of the CHA under Section 13 (e) of the CHALR, 2004 cannot be
stretched to it being obliged to undertake a further background check of
the client. As such, as a Customs Broker, the petitioner cannot be held

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 liable because exporters were not traceable, after the issuance of ‘Let
Export Orders’ and export of the goods out of the country.
21. In our considered opinion, the Commissioner of Customs erred in
accepting the findings of the Inquiry Officer regards the failure of
Customs Broker to comply with the provisions of Regulation 10(d), 10
(m), 10 (n) & 10 (q) of the CBLR, 2018.
22. The Writ Petition shall stand allowed. The impugned order dated
29.06.2022, insofar as, it revokes the CB License of the petitioner and
levies penalty upon the petitioner shall stand quashed and set aside.

RAVINDER DUDEJA, J.

YASHWANT VARMA, J.

JANUARY 30 , 2024
RM

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