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2019 SCC OnLine Del 8699 : (2019) 260 DLT (CN 13A) 13 :
(2019) 367 ELT 410

In the High Court of Delhi at New Delhi

(BEFORE VIBHU BAKHRU, J.)

Future Express … Petitioner;

Versus
Union of India and Others … Respondents.
W.P.(C) 11360/2017
Decided on May 27, 2019
Advocates who appeared in this case:
For the Petitioner : Mr. Giriraj Subramanium and Mr. Simarpal Singh
Sawhney.
For the Respondents : Mr. Harpreet Singh, Senior Standing Counsel
with Ms. Suhani Mathur for UOI.
The Judgment of the Court was delivered by
VIBHU BAKHRU, J.:— The petitioner has filed the present petition
impugning an order dated 15.09.2017 (hereafter ‘the impugned
order’), whereby respondent no. 3 (Chief Commissioner of Customs)
has rejected the petitioner's appeal against an order dated 27.01.2017
passed by respondent no. 2 (Commissioner of Customs (General)). By
the said order, respondent no. 2 had revoked the Authorized Courier
License (License No. DEL/POL/COUR/12/2014) granted to the
petitioner. In addition, respondent no. 2 had also directed forfeiture of
the security amount of Rs. 10,00,000/- and further imposed a penalty
of Rs. 50,000/- under Regulation 14 of the Courier Imports and Exports
(Electronic Declaration and Processing) Regulations, 2010.
2. The petitioner is a sole proprietorship concern of Sh. Surender
Kumar Sharma. His registration as an “Authorized Courier” was revoked
on the ground that he did not qualify to be an “Authorized Courier”
within the meaning of Regulation 3(1)(b) of the Courier Imports and
Exports (Electronic Declaration and Processing) Regulations, 2010
(hereafter “the 2010 Regulations”) and Regulation 3(a) of the Courier
Imports and Exports (Clearance) Regulations, 1998 (hereafter “the
1998 Regulations”).
3. The principal controversy involved in the present petition is
whether the petitioner falls within the definition of an Authorized
Courier under the 1998 Regulations and the 2010 Regulations and
whether the petitioner has complied with his obligations under those
Regulations. The principal allegation against the petitioner is that he is
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not performing functions of a courier but is merely acting as a Custom

Clearing Agent. The petitioner disputes the same and states that all
non-core functions relating to pick-up or local delivery of export/import
courier packages/shipments and housekeeping activities are not
necessarily required to be performed by an Authorized Courier and the
same can be outsourced. He claims that outsourcing of such activities
does not render the petitioner ineligible for being considered as an
Authorized Courier.
4. The petitioner is engaged in the business of acting as a courier
since the year 2014. The petitioner claims that he enjoys a good
reputation in the market. The petitioner applied for and was granted
license as an Authorized Courier under the 2010 Regulations and 1998
Regulations. The said license dated 05.11.2014 was valid for a period of
two years and expired on 30.09.2016.
5. The petitioner claims that he has vast experience and expertise
and has created an infrastructure by entering into Memoranda of
Understanding (MoUs) with various parties overseas.
6. The petitioner states that on 01.05.2015, he submitted a letter
dated 30.04.2015 seeking permission under Regulation 13(j) of the
1998 Regulations for outsourcing various services. According to the
petitioner, the same was necessary to complete the process of door to
door delivery of packages/shipments.
7. The petitioner states that thereafter, it entered into a MoU dated
14.05.2015 with M/s Budget Courier Private Limited (hereafter
“Budget”) for the purposes of augmentation of his business. The
petitioner submitted a copy of the said MoU to respondent no. 2 on
14.01.2016 as an addendum to the application dated 30.04.2015 under
Regulation 13(j) of the 1998 Regulations, which was filed by the
petitioner for seeking permission to outsource non-core operations.
Subsequently, on 18.02.2016, the petitioner entered into a fresh MoU
with Budget in terms of which Budget took over the business of the
petitioner. This was also communicated to respondent no. 2 under
cover of a letter dated 18.02.2016.
8. Subsequently, an audit/inspection team was deployed to conduct
an audit/inspection of the records of the petitioner. The said team
reported that it appeared that the petitioner was doing work only of
custom clearance, and most of the other operations as well as delivery
system were controlled by Budget. On examination of the said report, it
appeared that the petitioner was not fulfilling the requisites of an
Authorized Courier as defined under 1998 Regulations or 2010
Regulations.
9. In view of the above, an inquiry officer was appointed to inquire
into the grounds for rejection of the petitioner's license as an
Authorized Courier.
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10. Respondent no. 2 also issued a show cause notice cum

suspension order dated 18.02.2016 calling upon the petitioner to show
cause as to why his courier license not be cancelled. By the same order,
the petitioner's courier license was also suspended. The petitioner
states that the said Show cause notice cum suspension order was
received on 22.02.2016, as it was dispatched on 20.02.2016.
11. On receipt of the aforesaid Show cause notice, the petitioner
filed a representation dated 02.03.2016 before respondent no. 2. The
petitioner was afforded a personal hearing on 14.03.2016. Thereafter,
the petitioner filed a writ petition being W.P.(C) 3485/2016 captioned
“Future Express v. Union of India” challenging the Show cause notice
cum suspension order.
12. While proceedings were pending before this Court, the Inquiry
Officer appointed by the respondents concluded the inquiry and passed
an order dated 17.05.2016 concluding that the petitioner does not fulfill
the attributes on an Authorized Courier. The said report was
communicated to the petitioner on 14.06.2016.
13. Respondent no. 2 also concluded the proceedings initiated
pursuant to the Show cause notice and passed the order dated
27.01.2017 revoking the petitioner's license as an Authorized Courier;
forfeiting the security deposit of Rs. 10,00,000/-; and imposing a
penalty of Rs. 50,000/-.
14. In view of the above, the writ petition preferred by the petitioner
(W.P.(C) 3485/2017) was rendered infructuous and was, accordingly,
disposed of by an order dated 23.08.2017.
15. The petitioner preferred an appeal against the order dated
27.01.2017 before respondent no. 3, which was rejected by an order
dated 15.09.2017 (the impugned order). The said order is challenged in
the present petition.
Submissions
16. Mr Giriraj Subramanium, learned counsel appearing for the
petitioner submitted that the order dated 27.01.2017 and the
impugned order had proceeded on an erroneous premise that the
Authorized Courier was required to perform all functions by itself and
could not outsource any of its activities. He submitted that the said
assumption was wholly erroneous as that would mean that apart from
three large courier agencies, no other courier agency could be
recognized as courier. He submitted that it is common in this trade, for
various courier agencies to collaborate with one another and outsource
various activities in the supply chain. He submitted that insofar as the
Custom Authorities are concerned, the core activity to perform was
custom clearance and there was no dispute that the petitioner was
performing the said activity. Other activities pertaining to delivery and
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transportation of parcels/shipments prior to entering into the custom

area and after custom clearance, were not core activities and could be
outsourced by any courier agency. He earnestly contended that it was
not necessary for the petitioner to carry out the door to door delivery
services, and outsourcing such activity to Budget did not disqualify the
petitioner from being considered as an Authorized Courier either under
the 1998 Regulations or 2010 Regulations.
17. He referred to Regulation 13 of the 1998 Regulations and
contended that Clause (j) of the said Regulations prohibited an
Authorized Courier to sub-contract or outsource the functions required
to be carried out by an Authorized Courier without the permission of the
Commissioner of Customs. He submitted that in view of the aforesaid
Clause, the petitioner had applied for permission to outsource part of
the functions to Budget. However, it received no response to the said
application. He contended that the same was not necessary as the
respondents had by a subsequent Circular (Circular No. 59 of 2016 -
Customs dated 02.12.2016), recognized that no permission was
required to outsource non-core activities. He contended that in terms of
the said notification, the petitioner was only required to submit prior
intimation for outsourcing the non-core functions of pick-up, local
delivery and housekeeping activities.
18. He submitted that in view of the aforesaid notification, the order
rejecting the petitioner's license and the impugned order, could not be
sustained.
Reasons and Discussion
19. The Central Board of Excise and Custom (CBEC) has framed the
1998 Regulations for assessment and clearance of goods by Authorized
Couriers. Subsequently, CBEC also framed the 2010 Regulations for
enabling electronic filing and processing of customs declaration with
regard to import and export consignments carried by courier
companies. Consequential changes were also made in the 1998
Regulations, which regulates the procedure for clearance of courier
consignments in a manual mode.
20. As is apparent from the above, the principal question to be
addressed is whether the petitioner is entitled to be considered as an
Authorized Courier within the meaning of the aforesaid Regulations.
Regulation 3(a) of the 1998 Regulations defines “Authorized Courier” in
the following terms:—
“3. Definitions.— In these regulations, unless the context
otherwise requires—
(a) “Authorised Courier” in relation to import or export goods
means a person engaged in the international transportation of the
goods on express door to door delivery basis and is registered in this
behalf by a Commissioner of Customs;”
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21. Regulation 3(1)(b) of 2010 Regulations defines “Authorized

Courier” as under:—
“3(1)(b) “Authorised Courier”, in relation to imported or export
goods, means a person engaged in the international transportation of
time-sensitive documents or goods on door-to-door delivery basis
and is registered in this behalf by a Commissioner of Customs in
charge of a Customs airport;”
22. It is clear from the aforesaid definitions that an Authorized
Courier is a person who is engaged in transportation of documents or
goods “on a door to door delivery basis”. Indisputably, the main
function of a courier agency is to collect and deliver documents/goods
couriered through it.
23. Regulation 13 of the 1998 Regulations sets out the obligations of
an Authorized Courier. The said Regulation is set out below:—
“13. Obligations of Authorised Courier. An Authorised Courier
shall-
a) obtain an authorisation, from each of the consignees of the
import goods for whom such courier has imported such goods
or consigners of such export goods which such courier proposes
to export, to the effect that the Authorised Courier may act as
agent of such consignee or consigner, as the case may be for
clearance of such import or export goods by the proper officer;,
provided that for import consignments having a declared
value of ten thousand rupees or less, the authorization may be
obtained at the time of delivery of the consignments to
consignee
(b) advise his client to comply with the provisions of the Customs
Act 1962 (52 of 1962) and rules and regulations made
thereunder and in case of non-compliance thereof shall bring
the matter to the notice of the Assistant Commissioner of
Customs or Deputy Commissioner or Customs.
(c) exercise due diligence to ascertain the correctness and
completeness of any information which he submits to the
proper officer with reference to any work related to the
clearance of import goods or of export goods;
(d) not withhold information communicated to him by an officer of
customs, relating to assessment and clearance of import goods
as well as inspection, examination and Clearance of export
goods, from a client who is entitled to such information;
(e) not withhold any information relating to assessment and
clearance of imported goods or of export goods, from the
Assessing Officer;
(f) not attempt to influence the conduct of any officer of Customs
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in any mater pending before such officer of his subordinates by

the use of threat, false accusation, duress of offer of any special
inducement or promise of advantage or by this bestowing of
any gift or favour or other thing or value;
(g) maintain records and accounts in such form and manner as
may be directed from time to time by an Assistant
Commissioner of Customs or Deputy Commissioner or Customs
and submit them for inspection to the Assistant Commissioner
of Customs or an officer authorised by him, wherever required.
(h) file declarations, for clearance of imported or export goods,
through a person who has passed the examination referred to
in regulation 8 or regulation 19 of the Customs House Agents
Licensing Regulations, 2004 and who are duly authorised under
section 146 of the Act:
Provided that a transition period of six months from the date
of publication of these regulations shall be allowed to the
Authorised Courier for fulfillment of the obligation.
(i) verify the antecedent, correctness of Importer Exporter Code
(IEC) Number, identity of his client and the functioning of his
client in the declared address by using reliable, independent,
authentic documents, data or information;
(j) not sub-contract or outsource functions permitted or required
to be carried out by him in terms of these regulations to any
other person, without the written permission of the
Commissioner of Customs.”
24. Regulation 12 of the 2010 Regulations also provides for the
obligations of Authorized Courier in more or less similar terms as
Regulation 13 of the 1998 Regulations. Regulation 12 of the 2010
Regulations is set out below:—
“12. Obligations of Authorised Courier.
(1) An Authorised Courier shall—
(i) obtain an authorisation, from each of the consignees or
consignors of the imported goods for whom or from whom such
Courier has imported such goods; or consignees or consignors
of such export goods which such Courier proposes to export, to
the effect that the Authorised Courier may act as agent of such
consignee or consignor, as the case may be, for clearance of
such imported or export goods by the proper officer; Provided
that for import of documents, gifts and samples, and low value
dutiable consignments for which declaration have been filed in,
Form-B or the Courier Bill of Entry-XI (CBE-XI), Form C or the
Courier Bill of Entry-XII (CBE-XII) or Form-D or Courier Bill of
Entry-XIII (CBE-XIII) respectively, the authorization may be
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obtained at the time of delivery of the consignment to

consignee subject to the production of consignors authorisation
at pre-clearance stage and retention of authorisation obtained
from the consignee for a period of one year or date of Audit by
Customs, whichever is earlier.
(ii) file electronic declarations, for clearance of imported or export
goods, through a person who has passed the examination
referred to in regulation 8 or regulation 19 of the Customs
House Agents Licensing Regulations, 2004 and who are duly
authorised under section 146 of the Act;
st
Provided that a transition period upto 31 December, 2011
shall be allowed to the Authorised Courier for fulfillment of the
obligation in so far as it relates to examination referred to in
regulation 8 of the Customs House Agents Licensing
Regulations, 2004.
(iii) advise his consignor or consignee to comply with the
provisions of the Act, rules and regulations made thereunder
and in case of non-compliance thereof, he shall bring the
matter to the notice of the Assistant Commissioner of Customs
or Deputy Commissioner of Customs;
(iv) verify the antecedent, correctness of Importer Exporter Code
(IEC) Number, identity of his client and the functioning of his
client in the declared address by using reliable, independent,
authentic documents, data or information;
(v) exercise due diligence to ascertain the correctness and
completeness of any information which he submits to the
proper officer with reference to any work related to the
clearance of imported goods or of export goods;
(vi) not withhold information communicated to him by an officer
of customs, relating to assessment and clearance of imported
goods as well as inspection, examination and Clearance of
export goods, from a consignor or consignee who is entitled to
such information;
(vii) not withhold any information relating to assessment and
clearance of imported goods or of export goods, from the
Assessing Officer;
(viii) not attempt to influence the conduct of any officer of
Customs in any matter pending before such officer or his
subordinates by the use of threat, false accusation, duress or
offer of any special inducement or promise of advantage or by
the bestowing of any gift or favour or other thing or value;
(ix) maintain records and accounts in such form and manner as
may be directed from time to time by an Assistant
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Commissioner of Customs or Deputy Commissioner or Customs

for a period of five years and submit them for inspection to the
Assistant Commissioner of Customs or an officer authorised by
him, wherever required; and
(x) abide by all the provisions of the Act and the rules,
regulations, notifications and orders issued thereunder.”
25. It is clear from Clause (j) of Regulation 13 of the 1998
Regulations that the petitioner was prohibited from sub-contracting or
outsourcing any function required to be carried out by the petitioner as
an Authorized Courier in terms of the said Regulations. Concededly, the
petitioner was granted no such permission to outsource any of its
functions. According to the petitioner, he had sought such a
permission. However, undisputedly, no such permission was granted by
the Commissioner of Customs. Notwithstanding, that such a permission
had not been granted, the petitioner had confined his functions only to
custom clearance of the couriered packages/shipments; admittedly, the
petitioner is not involved in door to door delivery of the couriered
goods. Respondent no. 2 had, in its order dated 27.01.2017, set out
the work flow chart as submitted by the petitioner. The said work flow
chart is reproduced below:—
“Work Flow chart
Step wise door to door delivery activities:
1. Pickup and security check at Customer location in overseas
location - managed by Overseas Partner i.e. Fardar Express/AJ
Worldwide etc.
↓
2. Bagging/Manifesting Export of Consolidated courier Meterial in
overseas locations-Managed by overseas partner i.e. Fardar
Express/AJ Worldwide etc.
↓
3. Import receiving/clearance at EICI Terminal IGI; Delhi -
Managed by Future Express
↓
4. The consignment is then handed over to Budget Courier Pvt.
Ltd. by Future Express with compete documentation of hand
over.
↓
5. Pincode wise segregation of deliveries at warehouse managed
by Budget Courier Pvt. Ltd.
↓
6. Final Delivery to Receivers location in NCT-Managed by Budget
Courier Pvt. Ltd.
↓
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1. Final Delivery to receiver location of Rest of India - Managed by

Budget Courier Pvt. Ltd.”
26. In addition to the above, the petitioner had also set out its
obligations and that of Budget under the MoU, in his submissions. The
same is set out in the order dated 27.01.2017 and is reproduced below:
—
“Responsibility (Operational & Financial) of Each Company
as described below:
Joint Responsibility : Both M/s Budget Couriers Pvt. Ltd and M/s
Future Express are jointly responsible for KYC & various
documentation as required by any agency of Govt. of India and in
case of any irregularities both shall be equally responsible
1. Operational Responsibility:
Budget:
(a) Budget is responsible for all customers interface (including
contracts (marketing & rates) for Budget customers and all
operational interaction with, Customers of both (Budget &
Future Express).
(b) Budget is responsible for all operational instructions and
interface with international agents/partners of Future who
service (pickup c& delivery) both the clients of Budget &
Future through their International network and consign the
shipment to Future.
(c) Budget arranges to take into custody all shipments once
cleared by Future (be it Budget clients or Future clients) and
are then brought to warehouse for sorting repacking and
delivery through own/leased vans as the case may be within
NCT & rest of India.
Future Express : Future is responsible for Customs clearance of
shipments once it arrives into India and ensure all documents and
processes are adhered to.”
27. It is apparent from the above that the petitioner had confined
himself to custom clearance of shipments and had no operational
responsibility for either interfacing with the customers or international
partners. Thus, in view of this Court, there can be no doubt that the
petitioner was not engaged in the business of acting as a courier as
contemplated under the 1998 Regulations or the 2010 Regulations.
28. The contention that the petitioner had merely outsourced some
of its non-core activities as a courier, is unmerited. Admittedly, the
agreement between the petitioner and Budget (MoU) was on a principal
to principal basis. It is also brought on record that the petitioner used
to also raised invoices on Budget for the activities performed by it
(Custom clearance). It is, thus, apparent that the petitioner also
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performed the service of custom clearance for Budget. In other words,

Budget had outsourced the activities performed by the petitioner to it.
If the activities carried on by Budget and the petitioner are examined,
it is at once clear that the role of the petitioner was not that of a courier
agency but merely of a service provider engaged in the activity of
custom clearance. The activity of a courier includes that of delivery of
goods/shipments to customers, and clearance of customs is only an
incidental part of the said business. In the present case, the principal
business of the petitioner is assistance in custom clearance and not of
collection and delivery of goods on a door to door basis.
29. At this stage, it is also relevant to refer to paragraph 4 of the
Circular No. 33/2010 dated 07.09.2010, which explains the rationale for
granting license to Authorized Couriers. Sub-paragraph (i) of Paragraph
4 of the said Circular is relevant and is set out below:—
“4. Apart from the changes as outlined at Para 2 above, some
additional changes have been brought in the Regulations for the
manual mode:
(i) On the lines of similar requirement for Customs Cargo
Service Providers (CCSP) under the Handling of Cargo in Customs
Areas Regulations, 2009, a provision has been made prescribing
the requirement of prior permission of customs if the Authorised
Courier wants to sublet/outsource any of the components in the
door-to-door supply chain. This is necessary since an Authorized
Courier is defined as one, who, in relation to import or export of
goods, is a person engaged in the international transportation of
goods for export and imports on door-to-door delivery basis, and
is registered in this behalf by the jurisdictional Commissioner.
Also, the basic reason for expeditious clearance facilities being
extended to them is that express companies have put in place
verifiable and secure work processes on a global basis backed by
an elaborate IT infrastructure for knowledge and information
management. These companies have their own in-house
mechanisms to guard against use of express supply chain by
unscrupulous elements. Therefore, any unauthorized sub-letting
or outsourcing of any of the components in the door-to-door
supply chain may defeat the very purpose behind facility of
expeditious clearance. Hence, the Commissioners of Customs
should review the facilities available with the Authorised Couriers
appointed under their charge to ensure compliance. Further, while
allowing, any sub-letting or outsourcing due care should be taken
to ensure that it does not go against the very purpose behind
facility of expeditious clearance.”
30. It is clear from the above that the purpose of framing the 2008
Regulations and 2009 Regulations is to extend expeditious clearance
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facilities to couriers on the premise that couriers have an elaborate

infrastructure for knowledge and information management and such
courier companies used their inhouse mechanism to guard against use
of supply chain by unscrupulous elements. Plainly, if the petitioner was
not in touch with the customers and was merely acting in a custom
clearance agent, the question of extending expeditious clearance
facilities on reliance of the petitioner's infrastructure and knowledge of
its customers, does not arise.
31. In view of the above, this Court finds no infirmity with the order
dated 27.01.2017 passed by respondent no. 2 and the impugned order
passed by respondent no. 3. In view of the above, it is not necessary to
examine the question whether the petitioner was required to obtain the
permission of the Commissioner of Customs under Regulation 13(j) of
the 1998 Regulations. However, for the sake of completeness, this
Court considers it apposite to examine the said question as well.
32. It is contended on behalf of the petitioner that he was not
required to obtain permission as contemplated under Regulation 13(j)
of the 1998 Regulations in view of the Circular dated 02.12.2016. At
this stage, it would be necessary to refer to paragraphs 4 and 5 of the
said Circular (Circular No. 59 of 2016 - Customs dated 02.12.2016)
which are set out below:—
“4. An authorised courier performs varieties of activities during
the process of assessment and clearance of the goods followed by
delivery at the door. Some of these are core activities and critical to
his role as an authorised courier whereas some are non-core
activities. Like other sectors, it is understandable that an authorised
courier would like to outsource some its non-core activities without
the rigour of obtaining permission each time.
5. In view of this, Board is of the view that relaxation from such
permission merits consideration with regard to certain components
of the supply chain before entry inwards/after clearance of the
imported courier shipments and before carting in/after ‘Let Export’ of
the export shipments. Accordingly, Board has decided that for
functions namely pick-up or local delivery of export/imported courier
packages/shipments, transportation for officials and housekeeping
activities permission will not be required. Prior intimation would
suffice. Needless to add, the authorised courier will ensure that due
diligence is exercised and necessary checks carried out before
outsourcing these activities.”
33. It is, at once, clear that the import of the said Circular is to
exempt courier agencies from seeking permission to outsource certain
non-core activities; is not to enable a person carrying on the activity of
custom clearance to masquerade as a courier. Outsourcing of activities,
essentially means, that a person carrying on a business is not required
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to perform all activities himself. However, it is essential that the person

outsourcing the activities maintains the integrity of the business. In the
present case, it is difficult to accept that the petitioner was carrying on
the business of a courier and had outsourced certain components of his
business. The petitioner was merely involved in custom clearance; he
had no interface with customers using courier services and was also not
involved with other business activities. In view of the above, the
Circular dated 02.12.2016 is of little assistance to the petitioner.
34. In view of the above, the present petition is unmerited and is,
accordingly, dismissed.
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