Delhi High Court Refuses To Waive Pre-Deposit For Customs Brokers' Appeal Against ₹30 Crore Penalty, Says They 'Misused' License
Stating that Customs Brokers have a significant responsibility under the Customs Act, the Delhi High Court refused to waive the pre-deposit for appeal by certain Customs Housing Agents against ₹30 crore penalty imposed upon them over import fraud.A division bench of Justices Prathiba M. Singh and Shail Jain observed,“The clear position is that the Customs Brokers have a...
Stating that Customs Brokers have a significant responsibility under the Customs Act, the Delhi High Court refused to waive the pre-deposit for appeal by certain Customs Housing Agents against ₹30 crore penalty imposed upon them over import fraud.
A division bench of Justices Prathiba M. Singh and Shail Jain observed,
“The clear position is that the Customs Brokers have a significant responsibility under the Customs Act as also the Customs Brokers Licensing Regulations, 2018. The CHA ought to perform the same with diligence and commitment. In the present case, permitting misuse of the CHA licence, that too after receiving monthly remuneration for the same shows that the license itself has been sub-let without any control over the same.”
For context, it is alleged that Petitioners— Customs Housing Agents allowed one Zakir Khan to misuse their licenses for huge undervaluation and mis-declaration in imports of various electronic goods and accessories.
The impugned order was passed by the Principal Commissioner of Customs, imposing penalties of Rs.10,00,00,000/-on each CHA, under Sections 122(a)(i), 122(b)(i) and 114AA of the Customs Act, 1962.
The CHAs sought to prefer an appeal before the CESTAT but that would entail a 7.5% pre-deposit, approximately ₹75 lakh each in this case.
They thus moved the High Court, claiming that they are in extremely precarious financial condition and cannot afford the payment of the pre-deposit.
The Department opposed the plea, claiming that this was one of the biggest frauds unravelled by the authorities, involving evasion of Customs Duty to the tune of Rs.600 crores.
It was contended that in such cases, the discretion of the Court under Article 226 of the Constitution ought not to be exercised as under Section 129E of the Customs Act, the amount of pre-deposit is specifically prescribed.
The Department further argued that CHA license holders have a duty to behave responsibly and not enable such fraudulent activities.
Agreeing, the High Court said that the kingpin i.e., Zakir Khan, had “ indiscriminately” used CHA licenses of the Petitioners, “without any accountability, to which the Petitioners are also to be blamed.”
Reliance was placed on Commissioner Of Customs (Airport And General) v. M/S Jaiswal Import Cargo Services Ltd (2025) where a coordinate bench had held that Customs Broker must diligently perform its responsibilities under the 2018 Licensing Regulations and any failure thereof must be met with a proportionate punishment.
As such, the Court refused to grant any waiver or reduction of the pre-deposit.
Appearance: Ms. Riya Soni, Mr. Sunil Kumar Tripathi and Mr. AkshayBhambari, Advs. for Petitioner; Mr. Badar Mahmood (SPC for UOI) and Mr. Ammar Ahmad, Adv. Mr. Akash Verma, Sr. Standing Counsel, CBIC with Ms. Aanchal Uppal Adv. for R-1&4.
Case title: Manoj Kumar Nagar v. The Principal Commissioner Of Customs & Ors.
Citation: 2025 LiveLaw (Del) 1516
Case no.: W.P.(C) 16970/2025