Customs Brokers Creating Fake Firms Jeopardise Real Exporters: Delhi High Court Forfeits ₹2 Lakh Over Alleged Duty Drawback Fraud

The Delhi High Court has ordered forfeiture of ₹2,00,000/- out of the ₹5 lakh security deposit made by a Customs Broker at the time of obtaining license, citing allegations of duty drawback fraud against it.A division bench of Justices Prathiba M. Singh and Shail Jain were dealing with an appeal preferred by the Commissioner of Customs against a CESTAT order, restoring the Respondent-broker's license and setting aside forfeiture of security deposit.The Department claimed that the broker (formally known as Customs House Agent) had over-valued export goods for availing higher duty drawback, to the tune of more than ₹11 lakh, for an exporter firm.It further alleged that on scrutiny, it was found that the exporting firm itself did not exist and as such, the Respondent had violated its duty of verification under the Customs Brokers Licensing Regulations, 2018.The Department further claimed that summons were issued to the Respondent on multiple occasions for tendering statements, but to no avail. As such, the punishment of revoking license and forfeiting security came to be imposed, which was later set aside by CESTAT.CESTAT had come to a finding that the custom broker and the exporter were independent and none of the documents were fake or forged.The High Court however noted that apart from basic KYC documents, no other details of the exporter were available with the Respondent.“It clearly shows that the conduct of the CHA is quite detrimental. If customs brokers indulge in such conduct of conniving and creating fake exporting firms, it jeopardises the incentives to real exporters,” it thus remarked.Reliance was placed on Nitco Logistics Pvt Ltd v. The Commissioner Of Customs Airport And General (2025) where the High Court held that Customs Brokers can be held responsible for failure to exercise due diligence.The Court however noted that Respondent's license had remained suspended for last three years, and the same was “adequate message for the Custom broker not to indulge in such acts in future.”Reliance was placed on Commissioner Of Customs (Airport And General) v. M/S Jaiswal Import Cargo Services Ltd (2025) where the High Court held that failure of Customs Broker to diligently perform its responsibilities must be met with a “proportionate punishment”.As such, the Court modified CESTAT order to the extent that Respondent's license shall be renewed subject to forfeiture of ₹2,00,000 and deposit of a further amount of Rs. 2,00,000/- to the Customs Authority.In addition, an amount of Rs. 2,00,000/- shall be deposited to the Delhi High Court Staff Welfare Fund and the Delhi High Court Clerk Association.Appearance: Mr. Aakarsh Srivastava, SSC, CBIC for Appellant; Mr. Nikhil Gupta, Mr. Rochit Abhishek, Mr. Prince Nagpal, Mr. Devang Dwivedi for RespondentCase title: Commissioner of Customs v. Ravi DhanwariyaCitation: 2025 LiveLaw (Del) 1537Case no.: CUSAA 162/2025Click here to read order

Customs Brokers Creating Fake Firms Jeopardise Real Exporters: Delhi High Court Forfeits ₹2 Lakh Over Alleged Duty Drawback Fraud

Kapil Dhyani

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