Customs Broker's Failure To Oversee Warehousing Of Re-Export Goods Leading To Sale In Local Market Is 'A Clear Infraction': Delhi HC

The Delhi High Court has held that a Customs Broker must diligently perform its responsibilities under the 2018 Licensing Regulations however, any failure thereof must be met with a proportionate punishment.While dealing with a case where the broker's license was suspended due to alleged failure to oversee warehousing of goods meant for re-export, leading to their sale in the domestic market, a division bench of Justices Prathiba M. Singh and Shail Jain observed,“There is no doubt that Customs Brokers do have significant responsibility under the CBLR (Customs Brokers Licensing Regulations) 2018 which ought to be performed with diligence and commitment. The fact that the Respondent did not oversee the clearance and the warehousing of the goods leading to diversion of the goods in the domestic market is a clear infraction.”However, it added, “the Respondent has already suffered in its business for 13 months. Applying the principle of proportionality, this Court is of the opinion that the suspension/ revocation for a period of 13 months is a sufficient period considering the nature of violation.It relied on M/S. Ashiana Cargo Services v. Commissioner of Customs (I&G) (2012) where it was held that proportionality of punishment in Customs cases is of great significance as action is under a fiscal statute, and may ultimately lead to a civil death.The Customs Department had challenged an order of the CESTAT, setting aside the Original Order vide which, the customs brokers license of Respondent was suspended.The allegation against the Respondent was that it enabled local sale of goods which were imported by one M/s Tanu Trading with the intention to re-export. As per the Department, the said goods were diverted for home consumption instead of being deposited in a bonded warehouse.These allegations were considered by the CESTAT which held that the broker had no obligation to conduct a physical verification.The High Court was of the view that while failure to oversee proper warehousing was a clear infraction, however, Respondent's business had come to a standstill for a total period of 13 months due to suspension. “The primary responsibility here was of the importer and at best the allegation against the Customs Broker was that it was complicit with the importer. The appeal filed by the Department now seeks to reinstate the revocation against the Customs broker which this Court is not inclined to do…13 months is a sufficient period considering the nature of violation,” it said.Before parting, it directed the Respondent to contribute a sum of Rs. 2 lakh to the Customs Department, Rs. 1 lakh to the Delhi High Court Legal Service Committee and Rs. 1 lakh to the Delhi High Court Bar Association “as a matter of retribution”.Appearance: Mr. Aakarsh Srivastava, SSC with Mr. Anand Pandey, Adv. for Appellant; Mr. Piyush Kumar, Ms. Shikha Sapra & Ms. Reena Rawat, Advs. for RespondentCase title: Commissioner Of Customs (Airport And General) v. M/S Jaiswal Import Cargo Services LtdCitation: 2025 LiveLaw (Del) 1071Case no.: CUSAA 111/2025Click here to read order

Customs Broker's Failure To Oversee Warehousing Of Re-Export Goods Leading To Sale In Local Market Is 'A Clear Infraction': Delhi HC

Kapil Dhyani

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