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“Indirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisory”

Dated: 07.03.2025

CESTAT Delhi Overturns Customs Broker License Revocation

Case Overview

• Appellant: M/s Akanksha Global Logistics Pvt. Ltd. (Customs Broker)
• Respondent: Commissioner of Customs, New Delhi
• Issue: Revocation of Customs Broker License, forfeiture of security deposit, and imposition of penalty due to alleged violation of Regulation 10(n) of Customs Broker Licensing Regulations (CBLR), 2018.

Background

• The Directorate General of Analytics and Risk Management (DGARM) flagged several “risky” exporters suspected of IGST refund fraud.
• The Customs Broker (Appellant) had facilitated export transactions for 27 such exporters, but physical verification was conducted for only one exporter, M/s Goodluck Traders, who was found to be non-existent.
• Based on this, the Commissioner of Customs revoked the broker’s license, forfeited their security deposit, and imposed a ₹50,000 penalty, alleging failure to verify the authenticity of exporters.

Appellant’s Arguments

• Followed due diligence – Verified Importer Exporter Code (IEC), GSTIN, and identity documents from government portals.
• Mere non-traceability does not prove fraud – Exporters were verified via official documents at the time of transaction.
• Customs Broker cannot be held responsible for subsequent non-existence of exporters.
• CBLR 2018 does not mandate physical verification of client premises by Customs Brokers.

Revenue’s Arguments

• Customs Brokers play a crucial role in preventing misuse of export incentives.
• Failure to verify exporters’ actual existence contributed to potential fraud.
• Reliance on documents alone is insufficient under CBLR 2018, Regulation 10(n).

Final Decision by CESTAT Delhi

• Revocation of the Customs Broker License was set aside.
• Forfeiture of security deposit and penalty of ₹50,000 was quashed.
• Tribunal ruled that the Customs Broker fulfilled obligations under Regulation 10(n).
• Held that verification based on government-issued IEC and GSTIN is sufficient – Physical verification not mandatory.

Impact of the Judgment

• Significant relief for Customs Brokers – No arbitrary license revocation.
• Clarifies regulatory obligations under CBLR 2018.
• Sets precedent on Customs Brokers’ liability in export fraud cases.

This ruling strengthens legal protection for Customs Brokers, reinforcing that their responsibility is limited to document-based verification and not continuous monitoring of exporters’ activities.

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Source: CESTAT New Delhi

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