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Dated: 17.03.2025

CESTAT Mumbai- Customs Broker’s role is procedural, not investigative

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Mumbai, in its final order No. 87455/2024 (dated 12th December 2024), ruled in favor of Sarajdeep Logistics Pvt Ltd, setting aside the revocation of its customs broker license, forfeiture of security deposit, and ₹50,000 penalty imposed by the Principal Commissioner of Customs (General), Mumbai under the Customs Brokers Licensing Regulations (CBLR), 2018.

Background of the Case

• The dispute arose from an offense report regarding a bill of entry dated 31st October 2022 for the import of “assorted goods” from China by M/s Arise Enterprises, which was handled by Sarajdeep Logistics Pvt Ltd as the customs broker.
• The imported goods were found non-compliant with the Foreign Trade Policy (FTP) and relevant quality control orders for toys.
• The customs broker was accused of violating Regulations 10(b), 10(d), 10(m), 10(n), and 13(2) of the CBLR, 2018.

Allegations Against Sarajdeep Logistics Pvt Ltd

1. Violation of Regulation 10(b):

• It was alleged that the company did not conduct business personally or through an authorized employee approved by the competent authority.

2. Violation of Regulation 10(d):

• The customs broker allegedly failed to advise the client to comply with customs laws and did not inform the authorities about non-compliance.

3. Violation of Regulation 10(m):

• The company was accused of not handling the clearance process with speed and efficiency.

4. Violation of Regulation 10(n):

• The customs broker failed to verify the identity and business address of the importer.

5. Violation of Regulation 13(2):

• Alleged failure to supervise the proper conduct of employees.

Key Arguments by Sarajdeep Logistics Pvt Ltd

• Reliance on Statements Under Section 108 of the Customs Act, 1962:
  • The appellant argued that the revocation was solely based on statements recorded under Section 108, which cannot be treated as conclusive proof.
  • Cited case precedents such as Thakkar Shipping Agency v. Collector of Customs (1994 ELT 90) and Shasta Freight Services Pvt Ltd v. Principal Commissioner of Customs (2019 ELT 41 Telangana) to challenge the reliance on such statements.

• Customs Brokers Are Not Responsible for Misdeclaration by Importers:
• The company cited the Bombay High Court’s ruling in Jayesh Shah v. Union of India, which held that a Customs Broker cannot be held liable for misdeclaration when handling sealed Full Container Load (FCL) shipments.

CESTAT’s Findings & Final Judgment

• The Tribunal found that the findings against Sarajdeep Logistics were not supported by substantial evidence.
• Reliance on recorded statements alone was deemed insufficient to prove the alleged violations.
• The CBLR, 2018 does not impose an obligation on brokers to act as law enforcement agents; their role is limited to ensuring procedural compliance.
• Charges under Regulations 10(b), 10(d), 10(m), 10(n), and 13(2) were not substantiated.

Final Decision:

• Revocation of the customs broker license was set aside.
• Penalty of ₹50,000 was annulled.
• Appeal allowed in favor of Sarajdeep Logistics Pvt Ltd.

Impact of the Judgment

• Major relief for customs brokers, reaffirming that they cannot be penalized for misdeclarations by importers.
• Clarifies the scope of responsibilities under CBLR, 2018, ensuring fair treatment of customs brokers.
• Strengthens legal protection for brokers dealing with sealed container shipments.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

We offer Legal advice and litigation support in matters related to Indirect Tax-Customs, FTP, other Indirect Tax matters & Arbitration law, all sorts of Central licensing and related matters. Come and explore the new way of doing business with us!

Source: CESTAT Mumbai

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