Legal principle

A customs broker is responsible for its employees' failure to verify KYC and authorisation, but revocation of licence is not automatic for every CBLR violation; for a single lapse without active involvement, a penalty can be a proportionate punishment.

Court decision

The Delhi High Court dismissed the customs appeal. The CESTAT order stands: the broker's licence is not revoked, the forfeiture of security is set aside, and the penalty of Rs.50,000/- remains. The court found no substantial question of law.

Facts

Freight Logistics holds a customs broker licence valid up to 28.08.2027. It filed shipping bill no.2619886 dated 11.05.2020 naming M/s Ala Foodstuff Pvt. Ltd. as exporter. The goods, declared as pouch packing material, were found to be non-woven fabric for making masks, a prohibited export, and were seized. The named exporter denied filing the shipping bill. The broker's employee had not verified the authorisation and KYC. A show cause notice dated 28.01.2021 alleged breach of CBLR 2018. The Commissioner did not revoke the licence but forfeited the security and imposed a penalty of Rs.50,000/-. The CESTAT set aside the forfeiture and kept the penalty. Customs appealed to the Delhi High Court seeking revocation.

Key provisions

• Regulation 14, Customs Brokers Licensing Regulations, 2018 — Revocation of licence or imposition of penalty