Delhi High Court Upholds Customs Broker Licence Revocation For Using Another Broker's Credentials

The Delhi High Court has upheld the revocation of a Customs Broker's licence after finding that it had consciously undertaken clearance-related activities using the credentials of another Customs Broker in relation to goods which were prohibited for import.

The Division Bench of Justices Anil Kshetrapal and Shail Jain held that the consent or knowledge of the Customs Broker whose credentials were used could not authorise another broker to undertake Customs Broker functions using those credentials.

“The fact that M/s Prakhar Gupta may have permitted the Appellant to use his Customs Broker credentials does not authorise the Appellant to undertake Customs Broker functions in a transaction in which it had not obtained authorisation from the importer in its own name or to file the Bill of Entry using the credentials of another Customs Broker,” it observed.

The proceedings arose from the import of a consignment, for which the Bill of Entry reflected M/s Prakhar Gupta as the Customs Broker, but the Customs investigation found that Appellant had undertaken the clearance-related activities.

The Customs found the goods were prohibited. Following an inquiry, the Adjudicating Authority found violations of several obligations under the Customs Brokers Licensing Regulations, 2018 (CBLR), revoked Appellant's licence, forfeited the entire security deposit and imposed a penalty of Rs.50,000. CESTAT upheld the action.

Before the High Court, Appellant argued that the Bill of Entry had been filed using M/s Prakhar Gupta's credentials with his knowledge, instructions and consent. It also contended that there was no deliberate misdeclaration on its part and that the nature of the goods as prohibited could only be determined upon examination.

The Court however held,

“The statutory scheme governing Customs Brokers does not contemplate one Customs Broker undertaking the functions of another Customs Broker by using the latter's credentials. A Customs Broker is required to transact business in accordance with the authorisation obtained from the importer and to discharge the obligations cast upon it under the CBLR.”

On the Appellant's argument that it could not have known that the goods were prohibited until their examination, the Court said a Customs Broker was not merely required to file documents supplied by an importer.

“The obligations under the CBLR require the Customs Broker to exercise the degree of diligence expected of a licensed intermediary and to advise the client regarding the statutory requirements governing the import and clearance of goods. Where the goods are subject to restrictions or prohibition under the applicable law, the Customs Broker cannot proceed with their clearance by simply filing the Bill of Entry in the name of another Customs Broker,” it held.

Rejecting the plea that revocation was disproportionate, the Court said this was not a case of a mere inadvertent or technical omission.

“Once the goods were described correctly, the Appellant was expected to be aware of the restrictions and prohibitions. It was the Appellant's responsibility to inform the importer. If the importer insisted, the Appellant was required to bring this fact to the notice of the Customs authorities. The use of another Customs Broker's credentials, in these circumstances, had the effect of concealing the identity of the Customs Broker actually undertaking the transaction and undermining the regulatory framework governing Customs Brokers,” it held.

As such, the Court dismissed the appeal.

For Appellant: Advocates Pradeep Jain, Shubhankar Jha, Sambhav Jain, Pranav Raj Singh, Alibha Mishra and Gouri Agarwal

For Respondent: Senior Standing Counsel (Customs) Arunima Dwivedi, with Advocate Himanshi Singh