CESTAT Mumbai Quashes Continued Suspension Of Nhava Sheva CFS, Notes No Inquiry Was Initiated

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) at Mumbai has set aside an order continuing the suspension of a Container Freight Station (CFS) operated by International Cargo Terminal Private Limited (ICTPL) at Nhava Sheva. The tribunal held that Customs authorities had not substantiated the grounds for continuing the immediate suspension.

A bench of Judicial Member S.K. Mohanty and Technical Member M.M. Parthiban observed:

"In view of the above, we set aside the order dated 05.05.2026 of the learned Commissioner of Customs for having continued suspension beyond a reasonable period, without having substantiated the grounds for invoking immediate suspension under Regulation 11 ibid."

The case arose from a Directorate of Revenue Intelligence (DRI) investigation into an alleged attempt to smuggle Chinese-origin fireworks and firecrackers. The goods were allegedly declared as CMS Granules, Gypsum Plaster and household goods.

Acting on the DRI's findings, the Commissioner of Customs suspended ICTPL's approval to operate as a Customs Cargo Service Provider on April 13, 2026. Following post-decisional hearings, the Commissioner continued the suspension on May 5, 2026 until further orders.

ICTPL challenged the decision before the Tribunal. The company contended that it had cooperated with the investigation. It also contended that it had furnished CCTV footage and records sought by the DRI. ICTPL further submitted that it had introduced additional safeguards after the incident.

After examining the regulatory framework, the Tribunal observed that a decision on suspension should be taken only after obtaining an inquiry report.

The bench observed, "the licensing authority should be able to take a decision on suspension of the appellants only on obtaining an inquiry report in terms of Regulation 12 of HCCAR."

The Tribunal also noted that Revenue had not shown that any show-cause notice had been issued to ICTPL. It further noted that Revenue had not shown that any inquiry had been contemplated or was pending for obtaining an inquiry report.

The bench observed, "Revenue has not shown that there is any show cause notice issued to the appellants CFS or any inquiry has already been contemplated or pending for obtaining an 'inquiry report'. For this reason alone, we find that the impugned order dated 05.05.2026 is liable to be set aside being not sustainable for legal scrutiny under the HCCAR, 2009."

The tribunal clarified that it was not expressing any opinion on the allegations against ICTPL. It noted that the DRI investigation was continuing.

Accordingly, the Tribunal allowed ICTPL's appeal and set aside the order continuing the suspension.

For Appellants: Dr. Sujay Kantawala, Ms. Aishwarya Kantawala, Advocates along with Shri Manoj Das, Consultant

For Respondent: Shri P.R.V. Ramanan, Special Counsel for the Respondent