Customs Broker Has Right To Cross-Examine Witnesses In Licence Revocation Inquiry: Delhi High Court

On 1 September, the Delhi High Court held that a Customs Broker is entitled to cross-examine witnesses whose statements are relied upon in proceedings for revocation of its licence under the Customs Brokers Licensing Regulations, 2018 (CBLR).

A Division Bench of Justices Anil Kshetarpal and Shail Jain upheld the remand of the revocation proceedings for fresh adjudication after granting Vogue Logistics Pvt. Ltd. an opportunity to cross-examine the witnesses. It observed:

“Regulation 17(3) of the CBLR expressly requires the Inquiry Officer to take such oral evidence as may be relevant or material to the inquiry, while Regulation 17(4) confers upon the Customs Broker the right to cross-examine the persons examined in support of the grounds forming the basis of the proceedings...”

The matter arose from an investigation into an alleged attempt to export diamonds worth approximately Rs. 1.56 crore concealed in plastic hot fix. During the investigation, authorities recorded statements of persons connected with Vogue Logistics. They subsequently initiated proceedings to revoke its Customs Broker licence for alleged violations of various provisions of the CBLR.

The Inquiry Officer did not examine the witnesses whose statements authorities had relied upon and instead relied on their statements recorded during the investigation. The Commissioner thereafter revoked Vogue Logistics' licence, forfeited the security deposit and imposed a penalty of Rs. 50,000.

Vogue Logistics challenged the Commissioner's order before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT found that the Commissioner was not justified in dispensing with examination of the witnesses. It held that the statements could not be relied upon without following the procedure under Section 138B of the Customs Act, which governs the admissibility of statements recorded during customs investigations.

CESTAT consequently set aside the Commissioner's order and remanded the matter for fresh adjudication, directing the Commissioner to give Vogue Logistics an opportunity to cross-examine the witnesses.

Vogue Logistics then challenged the remand before the High Court, arguing that it would allow the Respondents to fill a lacuna in the proceedings, which is impermissible in law. It also submitted that the revocation proceedings stood vitiated by non-compliance with Regulation 17 of the CBLR.

The High Court, however, upheld the remand and clarified that Regulation 17(4) of the CBLR specifically confers the right to cross-examination in such proceedings. It added:

“Consequently, where oral evidence is sought to be relied upon in the inquiry, the Customs Broker must be afforded the corresponding opportunity of cross-examination.”

The Bench noted that the procedure under Regulation 17 bears some resemblance to a domestic disciplinary inquiry. However, it cautioned that this does not mean that all principles governing a domestic inquiry between an employer and employee can be imported into proceedings under the CBLR. It observed:

“The requirement of affording an opportunity of cross-examination flows specifically from Regulation 17(4), which could not have been overlooked by the Commissioner.”

Accordingly, the High Court dismissed the appeal.

For Appellant: Mr. Amit Rawal, Sr. Adv. with Mr. Devesh Tripathi, Mr. Mohd. Faraz Anees, Mr. Mukeshwar Nath Dubey, Mr. Ajay Kumar & Mr. Yash Singh, Advs.

For Respondents: Mr. Vijay Joshi, Sr. Standing counsel with Ms. Katyayani Joshi, Adv.