Lending Customs Broker Licence And Dongle For Money Prohibited Under CBLR: Delhi High Court

The Delhi High Court on 21 August held that a Customs Broker cannot lend his licence and dongle to another person for monetary consideration, as such conduct amounts to impermissible transfer of the licence under the Customs Brokers Licensing Regulations, 2018 (CBLR).

A Division Bench of Justices Anil Kshetarpal and Shail Jain upheld the revocation of the appellant, Pardeep Kumar Prashar's Customs Broker licence, forfeiture of his security deposit of Rs. 75,000 and imposition of a penalty of Rs. 50,000. The judges held:

“The distinction, therefore, is between permitting a G-card holder to act on behalf of the Customs Broker and parting with the use of the Customs Broker‟s licence and dongle for a fixed monetary consideration. The latter conduct is expressly prohibited by Regulation 1(4) of the CBLR, 2018.”

The case arose from an attempted export of a consignment declared as “decorative iron material” in the name of Deepnidhi International. On 16 December 2019, Customs officials examined the consignment and recovered approximately 1,158 kg of Red Sanders, for which the requisite export permission had not been produced. Customs officials consequently treated the goods as prohibited and seized them.

The investigation found that the appellant had filed the Shipping Bill in the name of Deepnidhi International without obtaining any authorisation from the exporter. He had also not contacted the exporter before filing the Shipping Bill. The appellant also admitted that he received Rs. 10,000 per month from his G-card holder and had lent his licence and dongle to him for consideration.

On 2 August 2021, the Commissioner of Customs revoked the appellant's Customs Broker licence, forfeited his security deposit of Rs. 75,000 and imposed a penalty of Rs. 50,000. The appellant challenged the order before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). On 27 August 2024, the CESTAT dismissed his appeal and upheld the disciplinary action.

The appellant then approached the High Court, contending that the amount he received represented clearance charges or agency commission. He also argued that lending his licence and dongle did not amount to “transfer” of the licence without transferring proprietary title.

The Court rejected these contentions and held that the arrangement amounted to parting with the use of the licence for consideration. It noted that Regulation 1(4) prohibits a Customs Broker licence from being “sold or otherwise transferred”.

It held that the appellant violated the provision by lending his licence and dongle for consideration, thereby enabling another person to undertake Customs transactions using his credentials. Further, the Bench held that the appellant breached his statutory obligations by filing the Shipping Bill without obtaining authorisation from the exporter. It observed:

“A violation of the obligations under the CBLR, 2018 does not cease to be a violation merely because the Department is unable to establish that the Customs Broker was a participant in the underlying offence.”

Accordingly, the High Court held that revocation of the appellant's licence was not disproportionate and dismissed the appeal.

For Appellant: Mr. Abhas Mishra and Ms. Shruti Jindal, Advs

For Respondent: Mr. Akash Verma, SSC CBIC, with Ms Aanchal Uppal, Adv.