Customs Broker Licence Revocation Set Aside: Bombay High Court Upholds CESTAT Ruling in Sky Shipping Case

Case Overview

Case Name: Commissioner of Customs (General) Vs Sky Shipping
Court: Bombay High Court
Tribunal Below: Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Subject Matter: Revocation of Customs Broker Licence and Forfeiture of Security Deposit under Customs Brokers Licensing Regulations (CBLR), 2018

Background of the Dispute

The Bombay High Court recently adjudicated upon a Revenue-filed appeal challenging a CESTAT order that had restored a Customs Broker's licence and reversed the forfeiture of its security deposit. The original adjudicating authority had revoked the licence of Sky Shipping, a licensed Customs Broker, on the ground that it had allegedly breached Regulation 10(d) and Regulation 10(e) of the Customs Brokers Licensing Regulations (CBLR), 2018. Additionally, the security deposit was ordered to be forfeited under Regulation 14 of the CBLR, 2018.

The CESTAT, however, on an independent appraisal of the facts and evidence on record, had concluded that the Revenue failed to substantiate the alleged violations. Accordingly, it set aside both the licence revocation and the security deposit forfeiture while retaining only the monetary penalty of ₹50,000 against the Customs Broker. Aggrieved by this relief granted to the Customs Broker, the Revenue approached the Bombay High Court.

Revenue's Contentions Before the High Court

The Revenue framed several questions of law in its appeal, broadly targeting the correctness and legality of the CESTAT's order. The following questions were specifically raised:

  1. Whether the CESTAT erred in law by setting aside the revocation of the Customs Broker's license and forfeiture of security deposit under Regulation 14 of the Customs Broker Licensing Regulations (CBLR), 2018, despite acknowledging partial non-compliance with RMS-mandated 100% examination requirements, in light of the binding precedent in Commissioner of Customs v. Aafloat Textiles (2009) 237 ELT 587 (SC), which holds that procedural lapses in mandatory inspection protocols constitute a violation warranting regulatory action, regardless of intent?

  2. Whether the CESTAT misinterpreted Regulations 10(d) and 10(e) of the CBLR, 2018, by holding that the Customs Broker was not liable for non-compliance with RMS examination orders, contrary to the Supreme Court's ruling in Commissioner of Customs v. K.M. Ganatra & Co. (2016) 335 ELT 3 (SC), which mandates that Customs Brokers are responsible for ensuring strict compliance with customs procedures, including proper examination?

  3. The finding of the CESTAT that the Customs Broker's failure to ensure 100% examination constituted a mere "technical lapse" is legally untenable. The record reveals compelling and corroborative evidence — namely, CCTV footage admissible under Section 65B of the Indian Evidence Act, 1872; discrepancies in Container Freight Station (CFS) examination charges; and statements recorded under Section 108 of the Customs Act, 1962. These materials collectively establish grave procedural irregularities and a clear dereliction of duty by the Customs Broker. Such negligence, which either resulted in or had the potential to cause substantial revenue loss to the exchequer, squarely attracts penal consequences under the applicable statutory framework viz. CBLR, 2018. The characterization of these lapses as merely technical undermines the seriousness of the breach and fails to appreciate the statutory obligations imposed on Customs Broker.