Custom, Excise & Service Tax Tribunal
Commissioner Of Customs (Viii) ... vs K Padmanaban Logistics Services Pvt Ltd on 18 February, 2026
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
Customs Appeal No. 40396 of 2016
And
Customs Miscellaneous Application (Cross) No. 41038 of 2016
(Arising out of Order in Original No. 42547 of 2015 dated 05.11.2015
passed by the Commissioner of Customs, Chennai - VIII, Chennai)
Commissioner of Customs Appellant
Chennai VIII Commissionerate (General)
Custom House, 60, Rajaji Salai
Chennai - 600 001.
Vs.
K. Padmanaban Logistics Services Pvt. Ltd. Respondent
No. 37-A, VOC Street Meenambakkam, Chennai - 600 027.
APPEARANCE:
Smt. Anandalakshmi Ganeshram, Authorized Representative for the Appellant Shri L. Gokulraj, Advocate for the Respondent CORAM Hon'ble Shri M. Ajit Kumar, Member (Technical) Hon'ble Shri Ajayan T.V., Member (Judicial) FINAL ORDER NO. 40249/2026 Date of Hearing: 25.08.2025 Date of Decision: 18.02.2026 Per M. Ajit Kumar, This appeal is filed by the Revenue against Order in Original No. 42547 of 2015 dated 05.11.2015 passed by the Commissioner of Customs, Chennai - VIII, Chennai (impugned order).
2. Brief facts of the case are that the respondent is a Customs Broker company having License No. R-328/CHA and Shri K. Padamanaban and P. Vaithisubramanian are the authorized signatories of the Customs Broker. Based on intelligence, SIIB, Mumbai investigated the imports of float glass from China by M/s. Neto 2 International, Mumbai, M/s. Neto Industries, Mumbai and M/s. Chirag Corporation, Bhiwandi. It was found that the goods were cleared for home consumption by grossly under-invoicing the goods and mis- utilization of Duty-Free Import Authorization (DFIA) scheme which has resulted in issue of Show Cause Notices against the importers. The respondent being the Customs Broker for the importers, a Show Cause Notice dated 31.12.2014 was issued to them for revocation of the license granted; forfeiture of security deposit and for imposition of penalty. After due process of law, the Ld. Commissioner of Customs imposed a penalty of Rs.50,000/- on the respondent. Aggrieved by the alleged leniency shown in the order, Revenue has filed the present appeal praying for the remand of the matter to the Commissioner for revocation of the Customs Broker License. The respondent has filed cross-objection against the appeal filed by the Revenue.
3. The Ld. Authorized Representative Smt. Anandalakshmi Ganeshram appeared for the appellant-revenue and Ld. Advocate Shri L. Gokulraj appeared for the respondent.
3.1 Smt. Anandalakshmi Ganeshram the Ld. AR for the appellant submitted as follows:-
A. Although the Adjudicating Authority has held that the Customs Broker violated the statutory provisions, the impugned order has ultimately adopted an unduly lenient approach on the following grounds:
(i) the Show Cause Notice under section 124 of the Customs Act, 1962 was issued in 2014, nearly five years after detection of the offence; and 3
(ii) the Customs Broker terminated the services of the concerned employee at its Mumbai branch. B. While the Customs Act, 1962 prescribes a limitation period for demand of duty, no such limitation exists under the Customs Brokers Licensing Regulations, 2013 (CBLR, 2013) for initiating action against a Customs Broker for regulatory violations. Upon receipt of the offence report, the Commissioner is required to issue a Show Cause Notice within 90 days in terms of Regulation 20 of the CBLR, 2013.
B. In the present case, the Licensing Authority proceeded under Regulations 18 and 20 without invoking Regulation 19 relating to suspension or continuation of suspension of licence. Mere delay in detection or reporting of the offence does not absolve the Customs Broker of liability for the violations committed. C. Though proceedings under section 124 of the Customs Act, 1962 and proceedings under the CBLR, 2013 are distinct and independent, this cannot justify the imposition of a nominal penalty of ₹50,000 for a grave and established offence.
D. The Authorised Signatory of the Customs Broker, in statements recorded by the Investigating Officers, admitted that three consignments of float glass were cleared by deliberate undervaluation, with full knowledge and misuse of DFIA authorisation, in collusion with M/s K. Padmanabhan Logistics Services Pvt. Ltd., and that pecuniary benefits of ₹5,000 per container were received for such illegal acts. E. The Licensing Authority has also acknowledged that the offences stand established under Regulations 11(b), 11(d), and 17(9) of the CBLR, 2013. The Inquiry Officer appointed under Regulation 20, after charge-wise examination, conclusively held that the said violations 4 were proved. The Customs Broker, in collusion with three importers, not only attempted evasion of Customs Duty and Anti-Dumping Duty but also sought to violate the Foreign Trade Policy by undervaluation of imports and misuse of the DFIA scheme.
F. Export promotion schemes are intended to maintain equilibrium in import-export trade, and any violation thereof has serious ramifications on national trade interests. The Adjudicating Authority failed to apply due mind, disregarded the gravity of the offences, and did not accord due weight to the statutory Inquiry Officer's findings. It is therefore contended that the penalty imposed is grossly disproportionate to the seriousness of the offences. Permitting the Customs Broker to continue operations would jeopardize Government revenue.
G. She relied on the following judgments: (i) Commissioner of Customs (Airport & Admn) Vs M/s
Shipping & Clearing Agents Pvt. Ltd. [2024 (390) ELT 19 (Cal.)], where in it has been held that time lines prescribed under CBLR 2013 are only directory.
(ii) Commissioner of Customs, Chennai Vs. Freight Field (Madras) Pvt. Ltd. [2020 (373) ELT 78 (Mad.)] wherein it has been held that no party in an adjudicating proceedings can be rendered remediless by way of appeal and if any such contrary view is taken by Courts of law, that will be detrimental to the basic structure as enshrined in our Constitution i.e. Judicial review.
(iii) Commissioner of Customs (Airport & Administration) Vs. Marigo Logistics Pvt. Ltd. [(2023) 2 CENTAX 129 (Cal.)] wherein it has been held that a customs broker shall exercise such supervision as 5 may be necessary to ensure the proper conduct of his employees in the transaction of business and he shall be held responsible for all the acts or omissions of his employees during their employment.
(iv) D.S. Cargo Agency Vs. Commissioner of Customs (Airport & General), New Delhi [2020 (371) ELT 611 (Tri. Del.)] wherein the difference of opinion as to whether the time limit prescribed in Regulation 20(1) of the CBLR, 2013 is mandatory or directory in nature has been referred to Larger Bench.
(v) Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P. Ltd. [2018 (361) ELT 321 (Bom.] wherein it has been held that the time limit contained in Regulation 20 cannot be construed to be mandatory and is held to be directory. The delay in time line cannot be laid down as an absolute proposition of law that delay in taking immediate action would vitiate the action of the Commissioner.
H. The Ld. A.R. prayed that the impugned order deserves to be set aside and the matter remanded to the Licensing Authority for reconsideration, including revocation of Customs Broker Licence No. R-328/CHA for non-compliance with the provisions of the CBLR, 2013. 3.2 Ld. Advocate Shri L. Gokulraj the Ld. Counsel for the respondent submitted as follows:-
I. The Ld. Counsel for the respondent submitted that the mandatory timelines prescribed under the CBLR, 2013 have been grossly violated. The notice under Regulation 20 was issued in 2014 for an alleged offence of 2009. Though Regulation 18 does not prescribe a specific limitation period, it is settled law that proceedings must be initiated within a reasonable period, judicially held to be three 6 years. In the present case, proceedings were initiated after nearly five years and are therefore vitiated.
II. Further, Regulation 20(5) mandates submission of the inquiry report within ninety days of issuance of notice. Admittedly, the inquiry report dated 31.07.2015 was submitted after about seven months.
Regulation 20(7) further mandates passing of the order within ninety days from the inquiry report, whereas the impugned order was passed after nearly five months. Thus, the statutory timelines under CBLR, 2013 have been breached at every stage, rendering the proceedings liable to be quashed on this ground alone.
III. The Learned Commissioner, having duly considered the inordinate delays and statutory violations, has exercised discretion judiciously and taken a lenient view. In the absence of perversity or patent illegality, the impugned order does not warrant interference.
Reliance is placed on Raj Brothers Shipping Pvt. Ltd. (Final Order Nos. 40627 & 40628 of 2025 dated 19.06.2025) and Aristo Shipping Services [2021 (377) ELT 562 (Mad.)].
IV. It is further submitted that proceedings under CBLR, 2013 are disciplinary in nature and Regulation 21 provides a right of appeal only to the Customs Broker and not to the Department. Accordingly, the present appeal itself is not maintainable, as held in Transport Cargo & Travels [2023 (10) Centax 122 (Del.)].
V. As regards the allegations of collusion and misuse of DFIA scheme, the proposals against the Respondent under the Customs Act, 1962 have been dropped in entirety, including allegations of misuse of DFIA licence and undervaluation. While proceedings under the Customs Act and CBLR are independent, the dropping of substantive 7 allegations demonstrates the interpretative nature of the dispute. The goods were declared strictly as per documents and cleared accordingly, and no violation of obligations under CBLR is made out. The penalty of ₹50,000/-, imposed after due consideration, has been accepted and paid, thereby bringing finality to the matter.
The Ld. Counsel prayed that in view of the above, it is most humbly prayed that the appeal filed by the Department be dismissed.
4. We have gone through the appeals and have heard the parties to this appeal.
5. We find that the main thrust of the appeal is that the Adjudicating Authority failed to apply due mind, disregarded the gravity of the offences, whereby the penalty imposed while not revoking the licence is grossly disproportionate to the seriousness of the offence. Permitting the Customs Broker to continue operations would jeopardize Government revenue.
6. The operative portion of the impugned order which is under challenge is reproduced below:
"27. However, considering the facts and circumstances of the case and the submissions of the Customs Broker that the case was detected in the year 2009 and after investigation / clarification, the said Show Cause Notice under section 124 of the Customs Act, 1962 were issued in the year 2014 which is almost 5 years after detection of offence; that the Customs Broker have terminated the services of their employee at Mumbai Branch and closed their firm at Mumbai on the grounds of violations committed by their employee, I am inclined to take a lenient view."
7. Proceedings under the CBLR are disciplinary in nature, intended to ensure statutory compliance and maintain discipline within the Customs area. The Original Authority, being a Commissioner of adequate seniority, is presumed to possess the requisite legal expertise and institutional competence to appreciate the complexities of the 8 dispute. Where the Commissioner exercises discretionary jurisdiction for this purpose, the Tribunal ought not to interfere or substitute its own discretion in the absence of cogent reasons warranting such interference.
8. The Hon'ble Supreme Court in the case of Shri Parma Nanda Vs. State of Haryana and others [1989 (2) Supreme Court Cases 177], held that the Tribunal could exercise only such powers which the civil courts or the High Courts could have exercised by way of judicial review. The Supreme Court in that case further observed as under:
"....The jurisdiction of the Tribunal to interfere with the disciplinary matters or punishment cannot be equated with an appellate jurisdiction. The Tribunal cannot interfere with the findings of the Inquiry Officer or competent authority where they are not arbitrary or utterly perverse." (emphasis added)
9. Again the Hon'ble Supreme Court in its judgment in State Bank of India Vs Samarendra Kishore Endow [1994 (1) SLR 516], has reiterated its earlier rulings that a High Court or Tribunal has no power to substitute its own discretion for that of the original authority. The Supreme Court in that case further observed as under:
"On the question of punishment, learned counsel for the respondent submitted that the punishment awarded is excessive and that lesser punishment would meet the ends of justice. It may be noticed that the imposition of appropriate punishment is within the discretion and judgement of the disciplinary authority. It may be open to the appellate authority to interfere with it but not to the High Court or to the Administrative Tribunal for the reason that the jurisdiction of the Tribunal is similar to the powers of the High Court under Article 226. The power under 'Article 226 is one of judicial review'. It "is not an appeal from a decision, but a review of the manner in which the decision was made". In other words the power of judicial review is meant "to ensure that the individual receives fair treatment and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised by law to decide for itself a conclusion which is correct in the eyes of the Court."
(emphasis added) 9
10. In Caretel Infotech Ltd. Vs Hindustan Petroleum Corpn. Ltd., (2019) 14 SCC 81 also the Hon'ble Supreme Court observed that Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute their view for that of the administrative authority. Mere disagreement with the decision- making process would not suffice.
11. Where evidence is placed before the Original Authority, it is for that authority to assess such evidence and determine the weight to be accorded to it. The exercise of such discretion must be judicial, reasoned, and confined to the statutory framework, and not guided by arbitrariness. When so exercised, courts accord substantial deference to the findings of the Original Authority, who, by virtue of expertise and experience, is best positioned to evaluate the evidence and determine whether the facts disclose circumstances prejudicial to government revenue or economic security.
12. We find that the issue of fraud relates to one of the employees of the CHA firm. The question whether the CHA-employer can be held liable for the mischief of its employees, was examined by this Bench in the case of M/s. Sanco Trans Ltd. Vs Commissioner of Customs [FINAL ORDER NOS.40033 - 40036/2026, Dated: 09.01.2026]. The relevant portion of the order is reproduced below:
"9. Can the appellant/CHA-employer be held liable for the mischief of its employees?
10.1 The question whether the blameworthy conduct by an employee can be subject to penal action against his employee is a challenging one and has to be based on the facts of the case. However, it cannot be held as a universal principle that the CHA-employer cannot be held liable for the mischief of its employees. What needs to be seen is firstly, whether the wrongful act of the employee, even if it were an error of judgment, was in the course of his employment and authorised by the employer or a wrongful one done by an unauthorised mode of doing some act authorised by the master. Secondly whether the action of the employee was outside the scope of his employment. [See: Sitaram Motilal Kalal Vs 10 Santanuprasad Jaishankar Bhatt - AIR 1966 SUPREME COURT 1697, 1966 3 SCR 527 / N. Sridhar Vs Maruthi Jayaraman - Madras High Court, APPEAL SUIT NO.10 OF 2002, Dated: 16.06.2009]. It's only in the first scenario that the employer can be held liable. The acts of the employee done in excess of his authority or by defying express instructions or having been done recklessly, which clearly depart from the scope of his employment will not make his employer liable for his wrongful acts. Such a situation may be when the employee is engaged only in furthering his own interest's, pleasure or comfort etc. or to financially benefit himself as distinct from those of his employer. [See: State Bank of India Vs Shyama Devi - AIR 1978 SC 1263]. However, the situation is different even in a case when the action of the employee is beyond the scope of his employment i.e. when a fraud is committed by the employee for the benefit of the employer. Since the act and intent of the employee is attributed to and is for the benefit of the employer, the employer is liable for the acts of his employee.
10.2 When it is prima facie seen that a blame worthy act has been done by an employee in the course of his employment it shall be presumed to be done as authorised by the employer. A presumption is a probable inference which common sense draws from circumstances usually occurring in such cases. Such an assumption is drawn in a case where the factual basis of raising the presumption is established. The presumption is a rebuttable one. If the department based on credible facts alleges that the action of the employee was committed in the course of his employment with the employer, the onus of proof shifts to the employer and it is for the employer to rebut the allegation by demonstrating that the action of the employee did not have his approval and was not done for his (employer's) benefit.
10.3 As stated by the Hon'ble Supreme Court, in SOUNDS N. IMAGES Vs COLLECTOR OF CUSTOMS [2000 (117) E.L.T. 538 (S.C.)], the burden of proof is on the department authorities to establish by methods known to law and in a satisfactory manner that the allegation made by them are proved. Having said that, there are however exceptions to the general rule as to the burden of proof. Further discharging the burden of proof is not a one step process, it happens during the many steps involved in the continuous shifting of onus of proof between the department and the noticee. The essential distinction between burden of proof and onus of proof, along with the exceptions to the general rule as to the burden of proof has been discussed in the recent Apex Court's Judgment in MAHAKALI SUJATHA Vs THE BRANCH MANAGER, FUTURE GENERALI INDIA LIFE INSURANCE COMPANY LIMITED & ANOTHER [(2024) 8 SCC 712 / CIVIL APPEAL NO. 3821 OF 2024, Dated:
10.04.2024] which is extracted below:
"41. . . . Section 101 of the Evidence Act, 1872 states that whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. This Section clearly states that the burden of proving a fact rests on the party who substantially asserts the affirmative of the issue and not upon the party who denies it; for a negative is usually incapable of proof. Simply put, it is easier to prove an affirmative than a negative. In other words, the burden of proving a fact always lies upon the person who asserts the same. Until such burden 11 is discharged, the other party is not required to be called upon to prove his case. The court has to examine as to whether the person upon whom burden lies has been able to discharge his burden. Further, things which are admitted need not be proved. Whether the burden of proof has been discharged by a party to the lis or not would depend upon the facts and circumstances of the case. The party on whom the burden lies has to stand on his own and he cannot take advantage of the weakness or omissions of the opposite party. Thus, the burden of proving a claim or defence is on the party who asserts it.
42. Section 102 of the Evidence Act, 1872 provides a test regarding on whom the burden of proof would lie, namely, that the burden lies on the person who would fail if no evidence were given on either side. Whenever the law places a burden of proof upon a party, a presumption operates against it.
Hence, burden of proof and presumptions have to be considered together. There are however exceptions to the general rule as to the burden of proof as enunciated in Sections 101 and 102 of the Evidence Act, 1872, i.e., in the context of the burden of adducing evidence: (i) when a rebuttable presumption of law exists in favour of a party, the onus is on the other side to rebut it; (ii) when any fact is especially within the knowledge of any person, the burden of proving it is on him (Section 106). In some cases, the burden of proof is cast by statute on particular parties (Sections 103 and 105).
43. There is an essential distinction between burden of proof and onus of proof; burden of proof lies upon a person who has to prove the fact and which never shifts but onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence. For instance, in a suit for possession based on the title, once the plaintiff has been able to create a high degree of probability so as to shift the onus on the defendant, it is for the defendant to discharge his onus and in the absence thereof, the burden of proof lying on the plaintiff shall be held to have been discharged so as to amount to proof of the plaintiff's title vide RVE Venkatachala Gounder vs. Arulmigu Viswesaraswami and VP Temple, (2003) 8 SCC
752.""
(emphasis added) Hence the liability of the employer for the acts of his employee depends upon the facts of each case."
The Ld. Adjudicating Authority after examining the issue has been satisfied with the response of the appellant that the Customs Broker has terminated the services of the delinquent employee at the Mumbai branch and closed their firm in Mumbai on the grounds of violations committed by their employee. Further, we find that the main SCN 12 issued to the importers and others were dropped as time-barred vide Order No. 642/MRR/JC/Gr. VII-I (Exp)/2016-17 dated 28.04.2017.
13. Having regard to the facts and circumstances of the case, we are of the considered view that the discretion exercised by the Ld. Adjudicating Authority is reasonable and in consonance with law. Revocation of a Customs Broker licence is a drastic penal measure under the CBLR, 2013. It has serious civil consequences affecting not only the licence holder but also the persons employed under him and his right to carry on trade under Article 19(1)(g) of the Constitution of India. The decision hence needs to be finely balanced. The impugned order reflects due application of mind, satisfies the test of proportionality, and does not suffer from arbitrariness, perversity, or violation of principles of natural justice. It cannot be said to be so unreasonable or shocking as to warrant interference by exercising appellate jurisdiction. Accordingly, no interference is called for.
14. In the circumstances we do not feel it necessary to examine the case laws cited by revenue.
15. We accordingly uphold the impugned order and dismiss the appeal. The cross-objection filed by the respondent is also disposed of accordingly.
(Order pronounced in open court on 18.02.2026)
Sd/- Sd/-
(AJAYAN T.V.) (M. AJIT KUMAR)
Member (Judicial) Member (Technical)
Rex