Custom, Excise & Service Tax Tribunal
Cc Sea Ch - Viii vs La Freight Lift Pvt Ltd on 11 November, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. I
Customs Appeal No. 41640 of 2016
(Arising out of Order-in-Original No. 47539/2016, dated 06.06.2016 passed by
Commissioner of Customs, Chennai-VIII)
M/s. La Freight Lift Pvt Ltd., .... Appellant
No.32 & 32A II Cross Street,
VGP Murphy Square, St. Thomas Mount,
Chennai 600 016.
VERSUS
Commissioner of Customs ...Respondent
Chennai VIII Commissionerate, Custom House No.60, Rajaji Salai, Chennai 600 001.
And Customs Appeal No. 41770 of 2016 (Arising out of Order-in-Original No. 47539/2016, dated 06.06.2016 passed by Commissioner of Customs, Chennai-VIII) Commissioner of Customs .... Appellant Chennai VIII Commissionerate, Custom House No.60, Rajaji Salai, Chennai 600 001 VERSUS M/s. La Freight Lift Pvt Ltd., ...Respondent No.32 & 32A II Cross Street, VGP Murphy Square, St. Thomas Mount, Chennai 600 016 APPEARANCE :
Shri S. Murugappan, Advocate for the Appellant Shri Sanjay Kakkar, Authorised Representative for the Respondent CORAM :
HON'BLE MR. M. AJIT KUMAR, MEMBER (TECHNICAL) HON'BLE MR. AJAYAN T.V, MEMBER (JUDICIAL) FINAL ORDER Nos.41294-41295/2025 DATE OF HEARING: 18.07.2025 DATE OF DECISION:11.11.2025 Per Mr. Ajayan T.V.
These two appeals are arising out of the same impugned order in original and, being interconnected, have been heard together and are being disposed of by this common order.2
2. M/s. La Freight Lift Pvt Ltd, Chennai ( Appellant Customs Broker) is aggrieved by the impugned order in original to the extent it has ordered a forfeiture of the full amount of security deposit. The revenue is equally aggrieved by the impugned order in original as the appellate authority has failed to revoke the Customs Brokers Licence under the provisions of Regulation 20 (7) of the CBLR 2013.
3. The relevant facts are that the Appellant Customs Broker is operating under a valid Customs Broker Licence issued in terms of Regulation 8 of CHALR, 2004. The Docks Intelligence Unit, Custom House, Chennai (DIU) in the course of investigation into a case of attempted smuggling of a Red Sanders in the guise of Mild Steel Round Pipes vide Shipping Bill No. 9880221 dated 05.02.2014 in respect of the exporter Dharranee Roofing Plant P Ltd, found that the appellant has acted as customs broker for clearance of the said export shipment. During the course of investigation by the DIU, statements were recorded from the appellant's Managing Director and Branch Managers at Coimbatore and Chennai. The offices of the appellant at Chennai and Coimbatore were searched and documents relevant to the shipments pertaining to the said exporter Dharranee Roofing Plant Private Limited, Coimbatore were recovered and seized. Evidence gathered by DIU appeared to reveal that one Sri Badri K Narayanan who had introduced himself to the exporter as the buying agent of SVM Impex was suspected to be the main culprit in the said attempted smuggling, and was not traceable. Pursuant to the investigation, the Department alleged that the appellant customs broker had failed to obtain authorization from the said exporter Dharranee Roofing Plant Private Limited as required under CBLR 2013. It was further alleged that the appellant had dealt with the unauthorized person Sri Badri K Narayanan and facilitated the illegal activity of smuggling of Red Sander. It was further revealed from the statement of the Custom Broker's manager at Coimbatore that only the office of the said exporter was visited and the customs broker had not verified the identity, PAN, memorandum of articles of association etc of the exporter.
34. The Department formed the view that since the customs broker was looking after the export related work as per the directions given by Sri Badri K Narayanan, it was evident that the customs broker did not have the chance to advise his client to comply with the provisions of the act. An opinion was further formed that the customs broker did not exercise due diligence while receiving payments towards their charges from Dharranee Roofing Plant and never bothered to ascertain the source of payments which amounted to misconduct on their part. Therefore, the department was of the view that the customs broker failed to identify his client, verify the client's antecedents, and the functioning of the client at the declared address. The customs broker was required to do so by using reliable, independent, authentic documents, data or information, but had instead facilitated Sri Badri K Narayanan, an unauthorized person, in his illegal activity of smuggling of Red Sanders, by their acts and omissions.
5. The department therefore was of the view that the customs broker had failed in discharging their obligations as required under Regulation 11 (a), 11(b), 11 (e) 11 (n) of CBLR 2013. For such non- compliance, the license of the customs broker was suspended vide suspension order dated 17-04-2014 under Regulation 19 of CBLR 2013. The appellant was granted a personal hearing on 06-05-2014. After going through the case records and submissions made, Commissioner of Customs vide Order-in-Original No. 25614/2014, dated 20-05-2014, continued the suspension of the customs broker since they had contravened the provisions of the Customs Act 1962 read with provisions of CBLR 2013.
6. Thereafter, the customs broker was called upon to show cause vide show cause notice dated 02-06-2014 as to why the license issued to them should not be revoked and security deposit should not be forfeited or penalty should not be imposed upon them under Regulation 18 of the CBLR 2013 for their failure to comply with the provisions of CBLR 2013. The customs broker was asked to submit their statement of defence to the inquiry officer appointed under Regulation 20 of the CBLR 2013. The Inquiry Officer submitted the inquiry report on 28-05-2015 concluding that the customs broker had 4 failed in fulfilling the obligations cast upon them under 11 (a) and 11
(d) and found that they had not violated Regulations 11 (e) and 11
(n) of the CBLR 2013.
7. The appellant was granted a personal hearing on 22-09-2015 by the Commissioner of Customs in Chennai -VIII, the Licensing Authority. After going through the records of the case, Inquiry report, the written submissions, and oral submissions made at the time of personal hearing, the said Licensing Authority passed OIO No. 47539/2016-17 dated 06-06-2016. The authority found that though the appellant had not fulfilled their obligations under Regulation 11(d), the appellant had substantially complied with the provisions of Regulations 11(a) and 11(n) of CBLR-2013. The said authority held that though the failure of the customs broker in strictly complying with the obligations resulted in an attempt to smuggle contraband goods, in view of the substantial compliance of provisions of Regulations 11(a) and 11 (n), the authority was inclined to take a lenient view of the charges. Therefore, in exercise of the powers conferred under the provisions of Regulation 18, read with 20 of the Customs Broker Licensing Regulations - 2013, the licensing authority ordered the revocation of the suspension order dated 17-04-2014 but ordered forfeiture of full amount of security deposit.
8. In the meanwhile, separate proceedings were initiated against various persons, including the appellant customs broker for the alleged smuggling of Red Sanders under the Customs Act, 1962. The adjudicating authority therein, vide Order in Original No. 45207/2016 dated 20-06-2016, imposed a penalty of Rs. 5 lakhs on the appellant customs broker. However, on appeal, the appellate authority held that there was no basis for imposing penalty on the appellant. Accordingly, vide Order in Appeal C. Cus. II No. 603/2016 dated 20.06.2016 the appeal was allowed and the penalty imposed was set aside.
9. Given this background, the appellant customs broker and the revenue, having preferred appeals, are before this Tribunal.
10. Shri S. Murugappan, Ld. Advocate appearing for the appellant contended as under:-
5a. The incidents in this case occurred during February 2014. The SCN was issued in June 2014; the enquiry officer gave his report only in May 2015 and the respondent passed the order in June 2016. Thus, there is total non-compliance with the time limit stipulated in the regulations. Ld. Counsel submits that it has been held by the jurisdictional High Court that the time limit stipulated is mandatory. In this regard, reliance is placed on the judgement in the case of Masterstroke freight forwarders Private Limited. He submits that on this primary ground, the impugned order is liable to be set aside. b. In the enquiry report, the enquiry officer has held the charge relating to violation of regulations 11(a) and 11(d), as proved. However, he held that the appellant has not violated regulations 11(n) and 11( e ). The respondent found that the appellants have violated regulation 11(d), but substantially complied with Regulations 11(a) and 11(n). c. The provisions relating to regulation 11(d) have no application in the present set of facts, and invocation of this regulation is misconceived. It is submitted that, in this case, as there was no occasion to notice any contravention of the law by the exporter, there did not arise the need to advise them to comply with the law.
d. The goods were stuffed in the presence of Central Excise officials and there is no evidence to establish connivance on the part of the appellants with the smugglers of red sanders in the substitution of the cargo. In this regard, the appellants rely upon the judgement of the jurisdictional High Court in the case of Transport Logistics reported in 2016(338) E.L.T 380(Mad).
11. Ld. Advocate prays that the order of the appellate authority to the extent it directs for the forfeiture of the security deposit may be set aside and justice rendered. He placed reliance on the decisions in:-
a) Santon Shipping Services Vs. The Commissioner of Customs, The Customs Excise and Service Tax Appellate Tribunal reported in 2017 (10) TMI 621 - Madras High Court,
b) Commissioner of Customs, Chennai - VIII Vs. Trishiv Logistics Pvt Ltd., - 2019 (370) ELT 1055 (Tri. Chennai),
c) M/s. Masterstroke Freight Forwarders Pvt Ltd., Vs. Commissioner of Customs (Imports), Chennai - 2015-TIOL-2847-HC-MAD-CUS,
d) Transport Logistics Vs. Cestat, Chennai - 2016 (338) ELT 380 (Mad.).6
10. Shri Sanjay Kakkar, Ld. Authorised Representative, vehemently opposed the contentions of the learned advocate and submitted that the adjudicating authority has presumed that the customs broker would have taken an e-mail authorization for handling the export consignment without considering the voluntary statement of the exporter dated 11.02.2014 wherein the exporter had stated that, it was Shri Badri K. Narayanan, who arranged for the customs house agent. In such circumstances, the assumption of the adjudicating authority based on which he had dropped the charges, is not legal and proper. Given these facts and circumstances, the matter ought to be remanded back for consideration of revocation of the Customs Broker's License considering the gravity of the offence committed. He places reliance on the decisions in:-
a) The Principal Commissioner of Customs, Mumbai Vs. Unison Clearing Private Limited, 2018 (4) TMI-1053-Bombay High Court,
b) The Commissioner of Customs (Airport and Admin) Vs M/s. Shipping and Clearing Agents Private Limited, 2024 (390) ELT- 19 (Calcutta),
c) M/s. Cappithan Agencies Vs. Commissioner of Customs, Cochin, 2025 (6) TMI-1029-Kerala High Court,
d) Final Order No.40631/ 2025, dated 20-06-2025 - M/s. Raj Brothers Shipping Private Limited in customs appealing number 42090 of 2018, in the case of M/s. Raj Brothers Shipping Private Limited Vs Commissioner of Customs (Imports), Chennai.
11. Heard both sides and perused the appeal records and the citations submitted.
12. At the outset, we find that the Appellant has contended that there is noncompliance with the time limit stipulated in the regulations. It is pointed out that the Dock Intelligence Unit initiated an investigation into the case of an attempt to smuggle through the goods consigned vide shipping bill No.9880221 dated 05.02.2014.
13. We notice that right from the stage of reply to the order of suspension dated 17.04.2014, which reply was dated 02.05.2014, the appellant had taken a consistent stand that the order of suspension was also silent on the date when the investigating agency, i.e. DIU, informed the licencing authority. It is seen that this 7 stand of the appellant was noted by the licensing authority in para 17.2 when the show cause notice dated 02.06.2014 was issued under the provisions of regulations 18 of the CBLR, 2013 read with Regulation 20 of the CBLR 2013. Yet, the SCN continued to be non- transparent and did not disclose the date of receipt of the offence report. The appellant continued to reiterate the aforesaid submissions before the Inquiry Officer as well as before the adjudicating authority.
14. Even in the inquiry report, as well as in the impugned Order in Original, the Department has chosen to be silent on this crucial aspect. When the authorities, despite the repeated protestations of the appellant on this ground, even after recording the same in the inquiry report as well as the SCN issued proposing to proceed under Regulations 18 and 20 of the CBLR 2013, choses to not disclose the date of receipt of the offence report by the licencing authority/Commissioner of Customs even in the impugned OIO adjudicating the matter; it merits an adverse inference on this aspect being drawn against the Department.
15. The mandate of Regulation 20 (1) of the CBLR 2013 stipulates that the Commissioner of Customs shall issue a notice in writing to the Customs Broker within a period of ninety days from the date of receipt of an offence report, stating the grounds on which it is proposed to revoke the licence or impose penalty requiring the said Customs Broker.
16. At this juncture, it would be appropriate to note the Judgement dated 13.10.2017 of the Honourable Madras High Court in C.M.A No.730 of 2016 in the case of M/s.Santon Shipping Services v. The Commissioner of Customs, reported in 2017 (10) TMI 621- MADRAS HIGH COURT, relied on by the appellant. The relevant portions are reproduced below:
"41. In view of the aforesaid Judgments, in our opinion, the issue as to whether the limitation prescribed i.e., 90 days period, under Regulation 22(1) of CHALR 2004, is mandatory or not, is no more res integra.
42. Once the limitation prescribed is mandatory, as has been declared by the courts of law, it cannot be stated that, because of 8 the other issues, that is the merit of the case, this mandatory requirement of the limitation can be ignored.
43. It is not the case of the 1st respondent that the 90 days limitation contemplated under Regulation 22(1), is directory. It is also not the case of the 1st respondent that the show cause notice was issued within the limitation period of 90 days from the date of offence report.
44. Since the offence report was dated 22.9.2010 and the show cause notice, admittedly, was issued only on 18.11.2011, there can be no doubt that the said show cause notice was issued well beyond the period of limitation of 90 days.
45. Whatever be the claim and counter claim on the merits, in this appeal can, in our view, they get shadowed by the failure on the part of the Revenue in not acting in time, by issuing the show cause notice, within the period as contemplated under Regulation 22(1) of CHALR, 2004.
46. Therefore, we are of the considered view, and in fact have no hesitation to hold so that, the Revenue has not issued the show cause notice dated 18.11.2011 within the period of limitation prescribed under Regulation 22(1) CHALR, 2004 and thus, the consequent proceedings involving revocation of the appellant's CHA licence and forfeiture of its security deposit, is unlawful". (emphasis supplied)
17. Given that Regulation 20 (1) of CBLR 2013 in the instant case is pari materia with Regulation 22(1) ) CHALR, 2004 which considered by the Honourable High Court above, we have no hesitation in holding that the time limit prescribed under the said Regulation 20 (1) is mandatory. In our considered view, once the limitation prescribed under the said Regulation 20 (1) is mandatory, it was incumbent upon the SCN issuing authority to evidence that the mandated time limit has been adhered to. That is to say, the authority issuing the notice invoking Regulation 20 (1) of the CBLR 2013, proposing revocation of the licence issued to the Customs Broker and proposing imposition of penalty, is required to state the date of receipt of offence report by the said authority, when it issues such notice.
18. Viewed from any angle, be it in terms of procedural fairness or in terms of interest of justice, it is a necessary and vital information to be provided. Authorities in positions of power cannot be opaque and cannot refrain from disclosing such important information, moreso 9 when the power being exercised under regulation 20 (1) is to visit the Customs Broker with enormous consequences including crippling his right of livelihood by revocation of his licence. We also take note of the fact that in the instant case the appellant's licence stood revoked for a period of more than two years. Thus, not disclosing the date of receipt of the offence report incurably vitiates the said notice issued on that count.
19. Given that in the present proceedings, the show cause notice issued lacks this vital information, we hold that the show cause notice dated 02.06.2014 is not proven to be issued within the period of limitation prescribed under Regulation 20(1) of the CBLR 2013 and hence the consequent proceedings are liable to be set aside to the extent they have resulted in findings detrimental to the appellant customs broker. In such circumstances, given our aforesaid findings on the jurisdictional threshold, we are not delving into the other contentions on merits. Consequently, we also find the decisions relied on by the Ld. A.R. distinguishable from the current facts and circumstance.
20. Therefore, we hold that the impugned Order in Original cannot be sustained to the extent it forfeits the security deposit of the appellant customs broker and is liable to be set aside to that extent. Ordered accordingly. Resultantly, the Appeal preferred by the Revenue is liable to be dismissed. Ordered accordingly.
In sum, the appeal of the appellant customs broker is allowed and the appeal of the department is dismissed. The appellant customs broker is entitled to consequential relief(s), if any in law.
(Order pronounced in open court on 11.11.2025
(AJAYAN T.V.) (M. AJIT KUMAR)
Member (Judicial) Member (Technical)
psd