Delhi High Court Upholds Revocation of Pardeep Prashar's Customs Broker License for Lending Dongle

The Delhi High Court has delivered a significant ruling for the customs brokerage community, holding that a customs broker cannot lend his licence and dongle to another person for monetary consideration, as such conduct constitutes an impermissible transfer of the licence under the Customs Brokers Licensing Regulations, 2018 (CBLR) . A Division Bench comprising Justice Anil Kshetarpal and Justice Shail Jain dismissed the appeal of Pardeep Kumar Prashar, upholding the revocation of his customs broker licence, forfeiture of his security deposit of ₹75,000, and a penalty of ₹50,000.

Background of the Case

The case originated 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, a prohibited item for which the requisite export permission had not been produced. The consignment was seized, and an investigation was launched.

The probe revealed that the appellant, Pardeep Prashar, had filed the Shipping Bill in the name of Deepnidhi International without obtaining any authorisation from the exporter. He also admitted during investigation that he received ₹10,000 per month from his G-card holder and had lent his customs broker licence and electronic identity dongle to that individual for a fixed monetary consideration .

The Investigation and Findings

The Commissioner of Customs , acting on the findings, issued a revocation order on 2 August 2021 . The order revoked Prashar's customs broker licence, forfeited his security deposit of ₹75,000, and imposed a penalty of ₹50,000. The appellant challenged this order before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) . On 27 August 2024 , CESTAT dismissed the appeal and upheld the disciplinary action.

Prashar then approached the High Court, arguing that the amount he received represented clearance charges or agency commission . He further contended that lending his licence and dongle did not amount to a “transfer” of the licence because he did not transfer proprietary title .

Appellant's Contentions Rejected

The High Court firmly rejected these arguments. The Bench drew a clear distinction between allowing a G-card holder to act on behalf of the customs broker and parting with the use of the licence and dongle for a fixed monetary consideration . The judges stated:

“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 Court noted that Regulation 1(4) explicitly prohibits a customs broker licence from being “ sold or otherwise transferred .” By lending his licence and dongle for consideration, Prashar enabled another person to undertake customs transactions using his credentials, which effectively amounted to a transfer in contravention of the regulation.

Court's Ruling and Reasoning

The Bench further observed that the appellant had breached his statutory obligations by filing the Shipping Bill without obtaining authorisation from the exporter. This violation stood independent of whether the customs broker was aware of or participated in the underlying offence of exporting Red Sanders.

“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 .”

The Court held that the revocation of the licence was not disproportionate given the gravity of the misconduct. The appellant's attempt to rebrand the monetary consideration as legitimate commission was dismissed as a mischaracterisation of the transaction .

Legal Implications for Customs Brokers

This ruling clarifies the scope of Regulation 1(4) under the CBLR, 2018. The High Court has set a precedent that the lending of a customs broker’s credentials — including the electronic dongle — for a fee falls squarely within the prohibition against transfer of the licence . Customs brokers cannot circumvent the regulation by claiming that proprietary title remains with them.

The decision also underscores that a customs broker’s obligations are strict in nature. Even if the broker is not implicated in the actual smuggling or illegal export, failure to comply with procedural requirements — such as obtaining exporter authorisations — can independently lead to licence revocation.

Impact on the Trade Compliance Landscape

For the customs brokerage industry, this judgment sends a strong signal about the importance of personal accountability. The use of G-card holders is permissible under the regulations, but only when the broker retains direct control and oversight. Any arrangement where the broker effectively rentes out his licence for a fixed fee will be treated as a transfer, inviting the harshest disciplinary actions.

The Department can now rely on this ruling to crack down on “dummy brokers” who allow others to operate under their credentials. The forfeiture of security deposits and imposition of penalties will also serve as deterrents.

Conclusion

The Delhi High Court ’s judgment reinforces the regulatory framework governing customs brokers. By upholding the revocation, forfeiture, and penalty against Pardeep Prashar, the Court has made it clear that the integrity of the customs clearance system depends on brokers fulfilling their personal obligations . The decision will likely prompt a review of compliance practices among customs brokers and serve as a cautionary tale against any form of licence commodification.

For legal professionals, the case provides an authoritative interpretation of Regulation 1(4) of the CBLR, 2018 , and reiterates the principle that statutory duties cannot be outsourced for financial gain.