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2024 Supreme(Online)(DEL) 9163
HIGH COURT OF DELHI
Yashwant Varma, Ravinder Dudeja, JJ
NAMAN GUPTA – Appellant
Versus
COMMISSIONER OF CUSTOMS AIRPORT AND GENERAL – Respondent
W.P. (C) 15808/2022
For the Appellants/Petitioners: Mr. Prabhat Kumar, Mr. Karan Dang, Ms. Swadha Gupta
For the Respondents: Mr. Ajit Kumar Kalia, Mr. Abhinav Kalia
The court ruled that the denial of the right to cross-examine witnesses in administrative proceedings constitutes a violation of natural justice, thereby invalidating the consequent revocation of the Custom Broker License.
Headnote:(A) Customs Act, 1962 - Customs Broker Licensing Regulation, 2018 - Regulation 10(d), 10(m), 10(n), 10(q) and Regulation 17 - Revocation of Custom Broker License - The petitioner challenged the revocation of its Custom Broker License and imposition of penalty due to alleged violations of customs regulations relating to fraudulent exports and due diligence. The Court found the lack of due process as the petitioner was denied the right to cross-examine witnesses, therefore violating fundamental principles of natural justice. (Paras 1-22)
(B) Writ Jurisdiction - The Court affirmed that even in the presence of an alternative remedy, a writ petition can be maintainable if the issues raised are purely legal and do not involve disputed facts. (Paras 6-8)
Facts of the case:
The petitioner’s license as a Custom Broker was revoked citing involvement in fraudulent export activities related to overvalued consignments. The petitioner faced allegations of failing to verify the genuineness of exporters and their documents, which were deemed non-existent during investigations. (Paras 1-3)
Findings of Court:
The revocation order was quashed due to procedural irregularities, specifically denial of the right to cross-examine key witnesses, thus breaching natural justice principles. (Paras 21-22)
Issues: The court noted whether the petitioner was afforded the right to cross-examine witnesses during adjudication and whether procedural timelines were adhered to in revoking the license. (Paras 6-10)
Ratio Decidendi: The court reaffirmed the significance of the right to cross-examination and highlighted that violations of established procedural protocols render the revocation of license void. The investigative findings were also deemed inconsistent and improperly substantiated regarding the petitioner’s role. (Paras 16-20)
Result: Writ Petition allowed; the order revoking the Custom Broker License and imposing penalty quashed.
JUDGMENT
RAVINDER DUDEJA, J.
1. This Writ Petition has been preferred by Custom House Agent (CHA) against the Order-in-Original dated 29.06.2022 passed by respondent, revoking the Custom Broker License of the petitioner, forfeiting the entire security deposit and imposing penalty of Rs. 50,000/-.
2. BRIEF FACTS
Briefly stated, petitioner was granted license to operate as a Custom Broker (CB), which was valid upto 19.12.2025. The instant matter pertains to the previous exports of ball-bearings, investigation of which, was initiated by SIB, ACC, Kolkata on the basis of four live export consignments of unbranded ball-bearings on 24.09.2020 filed by M/s Gupta Vyapar (IEC CTGPG 6543A). These four consignments were highly over-valued for export to defraud to the exchequer by way of getting very high Input Tax Credit (ITC) Refund and other export related incentives. Thereafter, data pertaining to export of ball-bearings was analyzed for the period 01.01.2020 to 12.09.2020, wherein, it was found that a total of 35 consignments of similar/identical description had been exported, out of which, 23 consignments had been cleared by M/s Naman Gupta & Associates (hereinafter referred to as Custom Broker). The total ITC claimed by such exporters was Rs. 3.3 crores approximately, while total drawback claimed was to the tune of Rs. 36.62 lakhs. It was seen that petitioner was involved in the clearance of 23 shipping bills of ball-bearings filed by nine different exporters. Out of nine exporters, five were found to be non-existent. Two exporters i.e. M/s National Auto Parts and M/s Beam International were admitted to have been involved in the export unintentionally. Two other exporters M/s Theism Tradecom Private Limited and M/s Nitya Enterprises did not appear to record their statements. Statements of Md. Ishtiyaque Ahmad, Proprietor of M/s Beam International and Sh. Sanjit Ghosh, Proprietor of M/s National Auto Parts were recorded under Section 108 of the Customs Act, 1962 . Statement of Authorized Representative of the petitioner was also recorded under Section 108 of the Customs Act, 1962 . A purported offence report dated 11.08.2021 was forwarded by the Deputy Commissioner of Customs, Air Cargo Complex, NSCBI Airport, Kolkata, who initiated action against the petitioner for the violation of Regulation 10(d), 10 (m), 10 (n) & 10 (q) of the Customs Broker Licensing Regulation, 2018 (CBLR, 2018). On the basis of such offence report and the relied upon documents forwarded by the Customs Authorities including the statements recorded under Section 108 of the Customs Act, 1962 by the prohibition order dated 13.10.2021, the Principal Commissioner of Customs, (Airport & ACC), Kolkata prohibited the petitioner from carrying out his duties as a Custom Broker within the West Bengal Commissionerate. The prohibition order was valid for a period of 30 days from the issuance thereof and lost its force by efflux of time. On 01.12.2021, respondent passed a purported order under Regulation 16 (1) of the regulations suspending the C.B. License of the petitioner with immediate effect and directed the petitioner to appear post-decisional hearing on 13.12.2021. After considering the oral and written statements made on behalf of the petitioner, by order dated 24.12.2021, respondent passed suspension order under Regulation 16 (2) of the said regulations. Respondent issued a Show Cause Notice dated 05.01.2022 under Regulation 17 (1) of the regulations, requiring the petitioner to show cause within 30 days from the date of the notice as to why he should not be held responsible for the alleged contravention of provisions of Regulation 10 (d), 10 (m), 10 (n) & 10 (q) and why his Custom Broker License should not be revoked and penalty be not imposed under Regulation 17 & 18 thereof. Petitioner submitted reply to the Show Cause Notice dated 05.01.2022. Petitioner through its Authorized Representative appeared before the Inquiry Officer, appointed by the respondent in the s
