Delhi High Court Upholds Customs Broker Licence Revocation for Lending Credentials and Filing Unauthorised Shipping Bill Linked to Attempted Export of Prohibited Red Sanders
Delhi High Court Upholds Customs Broker Licence Revocation for Lending Credentials and Filing Shipping Bill Without Exporter’s Authorisation in Red Sanders Export Case
Facts
The appellant, Pardeep Kumar Prashar, was a licensed Customs Broker holding Customs Broker Licence No. R-94/97 and carrying on customs clearance activities, including at the Air Cargo Complex, Export, New Delhi. The dispute arose from an attempted export under Shipping Bill No. 8904827 dated 12 December 2019, filed in the name of M/s Deepnidhi International. The goods were declared as “decorative iron material” with an FOB value of ₹66,000 and were destined for Sweden.
Acting on intelligence concerning an attempted export of prohibited goods, Customs authorities detained and examined the consignment. The examination revealed approximately 1,158 kilograms of Red Sanders (Pterocarpus santalinus) concealed in 33 boxes. Since the requisite permission from the CITES Management Authority was not produced, the goods were treated as prohibited and seized under Section 110 of the Customs Act, 1962.
The investigation revealed that the Shipping Bill had been filed in Deepnidhi International’s name without obtaining its authorisation and without even contacting it. The documents had instead been supplied by Mohit Taneja of M/s Soleado Impex, who allegedly asked that the Shipping Bill be filed in Deepnidhi’s name rather than his own firm’s name.
A significant aspect of the investigation concerned Devender Kumar, a G-card holder associated with the appellant. In his statement, the appellant admitted that he received ₹10,000 per month from Devender Kumar and had lent his Customs Broker licence and dongle to him for a price. CESTAT relied upon this statement and the appellant’s admission regarding receipt of ₹10,000 per month.
Disciplinary proceedings followed under the Customs Brokers Licensing Regulations, 2018 (CBLR). By order dated 2 August 2021, the Commissioner revoked the appellant’s Customs Broker licence, forfeited the entire ₹75,000 security deposit, and imposed a ₹50,000 penalty. CESTAT subsequently dismissed his appeal and affirmed that order.
The appellant therefore approached the Delhi High Court under Section 130 of the Customs Act.
Issues
The High Court identified three principal questions:
- Whether CESTAT’s findings regarding violations of Regulations 10(a), 10(d), 10(e) and 10(n) of the CBLR, 2018 were perverse or legally erroneous so as to warrant interference under Section 130 of the Customs Act.
- Whether permitting the G-card holder to use the appellant’s Customs Broker licence and dongle for consideration amounted to an impermissible transfer or parting with the licence contrary to Regulation 1(4).
- Whether revocation of the licence, forfeiture of the security deposit and imposition of penalty were disproportionate to the misconduct proved against the appellant.
Petitioner/Appellant’s Arguments
The appellant argued that CESTAT had failed to properly consider the evidence and his submissions. He maintained that he had verified the exporter’s IEC and GST particulars and that there was no evidence demonstrating that he knew the consignment contained prohibited Red Sanders.
He disputed the Department’s characterisation of his arrangement with Devender Kumar as a transfer or sale of the Customs Broker licence. According to him, the ₹10,000 received from Devender Kumar represented clearance charges or agency commission rather than consideration for transferring the licence. He further argued that the expression “sub-letting” did not appear in Regulation 10.
The appellant further contended that:
- there was no evidence of knowledge, connivance or active participation in the attempted Red Sanders export;
- no incriminating material was recovered from his premises;
- a procedural or KYC lapse could not justify the extreme punishment of licence revocation;
- he had verified the IEC and GST particulars through available online records; and
- he could not be expected to conduct continuous monitoring or physical verification beyond the requirements of the Regulations.
He relied principally upon Kunal Travels (Cargo) v. Commissioner of Customs to argue that a Customs Broker is not an investigator required to verify the genuineness of every transaction, particularly where incorrect information is innocently supplied by a client.
He also relied upon Nitco Logistics Pvt. Ltd. v. Commissioner of Customs to contend that revocation was grossly disproportionate and that punishment must correspond with the seriousness of the established violation.
Respondent’s Arguments
The Customs Department maintained that CESTAT’s conclusions were supported by the evidence, particularly the appellant’s own admissions.
The Department emphasised that the appellant had permitted Devender Kumar to use his licence, dongle and Customs Broker credentials for ₹10,000 per month. According to the Department, this constituted an unauthorised transfer prohibited by Regulation 1(4), which expressly states that a licence cannot be sold or otherwise transferred.
It further argued that the appellant had breached his statutory verification and due-diligence obligations because the Shipping Bill was filed in Deepnidhi’s name without its authorisation and without even contacting the exporter.
The Department maintained that these were not minor procedural lapses. They represented serious breaches of the obligations attached to a Customs Broker licence, particularly because the transaction ultimately involved attempted export of prohibited Red Sanders.
Reliance was placed upon the Supreme Court’s decision in Commissioner of Customs v. K.M. Ganatra & Co., emphasising the position of trust occupied by Customs Brokers and the strict obligation to comply with licensing regulations.
Analysis of the Law
1. Lending the licence and dongle amounted to prohibited transfer
Regulation 1(4) of the CBLR, 2018 expressly provides that a Customs Broker licence “shall not be sold or otherwise transferred.”
The Court found that the case did not rest merely upon an inference drawn by Customs authorities. The appellant himself had admitted receiving ₹10,000 per month from Devender Kumar and lending his licence and dongle to him for consideration.
The Court rejected the argument that no “transfer” occurred because ownership of the licence itself had not changed.
In the Court’s view, Regulation 1(4) was wide enough to cover the appellant’s conduct of allowing another person to undertake Customs transactions through his licence and credentials for monetary consideration. The substance of the arrangement mattered, rather than whether it could technically be described as “sub-letting.”
2. Filing Shipping Bill without exporter’s authorisation violated Regulation 10(a)
Regulation 10(a) requires a Customs Broker to obtain authorisation from every company, firm or individual for whom he acts.
Here, it was undisputed that the appellant filed the Shipping Bill in Deepnidhi’s name without obtaining any authorisation whatsoever.
The Court considered the violation particularly serious because the appellant had not even contacted Deepnidhi. Instead, a third party had asked him to file the Shipping Bill in another exporter’s name, and he proceeded to do so without obtaining that exporter’s consent.
The Court therefore sustained the finding under Regulation 10(d) as well.
3. IEC and GST verification alone was insufficient
The Court explained that Regulation 10(n) goes beyond merely checking whether an IEC number or GSTIN exists.
A Customs Broker must verify the identity of the client and the functioning of the client at the declared address through reliable, independent and authentic material.
Consequently, the appellant could not rely merely upon online verification of Deepnidhi’s IEC and GST particulars when the more fundamental problem was that Deepnidhi had neither engaged nor authorised him.
The Court observed that:
Verification of IEC/GST particulars is not the same as obtaining authority from the exporter.
The existence of a valid IEC or GSTIN could not constitute authorisation to undertake a Customs transaction in that entity’s name.
4. Knowledge of Red Sanders was unnecessary for regulatory liability
An important distinction was drawn between participation in the underlying prohibited export and breach of the independent obligations imposed upon a Customs Broker.
The Court acknowledged that the evidence might not establish that the appellant himself knew that the consignment contained Red Sanders.
However, lack of such knowledge did not eliminate his independent violations of the CBLR. The appellant’s statutory obligations existed irrespective of whether he knowingly participated in the prohibited export.
The Court ultimately held that lending the licence and dongle for consideration, filing the Shipping Bill without the named exporter’s authority and failing to adequately verify the exporter were sufficient to sustain violations of Regulations 10(a), 10(d) and 10(n).
5. Regulation 10(e) violation was not established
The High Court nevertheless disagreed with CESTAT on one point.
Regulation 10(e) concerns the Customs Broker’s duty to exercise due diligence regarding the correctness of information imparted by the broker to the client.
The Court found that CESTAT had not identified any specific incorrect information imparted by the appellant to a client.
Accordingly, the finding of violation of Regulation 10(e) could not independently be sustained.
This finding, however, did not alter the result because the violations of Regulations 10(a), 10(d), 10(n) and Regulation 1(4) were independently sufficient to sustain disciplinary action.
Precedent Analysis
Kunal Travels (Cargo) v. Commissioner of Customs
The appellant relied on Kunal Travels for the proposition that a Customs Broker cannot be expected to act as an investigator into every representation or document supplied by a client.
The High Court distinguished the precedent.
In Kunal Travels-type circumstances, the broker acts for an authorised client who subsequently turns out to have provided incorrect information.
Here, Deepnidhi had never authorised or even engaged the appellant. The appellant therefore could not rely on the protection available to a Customs Broker who innocently acts upon incorrect information supplied by an actual client.
Commissioner of Customs v. K.M. Ganatra & Co.
The Court relied upon the Supreme Court’s decision in K.M. Ganatra to emphasise that a Customs Broker occupies a position of responsibility and trust within the customs clearance system.
The licence therefore carries corresponding obligations of control, diligence and regulatory compliance. The appellant’s lending of his licence and dongle for payment and filing a Shipping Bill without the exporter’s authority fell substantially below this standard.
Nitco Logistics Pvt. Ltd. v. Commissioner of Customs
The Court accepted the general principle relied upon by the appellant that proportionality applies to punishment imposed upon Customs Brokers, and that revocation must bear a reasonable relationship to the seriousness of the misconduct.
However, Nitco Logistics was distinguishable on the facts.
This was not a case where an employee independently misused the broker’s credentials without the licence holder’s knowledge. The appellant himself admitted that he received ₹10,000 every month and lent his licence and dongle to Devender Kumar.
Court’s Reasoning
The Court considered the violations cumulatively rather than treating each incident as an isolated technical lapse.
Three circumstances were particularly significant:
- The appellant knowingly lent his Customs Broker licence and dongle for ₹10,000 per month.
- A Shipping Bill was filed in Deepnidhi International’s name even though that exporter had neither engaged nor authorised the appellant.
- The transaction involved an attempted export of approximately 1,158 kg of prohibited Red Sanders.
The Court held that these circumstances demonstrated a substantial failure to exercise the control and diligence expected from a Customs Broker.
Even though the appellant’s prior knowledge that the consignment contained Red Sanders was not proved, such knowledge was unnecessary to establish the independent regulatory violations.
On proportionality, the Court held that the punishment could not be assessed by examining each lapse separately. Considering the cumulative misconduct, revocation of the licence, forfeiture of ₹75,000 and imposition of ₹50,000 penalty could not be regarded as shockingly or manifestly disproportionate.
Conclusion
The Delhi High Court substantially affirmed CESTAT’s findings against the appellant.
Although it held that the finding of violation of Regulation 10(e) could not independently survive, the remaining violations were sufficiently serious to sustain the disciplinary action.
The Court held that:
- lending a Customs Broker licence and dongle for monetary consideration amounted to prohibited parting with or transfer of the licence;
- filing a Shipping Bill without obtaining the named exporter’s authorisation violated the Customs Broker’s statutory obligations;
- mere verification of IEC and GST particulars did not substitute for verification and authorisation of the actual client;
- absence of proof that the broker knew about the Red Sanders did not excuse independent regulatory violations; and
- revocation, forfeiture and penalty were not disproportionate considering the cumulative misconduct.
The Court found no perversity or error of law in CESTAT’s findings warranting interference under Section 130 of the Customs Act and held that no substantial question of law arose. The appeal was consequently dismissed.
Case Details
Case: Pardeep Kumar Prashar v. Commissioner of Customs (Airport and General)
Court: High Court of Delhi at New Delhi
Case Number: CUSAA 75/2025
Judge: Justice Anil Kshetrapal and Justice Shail Jain
Date: 21 August 2026
Result: Appeal dismissed; revocation of Customs Broker licence, forfeiture of ₹75,000 security deposit and ₹50,000 penalty upheld.
