Court highlights procedural infirmity where Inquiry Officer denied cross-examination, directing fresh inquiry to ensure compliance with Customs Brokers Licensing Regulations
In a significant decision impacting the procedural rights of customs brokers, the Delhi High Court on August 31, 2026, dismissed an appeal filed by M/s Vogue Logistics Pvt. Ltd. challenging the remand order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The tribunal had set aside the revocation order issued by the Commissioner of Customs and directed a fresh inquiry, emphasizing the necessity of allowing the appellant to cross-examine witnesses whose statements were relied upon during the investigation.
The case arose from an investigation initiated against M/s Disha Enterprises for an alleged attempt to export diamonds worth approximately Rs. 1.56 crore concealed in plastic hot fix material. During the probe, statements of various persons connected with Vogue Logistics, including its directors and an H-Card holder, were recorded under Section 108 of the Customs Act, 1962. While these witnesses asserted that the appellant had no knowledge of the alleged concealment, the Commissioner of Customs issued a Show Cause Notice proposing revocation of Vogue Logistics' Customs Broker Licence on grounds of regulatory violations under the Customs Brokers Licensing Regulations, 2018 (CBLR).
An Inquiry Officer was appointed to investigate, but crucially, the officer did not permit the appellant to cross-examine the witnesses whose statements had been recorded and relied upon. Instead, the Inquiry Officer submitted a report based solely on those statements without direct witness examination. Subsequently, the Commissioner revoked the appellant's licence, forfeited the security deposit, and imposed a penalty of Rs. 50,000.
Aggrieved, Vogue Logistics appealed to the CESTAT which found this approach flawed, holding that Regulation 17(4) of the CBLR explicitly grants customs brokers the right to cross-examine witnesses in such inquiries. The tribunal ruled that reliance on witness statements without allowing cross-examination amounted to a procedural infirmity and remanded the matter to the Commissioner for fresh adjudication, ensuring the appellant's right to examine witnesses was respected.
The appellant challenged this remand before the Delhi High Court, arguing that the remand would allow the Department to fill gaps in the inquiry, which was impermissible, and that the entire revocation proceeding was vitiated due to non-compliance with the prescribed procedure. The Court, however, rejected these contentions.
Examining the relevant statutory provisions, the Court noted that while Section 108 of the Customs Act empowers officers to summon witnesses and Section 138B deals with the relevancy of statements in prosecutions, the present proceedings were not criminal prosecutions but administrative disciplinary inquiries under the CBLR. The Court emphasized that Regulation 17 of the CBLR clearly mandates that the Inquiry Officer take such oral evidence as may be relevant and affords the Customs Broker the right to cross-examine those witnesses. Denial of this right was a clear procedural lapse.
Importantly, the Court clarified that the remand was not an attempt to allow the Department to fill substantive lacunae but a necessary step to cure procedural defects and ensure fairness in the inquiry. It further held that procedural errors of this nature do not require quashing the entire proceedings but can be rectified by affording an opportunity for cross-examination.
Consequently, the Delhi High Court dismissed Vogue Logistics' appeal, upholding CESTAT's remand order for fresh adjudication in accordance with the CBLR. The ruling reiterates the importance of procedural fairness and the right to cross-examination in regulatory disciplinary proceedings, reinforcing that administrative inquiries must adhere to the principles of natural justice.
Bottom Line:
Customs Act, 1962 - In a case involving revocation of Customs Broker Licence, failure by the Inquiry Officer to allow cross-examination of witnesses whose statements were relied upon amounts to a procedural infirmity. The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) is justified in remanding the matter for fresh adjudication to rectify the procedural defect.
Statutory provision(s):
Customs Act, 1962 Sections 108, 130, 138B; Customs Brokers Licensing Regulations, 2018 Regulation 17
