Formalities under Customs Brokers Licensing Regulations 2018 cannot be waived when suspending Customs Broker’s licence: Calcutta High Court

The Calcutta High Court has held that no provision of the Brokers Licensing Regulations, 2018 or the Customs Act confer power upon the Commissioner of Customs to waive compliance with formalities under Regulation 16 (1) & (2) of the Regulations when suspending a customs broker’s licence (M/S. M.K. Saha and Co. vs. Union of India)..Single-judge Justice Md. Nizamuddin said that no provision provides for an “automatic” or “deemed suspension” of a broker’s licence and such suspension, if done without any formal order of suspension of licence under the Regulations, would amount to an infringement of right to livelihood. “It is settled position of law that when a statute requires a statutory authority to do a thing in a particular manner the same must be done in the same manner and in accordance with the procedure prescribed in law or not at all,” the Court held..Justice Nizamuddin also considered the validity of an additional order of suspension in exercise of power of rectification under Section 154 of the Customs Act after passing of an original adjudication order imposing a penalty and forfeiture of security deposit..Responding to this question, the Court held that Commissioner of Customs cannot insert additional punishment of suspension of broker’s licence by way of corrigendum citing clerical, arithmetical or typographical mistake since the additional punishment would amount to substantial alteration in the original order..The order was passed on a plea challenging an order suspending the license of the petitioner, a customs broker. The petitioner, a partnership firm holding a customs broker licence valid up to May 23, 2026, was proceeded against under Section 17 of the Customs Broker Licensing Regulations 2018.It culminated in an adjudication order dated March 3, 2021 imposing a penalty of ₹50,000 and forfeiture of security deposit furnished by the petitioner at the time of grant of customs broker licence.However, the challenge arose when the petitioner, on March 18, 2021 came to know of an “alert” in the system notifying the suspension of its licence. It was argued that such suspension amounted to an infringement of petitioners’ right to livelihood and right to carry on its business.The petitioner made a representation against the suspension before the respondent but did not receive any response prompting the present petition.The petitioner contended that the action of issuance of “alert” and “suspension” of the licence of the petitioner in Customs EDI system was in total departure and violation of due process of law envisaged under Customs Act, 1962 and Customs Brokers Licensing Regulations, 2018 and it amounted to infringement of petitioners’ right to livelihood and right to carry on its business.The Court in its judgment held that the action of the respondent customs authority suspending the customs broker licence of the petitioner infringing the petitioner’s right to livelihood is penal in nature and is without any authority of law and is without jurisdiction since the customs authority has failed to show any document of formal order of suspension of customs broker licence under Regulation 16 of Customs Brokers Licensing Regulations, 2018 or that criteria and formalities of Regulation 16 (1) & (2) were fulfilled."Regulation 18 (3) of the Customs Brokers Licensing Regulations, 2018 and no other provisions of the said Regulations or the Customs Act does confer any power upon the Commissioner of Customs to waive or dispense with the fulfilment of criteria and compliance of formalities under Regulation 16 (1) & (2) of the Customs Brokers Licensing Regulations, 2018, for suspending Customs Broker licence of the petitioner," the Court ruled..The Court in its judgment also discussed whether the term “security deposit” has the same nature and character as of “duty” or “penalty”. Justice Nizamuddin answered in the negative.“Since “Duty” is levied on dutiable goods and is actually indirect tax imposed by the government on the importation or exportation of goods or commodities and “Penalty” arises out of violation or breach of any provision of law and both arise out of an adjudication proceeding while “Security Deposit” is a condition precedent for granting Customs Broker Licence irrespective of any transaction or adjudication or enquiry proceeding,” the judge ruled..The final question adjudicated by the High Court was whether a pre-deposit of the amount of penalty imposed in adjudication order while filing appeal before the tribunal against the original adjudication order would amount to automatic revocation or stay of the order of forfeiture of security deposit.“Mere filing of Appeal before the Customs Tribunal by making pre-deposit of certain percentage of “Penalty”, “Interest” or “Demand” raised in an adjudication proceeding would not amount to automatic stay or revocation of the order of forfeiture of security deposit unless there is any specific order of stay or revocation of the order of forfeiture,” the judge held. .[Read Judgement]