The Delhi High Court has upheld the revocation of a Customs broker’s licence after he allegedly lent his licence and digital dongle to an employee for Rs 10,000 a month, who in turn used them to file a shipping bill without authorisation for a consignment reportedly containing 1,158 kg of red sanders.Justices Anil Kshetarpal and Shail Jain said that a Customs broker’s regulatory violation remains a violation even if the department cannot prove that the broker was involved in the underlying offence.“The relevant statutory prohibition is contained in Regulation 1(4), which prohibits the sale or otherwise transfer of a Customs Broker licence. The substance of the conduct, rather than the label attached to it, is therefore determinative,” the August 21 order said.It added that verification of the “existence of an IEC or GSTIN cannot, by itself, constitute authorisation by the person in whose name the Customs transaction is undertaken.” While IEC or Importer Exporter Code is a unique 10-digit number issued by the Directorate General of Foreign Trade that is required for Customs clearance, the Goods and Services Tax Identification Number (GSTIN) is a unique alphanumeric code assigned to every registered taxpayer.1,158 kg red sanders foundThe case arose after a customs broker’s licence was revoked after the department found that his licence and digital dongle were used by his G-card holder (authorised person to handle customs-related work as an employee of Customs broker) for Rs 10,000 per month. The broker had admitted that he had lent the licence to him. Justices Anil Kshetarpal and Shail Jain observed that the absence of proof that the broker knew the consignment contained red sanders did not rule out other violations.A shipping bill was filed in the name of Deepnidhi International for exporting goods to Sweden. Customs officials found around 1,158 kg of red sanders in the consignment. During the course of investigation, the Customs authorities examined the circumstances in which the shipping bill had been filed in the name of Deepnidhi.Also Read | Residents’ objections ‘selective’: Jammu and Kashmir High Court lets liquor vend operateIt was found that the appellant had not obtained any authorisation from Deepnidhi for filing the shipping bill in its name. In fact, the investigation revealed that he had not contacted Deepnidhi before filing the shipping bill.Story continues below this adThe additional commissioner of customs, Air Cargo Export Commissionerate, revoked the broker’s licence, forfeited his Rs 75,000 security deposit and imposed a Rs 50,000 penalty. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) later upheld the decision, following which the broker approached the Delhi High Court.Broker denied knowledge of red sandersAdvocates Abhas Mishra and Shruti Jindal, appearing for the customs broker, argued that he had undertaken verification of the IEC and GST particulars of the exporter and that there was no material to establish that the appellant had any knowledge of the prohibited goods sought to be exported. He submitted that the alleged arrangement with the G-card holder could not be treated as a transfer or sale of the Customs Broker licence.The counsel argued that there was no evidence of any knowledge, connivance or active facilitation on his part in the attempted export of red sanders, and that his premises were searched and no incriminating material was recovered from there. In the absence of any material establishing active involvement, a procedural lapse in relation to KYC or the conduct of the G-card holder could not, by itself, justify the extreme penalty of revocation of the licence.Also Read | Shimla apple grower wins Rs 3.52 lakh relief after buyers ‘withhold’ payment for 352 boxesAdvocate Akash Verma and Aanchla Uppal, appearing for the Customs Department, argued that the broker had knowingly permitted another person to undertake Customs transactions using his credentials. The counsel added that in the absence of authorisation from the named exporter, and the use of the shipping bill in an attempted export of prohibited goods, the revocation of the licence, forfeiture of the security deposit and imposition of penalty cannot be characterised as shockingly or manifestly disproportionate.Story continues below this adPlea dismissedThe court observed that the absence of proof that the broker knew the consignment contained red sanders did not rule out his independent regulatory violations. It observed that a customs broker’s failure to comply with legal duties remains even if the department can’t prove that the broker participated in or knew about the underlying offence.The court found no perversity or error of law in the findings recorded by the CESTAT warranting interference under Section 130 (appeal in high court against CESTAT order) of the Customs Act, 1962. The application was thus dismissed.