In a landmark judgment delivered on August 18, 2025, the Hon'ble Delhi High Court in CUSAA 35/2024: M/s ECG Easy Connect Logistics Pvt. Ltd. v. Commissioner of Customs provided significant relief to our client, M/s ECG Easy Connect Logistics Pvt. Ltd. (ECG), an authorized courier agent. The Court partially set aside the revocation of ECG's courier registration, applying the doctrine of proportionality to mitigate what it deemed a disproportionate penalty. This decision underscores the balance between regulatory enforcement and business rights under customs laws. Represented by Lexworks' advocates—Mr. Akhil Krishan Maggu, Mr. Vikas Sareen, Ms. Oshin Maggu, Ms. Maninder Kaur, and Mr. Aryan Nagpal—the case highlights our firm's expertise in navigating complex customs disputes.

Background and Facts of the Case

ECG, holding a courier license (No. DEL/POUCOUR/18/2018-19) valid until March 4, 2031, acted as a courier agency for imports by two entities: M/s Kripa Shankar Maurya (based in Nagpur) and M/s Mangalmurti Traders (based in Kolkata). The consignments, declared as mobile phone parts under CTH 85340000 (attracting nil Basic Customs Duty), were imported via House Airway Bills (HAWBs) No. 200002003 and 200002004.

The Customs Department alleged misdeclaration in terms of quantity, value, description, and classification. Investigations revealed that the goods were unassembled but complete sets of counterfeit Apple iPhones (various models), including IMEI stickers for older devices, intended to be repackaged and sold as new. The importers were found to be dummies, with the beneficial importer being Mr. Anoop Maurya (brother of Kripa Shankar Maurya and friend of an ECG employee, Mr. Gulshan Singh). Deliveries were made to the same person (Mr. Suraj) in Delhi/NCR, despite different destinations, and documents like proofs of delivery (PoDs) were altered. Invoices lacked numbers/dates or were spurious, and authorizations were forged post-seizure.

Initial proceedings led to a Show Cause Notice (SCN) cum suspension on November 27, 2020, but an inquiry report (January 13, 2021) and Order-in-Original (OIO) (February 5, 2021) exonerated ECG. However, subsequent SCNs (September 30, 2021, and December 24, 2021) under the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 (CIER 2010) resulted in another OIO (August 18, 2023) revoking the license till 2031, forfeiting Rs. 10 lakh security, and imposing a Rs. 50,000 penalty. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld this on March 22, 2024, citing violations of Regulation 12 of CIER 2010, including failure in due diligence, verification of IEC, and concealment of information.

Legal Framework: Brief on Courier License Rules and Regulations

The CIER 2010 governs the electronic declaration and processing of imports and exports via authorized couriers, aiming to streamline customs clearance while ensuring compliance. Key provisions relevant to this case include:

1. Scope and Application (Regulation 2): These regulations apply to the assessment and clearance of goods carried by authorized couriers by air at notified customs airports. They exclude certain goods like perishables, animals, or those under export promotion schemes (with exceptions, e.g., for COVID-19 vaccines or re-imported jewelry via e-commerce).
2. Obligations of Authorized Couriers (Regulation 12): Couriers must obtain authorizations from consignors/consignees, file declarations through qualified personnel, advise clients on compliance, verify antecedents and IEC details using reliable documents, ensure accurate information, maintain records for five years, and refrain from withholding data from customs officers or influencing them improperly.
3. Grounds for Suspension or Revocation (Regulation 13): The Commissioner may suspend/revoke registration and forfeit security for failure to comply with bond conditions, regulation provisions, or misconduct rendering the courier unfit for business.
4. Procedure for Suspension or Revocation (Regulation 13A): Involves issuing a notice with grounds, allowing defense (at least 45 days), conducting an inquiry (within three months), preparing a report, and passing reasoned orders after representations (at least 60 days).

These rules emphasize trust and diligence in the self-declaration era, with penalties like revocation intended for serious breaches.

Proceedings and CESTAT's Findings

CESTAT's order detailed ECG's complicity: altered PoDs, knowledge of dummy importers, misclassification to evade duty, and failure to report spurious goods. It rejected ECG's reliance on the 2021 exoneration, noting subsequent evidence (e.g., Apple's confirmation of counterfeits via letter dated March 12, 2021, DoT's IMEI verification, and Chartered Engineer's report) proved undervaluation and IPR violations. CESTAT affirmed violations of Regulation 12, upholding revocation as justified

.

The Delhi High Court's View and Findings

The High Court, presided over by Justices Prathiba M. Singh and Shail Jain, upheld CESTAT's factual findings on misdeclaration and ECG's involvement, noting the goods were counterfeit iPhones posing risks to consumers and brand owners. The Court observed that such imports deceive the public by rebranding used devices as new, impacting goodwill and equity.

However, invoking the doctrine of proportionality (derived from Articles 14 and 19(1)(g) of the Constitution), the Court found the full revocation till 2031 disproportionate. It emphasized that penalties must be commensurate with the violation's gravity—revocation being an extreme measure akin to "civil death" for businesses. Citing M/s Ashiana Cargo Services v. Commissioner of Customs (I&G) (CUSAA 24/2012), where similar principles were applied to Custom House Agents, the Court balanced enforcement with business freedom.

Key findings:

1. ECG was complicit but not the ultimate beneficiary (importers were).
2. Misdeclaration affected value, nature, and description of goods.
3. Consumer welfare and anti-counterfeiting concerns were highlighted.
4. Doctrine of proportionality requires penalties proportional to infractions, not blanket revocation.
5. 
   

The Court issued directions:

1. Revocation effective from August 18, 2023, to September 1, 2025.
2. Forfeiture reduced to Rs. 5 lakh (remaining Rs. 5 lakh as ongoing security).
3. Rs. 50,000 penalty upheld.

The appeal was dismissed on merits but modified for proportionality, distinguishing from res judicata arguments (citing Maldhari Sales Corporation v. Union of India).

Conclusion

This judgment sets a precedent for proportionate penalties in customs disputes, protecting courier agencies from overly harsh actions while upholding regulatory integrity. It reinforces that while misdeclaration and counterfeiting warrant action, penalties must not unduly burden businesses.

Disclaimer: This article is for informational purposes and does not constitute legal advice.