Customs Broker License Revocation Reversed on Appeal

The Tribunal set aside the order revoking the appellant's Customs Broker license and forfeiting the security deposit, allowing the appeal with consequential benefits. The Tribunal found the appellant failed to exercise due diligence in verifying duty credit scrips' authenticity but determined the proceedings were similar to a precedent where proceedings were quashed, leading to the revocation being overturned.

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Issues Involved:
1. Revocation of Customs Broker License and Forfeiture of Security Deposit.
2. Allegations of Fraudulent Activity Involving Duty Credit Scrips.
3. Compliance with Customs Brokers Licensing Regulations (CBLR), 2013.
4. Timeliness and Validity of Show Cause Notice.
5. Double Jeopardy and Reopening of Case.
6. Due Diligence and Verification Obligations of Customs Brokers.

Detailed Analysis:

1. Revocation of Customs Broker License and Forfeiture of Security Deposit:
The appeal was against the order dated 12/02/2018 by the Commissioner of Customs, which revoked the appellant's CHA license No. R-35/2010 and forfeited the security deposit of Rs. 75,000/- under Regulation 18 read with Regulation 20 (7) of the CBLR, 2013. The appellant was found involved in fraudulent activities related to duty credit scrips.

2. Allegations of Fraudulent Activity Involving Duty Credit Scrips:
The Directorate of Revenue Intelligence (DRI) reported that the appellant was involved in fraudulent registration of transferable duty credit scrips in the EDI system, which were not issued by DGFT. The appellant created credit amounts based on exhausted licenses by fraudulent methods, re-registered these scrips at ICD Tughlakabad, New Delhi, and utilized them to evade customs duties amounting to Rs. 1,11,98,374/-.

3. Compliance with Customs Brokers Licensing Regulations (CBLR), 2013:
The appellant failed to ensure the originality of the duty credit scrips and did not possess the physical copies of these scrips. The appellant violated Regulation 11 (d) and 11 (e) of the CBLR by not verifying the genuineness of the scrips and failing to perform due diligence. The appellant admitted to not verifying the identity of the sellers and not obtaining the hard copies of the licenses.

4. Timeliness and Validity of Show Cause Notice:
The appellant argued that the show cause notice dated 30/08/2017 was time-barred, as it was issued beyond the mandatory 90 days from the first offence report dated 28/03/2016. The Commissioner held that the proceedings for the three duty credit scrips mentioned in the earlier offence report were time-barred, but the proceedings for the additional eight scrips identified by the DRI were within the time limit.

5. Double Jeopardy and Reopening of Case:
The appellant contended that the present proceedings amounted to double jeopardy, as they were based on the same set of investigations previously conducted by SIIB and later transferred to DRI. However, the Tribunal found no bar to initiating fresh proceedings based on the new investigation report from DRI involving additional forged scrips.

6. Due Diligence and Verification Obligations of Customs Brokers:
The Tribunal found that the appellant failed to exercise due diligence in verifying the duty credit scrips' authenticity. The appellant did not verify the licenses from the DGFT website and failed to ensure the existence of the license trading firms. The CB's actions were deemed to be in violation of the duties prescribed under Regulation 11 (d) and 11 (e) of the CBLR.

Conclusion:
The Tribunal examined the findings and arguments and noted that the facts of the present case were similar to those in the case of HLPL Global Logistics Pvt. Ltd., where the proceedings were quashed. Following this precedent, the Tribunal set aside the impugned order, revoked the revocation of the license, and allowed the appeal with consequential benefits.

Order Pronounced:
(Order pronounced in open court on 01/10/2019.)

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