2020 (11) TMI 592 - AT - Customs

Tribunal Upholds Customs Broker License Forfeiture, Stresses Proportional Punishment

The Tribunal partially allowed the appeal by setting aside the revocation of the Customs Broker License and upholding the forfeiture of the security ... Continuation of Suspension of Customs Broker License - Smuggling - foreign origin cigarettes - Regulation 19(2) of CBLR, 2013 - appellant has failed to verify the antecedent and functioning of the client by using reliable and independent sources - violation of provisions of Regulation 11(n) of CBLR, 2013 - cross-examination not allowed - Violation of principles of natural justice - HELD THAT:- The learned Commissioner has not allowed cross-examination at his level but depended on the enquiry report wherein the cross-examination of Mr. Maswood Ahmed but it was held that cross-examination of Shri Abid Ali could not be undertaken. We find that this is not the spirit of the order of this Bench. Instead of delegating the directions given by this Bench to the Enquiry Officer, the Commissioner should have himself allowed the cross-examination as directed by this Bench during the personal hearing. Moreover, we find that Commissioner has given cryptic findings on the alleged violation of Regulation 11 (n) of CBLR, 2013 by the Custom Broker. As submitted by the appellants, he has not given any reasoning or findings of his own. To this extent, learned Commissioner has again violated the principles of natural justice. Regulation 11(n) of the Customs Broker Regulations, 2013 - HELD THAT:- The said Regulation stipulates that: - “A Customs Broker shall verify antecedent, correctness of Importer Exporter Code (IEC) number, identity of his client and functioning of his client at the declared address by using reliable independent, authentic documents, data or information.” Though the Customs Broker has been maintaining that as the importer Shri Abid Ali was always present during the course of investigation and presented himself before the authorities a need for independent verification had not arisen. We find that such an argument is not acceptable. Looking into the circumstances of the case where it is not the case of the department that the importer is either absconding nor traceable, the omission on the part of the Customs Broker becomes a bit less serious. Shri Abid Ali has presented himself as the importer and signed all the documents. He has also submitted himself before the authorities for questioning, recording of statement and investigation. Under the circumstances, though there was lapse on the part of the Customs Broker, the same has not caused the commission of offence by the importer. Therefore, the Customs Broker erred inasmuch as non verifying the antecedents of the importer. The punishment meted out to the Custom Broker should be commensurate with such omission. It is a settled law that penalty should be proportionate to the offence committed. It would be too harsh to revoke the license of the Customs Broker and to leave the right to livelihood of the Customs Broker as well as his employees to the wind. The fact that the Customs Broker’s license was suspended/revoked for a considerable period also needs to be taken on to account. The impugned order is modified by setting aside the revocation of Custom Broker License and upholding the forfeiture of security deposit - Appeal allowed in part. Issues Involved:1. Suspension and revocation of Customs Broker License (CBL).2. Alleged violation of Regulation 11(n) of CBLR, 2013.3. Alleged violation of Regulations 11(a), 11(d), and 17(9) of CBLR, 2013.4. Principles of natural justice and right to cross-examination.5. Proportionality of punishment.Detailed Analysis:1. Suspension and Revocation of Customs Broker License (CBL):The appellants, M/s. GSP Shipping & Logistics Agency, had their CB License suspended by the Commissioner of Customs (A&A), Kolkata, under Regulation 19(1) of CBLR, 2013, due to alleged misdeclaration and smuggling activities by their clients. The suspension was communicated via a circular and a subsequent hearing was scheduled. The Commissioner continued the suspension and initiated proceedings under Regulation 20 of CBLR, 2013. The appellants' request for postponement of the hearing was denied, and the order was passed ex parte. The appellants contested this and the matter was remanded back for de novo proceedings with directions to allow cross-examination of key witnesses.2. Alleged Violation of Regulation 11(n) of CBLR, 2013:The Inquiry Officer upheld the charge of violation under Regulation 11(n), which requires the Customs Broker to verify the antecedents, correctness of the Importer Exporter Code (IEC) number, identity, and functioning of the client at the declared address using reliable and independent sources. The appellants argued that the importer was available and participated in the investigation, thus negating the need for further verification. However, the Tribunal found that the Customs Broker failed to perform due diligence in verifying the client's antecedents, as the IEC holder was different from the individual handling the imports.3. Alleged Violation of Regulations 11(a), 11(d), and 17(9) of CBLR, 2013:The Inquiry Officer discharged the violations of Regulations 11(a), 11(d), and 17(9). The appellants contended that the Commissioner’s reliance on the Supreme Court’s decision in K.M. Gantra & Co was misplaced, as there was no evidence of intentional violation. The Tribunal noted that the importer's involvement in the investigation and the Customs' clearance of one container indicated no prior knowledge of misdeclaration by the Customs Broker.4. Principles of Natural Justice and Right to Cross-Examination:The appellants argued that the impugned order was passed in gross violation of the principles of natural justice as they were not given an opportunity to cross-examine key witnesses. The Tribunal had previously directed the Commissioner to allow cross-examination, but this was not adequately followed. The Commissioner relied on the Inquiry Report without providing his own findings or reasoning. The Tribunal emphasized that the Commissioner should have personally allowed cross-examination during the personal hearing, adhering to the principles of natural justice.5. Proportionality of Punishment:The Tribunal considered the proportionality of the punishment, noting that the revocation of the Customs Broker License was too harsh given the circumstances. The Tribunal referenced several cases where lesser penalties were deemed appropriate for similar violations. It was held that the punishment should be commensurate with the offence committed, and the fact that the license was suspended/revoked for a considerable period should be taken into account. Consequently, the Tribunal set aside the revocation of the Customs Broker License but upheld the forfeiture of the security deposit.Conclusion:The Tribunal partially allowed the appeal by setting aside the revocation of the Customs Broker License and upholding the forfeiture of the security deposit. The decision emphasized adherence to the principles of natural justice, the necessity of proportional punishment, and the importance of due diligence by Customs Brokers in verifying client information.