2021 (6) TMI 832 - AT - Customs

Tribunal Upholds Security Deposit Forfeiture & Penalty, Revokes License Set Aside

Unnati Shipping Agency P Ltd Versus Commissioner of Customs (General) Mumbai

The Tribunal upheld the forfeiture of the appellant's security deposit and imposition of a penalty under the Customs Broker Licensing Regulations, 2013. ... Revocation of Customs Broker License - forfeiture of security deposit - penalty under regulation 18 of Customs Broker Licensing Regulations, 2013 - alleged undervaluation - physical verification of the premises, or the person, of the importer - fictitious import export code (IEC) - breach of regulation no. 11(a), 11(d), 11(e), 11(m) and 11(n) of Customs Broker Licensing Regulations, 2013 - HELD THAT:- Though the inquiry, prescribed under Customs Broker Licensing Regulations, 2013, held that, while the breach of several of the obligations in regulation no. 11 had been substantiated, that failure to discharge duties with speed, as stipulated in regulation no. 11(m), was not, the licensing authority did, nonetheless, consider it fit to disregard that finding to conclude that the acceptance of documents from an unrelated person was indication of inefficiency but for which loss of revenue could have been avoided. The obligation to advice the client to comply with the provisions of Customs Act, 1962, the obligation to exercise due diligence by ascertaining the veracity of all information pertaining to client, the obligation to discharge duties as customs broker with utmost speed and efficiency and without any delay and the obligation to verify antecedents, correctness of importer exporter code, to identify his client and functioning of his client at the declared address were, according to the licencing authority, breached - The appellant had dealt with the beneficiary importer of the imported goods but against authorization furnished by the importer on record. It is also equally clear that the appellant, while dealing with Shri Anil Kumar Vachhar, did not appear to have evinced any interest in ascertaining the identity, or connection with the goods, of the importer on record. This is certainly not in accordance with the obligations that devolve upon a customs broker authorised to act on behalf of the importers under Customs Broker Licensing Regulations, 2013. At the same time, the existence of the importer on record not being in doubt and the role of such person vis-à- vis beneficial owner of the imported goods is yet to be decided upon in adjudication proceedings, it would, therefore, be improper to proceed on the assumption of any detrimental consequence to Revenue arising, directly or indirectly, from that breach. The appellant has dealt with only one bill of entry out of the several that were taken up for investigation and included in the show cause notice issued under Customs Act, 1962. The allegation against the imports is limited to undervaluation and it is difficult to appreciate that the breach of regulation no. 11(a) had, in any way, contributed to suppression of the value of the goods imported against the bill of entry. It is not within the remit of the customs broker to be conversant with the negotiations on price or the manner of transference of agreed recompense and, therefore, compliance with the said obligations would not have altered the allegations leveled against the importer, whether on the beneficial owner or of that on record. The detriments invoked against them are highly disproportionate. For not having insisted upon contact with the importer on record, revocation of licence and, that too, for first breach is, indeed, drastic - the ends of justice would be served by confirming the forfeiture of security deposit and the imposition of penalty of ₹ 50,000/- while setting aside the revocation of the customs broker licence - Appeal disposed off. Issues:Revocation of customs broker license, forfeiture of security deposit, imposition of penalty under Customs Broker Licensing Regulations, 2013.Analysis:Issue 1: Revocation of Customs Broker License and Forfeiture of Security DepositThe appellant's license was revoked, security deposit forfeited, and a penalty imposed under Customs Broker Licensing Regulations, 2013. The appellant argued that the actions taken were disproportionate as they were based on undervaluation in only one bill of entry. The proceedings were deemed premature as the show cause notice for penalty was pending adjudication.Issue 2: Allegations of Breach of RegulationsThe appellant filed a bill of entry for parts of 'DTH equipment' on behalf of a beneficiary importer, leading to undervaluation. The licensing authority found breaches of regulations 11(a), 11(d), 11(e), 11(m), and 11(n) of the Customs Broker Licensing Regulations, 2013. The appellant contended that due diligence measures were taken, and no loss was incurred by the revenue due to duty differentials being rectified by the importer.Issue 3: Compliance with Regulations and Due DiligenceThe appellant argued that physical verification of premises or the importer was not mandated by the regulations. They contended that the breach of regulations was not justified, as the duty differential was rectified by the importer, and no malafide intent was proven on their part.Issue 4: Discrepancies in PenaltiesThe authorized representative highlighted discrepancies in penalties imposed on different parties involved in the case. The Tribunal modified the penalty imposed on the appellant to align with penalties imposed on others, citing the need for justifiable and even-handed application of penalties.Issue 5: Failure to Discharge Duties and Breach of ObligationsThe licensing authority found breaches in discharging duties promptly and efficiently, obtaining authorization from the correct importer, and verifying antecedents. The appellant's lack of contact with the importer on record led to findings of breaches under various regulations.Issue 6: Discrepancies in Breach AllegationsThe Tribunal found discrepancies in the breach allegations, noting that some charges were not substantiated. The appellant's lack of contact with the importer on record was a key factor in the breach findings, but forgery or malafide intent was not proven.Issue 7: Impact of Breaches on Import ValuationThe Tribunal noted that the breach of regulations did not contribute to the undervaluation of goods imported. The appellant's obligations did not involve knowledge of price negotiations or agreements, and compliance would not have altered the undervaluation allegations against the importer.Issue 8: Proportionality of DetrimentsThe Tribunal agreed with the appellant that the detriments imposed were disproportionate. They confirmed the forfeiture of the security deposit and the penalty but set aside the revocation of the customs broker license, deeming it too drastic for a first breach.ConclusionThe appeal was disposed of, confirming the forfeiture of the security deposit and the penalty while setting aside the revocation of the customs broker license.