2023 (3) TMI 136 - AT - Customs

Customs broker penalized for breaching import regulations, faces forfeiture of security deposit

The Tribunal upheld two charges against the appellant customs broker, resulting in the forfeiture of the security deposit. Despite not revoking the ... Customs Broker - Levy of penalty - Breach of obligation to discharge duties - principal allegation against the appellant of not having rendered proper advice to the importer has been countered in the grounds of appeal with nothing other than mere denial and not warranting interference with the order. HELD THAT:- The claim of having been led to satisfaction about the bona fides of the import from compliance of several regulatory stipulations does not appear to be acceptable as the appellant was bound to be no less than rigid in appreciating the purpose of restricting such imports. It has been pointed out in the impugned order that the failure on the part of the ‘customs broker’ to infer infirmity in the import does not sit well with the expectations of a normal ‘customs broker’ in, at least, enlightening their customers about the few exceptions in a trade regime that is characterized by ‘open general licence (OGL)’ as a norm - there are no reason to interfere with the finding that regulation 13(d) of Customs House Agents Licencing Regulations, 2004 had been breached by the appellant. Non-compliance with the obligation of exercising due diligence in ascertaining correctness of the information imparted to client in the course of clearance of cargo has been held against the ‘customs broker’ on inference from failure to keep customers informed of the restrictions in import of ‘refrigerant gas’ of certain specifications - Though the finding on this charge by the licensing authority is bereft of detail, separate and distinct from that leading to confirmation of the first charge, we do not find that to be substantive lack as the two are mutually linked. It is, therefore, not inappropriate to conclude that the appellant had been in breach of regulation 13(e) of the Customs House Agents Licensing Regulations, 2004. Breach of obligation to discharge duties with utmost speed and efficiency and without avoidable delay - HELD THAT:- The cavalier dismissal of the counter of the ‘customs broker’ in response to this charge, and in the absence of evidence demonstrating lack of speed and efficiency on the part of the appellant as also of any avoidable delay having occurred, cannot but lead to the conclusion of not being in agreement with the licensing authority on the finding that appellant had breached regulation 13(n) of the Customs House Agents Licensing Regulations, 2004 - this obligation, intended to ensure best interests of the customer and, obviously, to be invoked in circumstances of grievance aired by customers, appears to have been alleged to have been breached without any thought to the manner in which it would be established in enquiry. The licensing authority has not taken recourse to the extreme penalty of revocation of licence but has limited himself to forfeiture of security deposit. Thus, even if one of the charges held as breached does not sustain, the gravity of the two that are sustained does not detract from the proportionality of the penalty finally imposed. There are no mitigating circumstances either to commend further leniency. There are no reason to interfere with the order directing forfeiture of security deposit - appeal dismissed. Issues:Appeal against order of Commissioner of Customs for forfeiture of security deposit under Customs Broker Licensing Regulations, 2013.Analysis:1. The judgment pertains to an appeal against an order of the Commissioner of Customs for forfeiture of the security deposit of a customs broker, M/s R S Kandalkar & Co, due to misdeclaration of goods in a consignment of 'refrigerant gas HFC-404A'. 2. The appeal was based on the argument that misdeclaration in the bill of entry was not the fault of the appellant customs broker, as compliance with other regulatory requirements had been met before the goods were entered for home consumption, and proceedings under the Customs Act, 1962 were dropped at the adjudication stage.3. The Tribunal considered the charges of breach of Customs Broker Licensing Regulations, 2013, and Customs House Agents Licensing Regulations, 2004. The appellant's defense against the charge of failing to provide proper advice to the importer was found insufficient, as the appellant should have been aware of the restrictions on importing ozone-depleting substances.4. The second charge of not exercising due diligence in informing the client about import restrictions on refrigerant gas was upheld, as the appellant failed to keep customers informed about the restricted goods, leading to a breach of regulation 13(e) of the Customs House Agents Licensing Regulations, 2004.5. The third charge of breaching the obligation to discharge duties with speed and efficiency was contested by the appellant, claiming lack of evidence demonstrating delay. However, the Tribunal found the charge substantiated, as the appellant failed to demonstrate efficient handling of the clearance process, breaching regulation 13(n) of the Customs House Agents Licensing Regulations, 2004.6. Out of the four initial charges, the Tribunal upheld two charges against the appellant, leading to the forfeiture of the security deposit. Despite not revoking the license, the Tribunal found the penalty of forfeiture proportionate to the gravity of the sustained charges, with no mitigating circumstances warranting leniency.7. Ultimately, the Tribunal dismissed the appeal and upheld the order directing the forfeiture of the security deposit, emphasizing the importance of customs brokers fulfilling their obligations diligently and efficiently to avoid penalties under the relevant regulations.