2023 (9) TMI 144 - AT - Customs

Tribunal upholds admissibility of Customs Act statement, finds breach of licensing regulations

Shyam Singh Versus Commissioner, Customs (AIRPORT & GENERAL), New Delhi

The Tribunal upheld the admissibility of the statement recorded under Section 108 of the Customs Act, rejecting the appellant's contention of ... Revocation of Customs Broker License - forfeiture of security deposit - penalty - gross mis-declaration and undervaluation in import of electronic goods by various importers - statement recorded under section 108 of the Customs Act, retracted - absence of cross examination of the witnesses who made confessional statement - failure to discharge the obligation cast on him under the Regulations - violation of principles of natural justice. Reliance on the statement recorded under Section 108 of the Act for the simple reason that it was not voluntary and has been retracted subsequently - HELD THAT:- In the present case, it is not the stand of the appellant that his statement has been recorded by the department under threat, duress or coercion. In the absence of any such plea the statement made by him under section 108 of the Act are binding on him and the same cannot be discarded on the ground that the same has been retracted - there is no violation of the principles of natural justice in denying the appellant an opportunity to cross examine the two witnesses in view of the voluntary confessional statement made by him under section 108 of the Customs Act. Violation of the Regulation 1(4) of CBLR - HELD THAT:- The submission of the appellant and relying on the statement made by the appellant under section 108 cannot be agreed since he did not have much business in his Customs Broker firm and Sh. Atul Kapoor had contacts with various importers but since he did not have the ‘F-Card’ therefore, he provided Customs Broker License to him for monetary consideration. This is sufficient to hold that the appellant had sublet his Customs Broker License for monetary gain and thereby violated the provisions of Regulation 1(4) of CBLR, 2018. Violation of the provisions of Regulation 10(a), 10(d), 10(e) and 10(n) of CBLR, 2018 - HELD THAT:- It is clear that on the date when the appellant appeared to give his statement, he did not produce the relevant documents. We would like to point out the statement made by the appellant on issue No. 9 where he was asked about the KYC documents of the said firms and he categorically stated that he does not know anything either about the firms (importers) or their proprietors and also he had not collected any KYC documents of the firm and have also not physically verified the address of the firms - The fact that the appellant had sublet the Customs Broker License for monetary gain of Rs. 25,000/- or Rs. 50,000/- p.m., rest of the work was done entirely by Sh. Atul Kapoor and obviously the appellant would not have any knowledge either of the firms, their Proprietors or the KYC documents. Thus, violation of Regulation 10(a) and 10(n) are established. In the absence of any knowledge, it is prima facie evident that there was no scope for the appellant to comply with these provisions, i.e. to advise his client to comply with the provisions and to exercise due diligence for ascertaining the correctness of the information. The Adjudicating Authority without any material has observed that the Customs Broker played an active role in the scheme devised by various unscrupulous importers to defraud the Revenue by evading the customs duty, that they with malafide intention and knowingly abetted illegal import of the consignments involving gross mis-declaration and undervaluation and therefore the role of accomplice played by the Customs Broker and their employees is clearly proved - No material has been shown from the statement of the appellant to even remotely suggest that he was privy to the actual activity of facilitating the import. In this scenario, on what basis the adjudicating authority has arrived on the findings of mis-declaration and undervaluation against the appellant is missing - such findings are unsustainable in the absence of any material and therefore deserves to be set aside. The punishment has to commensurate with the misconduct and the charges against the appellant are not so grave that extreme punishment of revocation of license is called for. Thus, the impugned order in so far it has ordered for revocation of the licence of the appellant deserves to be set aside, however the forfeiture of the security deposit and penalty of Rs. 50,000/- imposed under Regulation 18 of CBLR, 2018 needs to be maintained. Order under Regulation 14 read with Regulation 17, CBLR revoking the Customs Broker Licence by the impugned order is set aside - Order in terms of Regulation 14 read with Regulation 17, CBLR forfeiting the security amount deposited by the appellant is confirmed - Penalty under Regulation 18 of CBLR of Rs. 50,000/- imposed on the appellant is affirmed. Appeal allowed in part. Issues Involved:1. Admissibility of the statement recorded under Section 108 of the Customs Act.2. Violation of principles of natural justice due to absence of cross-examination.3. Failure of the appellant to discharge obligations under the Customs Broker Licensing Regulations (CBLR), 2018.4. Maintainability of charges of mis-declaration and undervaluation.5. Proportionality of the punishment imposed under CBLR.Summary:1. Admissibility of the Statement under Section 108:The Tribunal held that the statement recorded under Section 108 of the Customs Act, though retracted, is binding on the appellant. The appellant's contention that the statement was not voluntary and was made under medication was rejected. The Tribunal referred to the Supreme Court's decision in *Surjeet Singh Chhabra vs. Union of India*, reiterating that Customs Officers are not Police Officers, and thus, statements under Section 108 are admissible as evidence.2. Violation of Principles of Natural Justice:The Tribunal found no violation of principles of natural justice due to the absence of cross-examination of witnesses. It was held that the appellant's own statement was sufficient to establish the substantive allegation of subletting the license. The Tribunal referred to multiple decisions, including *Surjeet Singh Chabbra* and *D.S. Cargo Agency vs. Commissioner of Customs*, supporting that failure to provide an opportunity for cross-examination is not a violation when there is a confessional statement by the party.3. Failure to Discharge Obligations under CBLR:The Tribunal upheld the findings that the appellant violated various provisions of CBLR, 2018, including Regulation 1(4) (prohibition on selling or transferring the license), and Regulations 10(a), 10(d), 10(e), and 10(n) (obligations of Customs Brokers). The appellant admitted to subletting his license for monetary gain, and thus, failed to verify the importers' details and ensure compliance with the Customs Act.4. Maintainability of Charges of Mis-declaration and Undervaluation:The Tribunal found that the adjudicating authority's observations regarding the appellant's role in mis-declaration and undervaluation were without material evidence and thus unsustainable. The Tribunal noted that the investigation by DRI was still ongoing, and no show cause notice had been issued to the importers or Zakir Khan.5. Proportionality of the Punishment:The Tribunal applied the doctrine of proportionality, considering the gravity of the situation and the nature of the violation. It was concluded that the revocation of the license was too harsh a penalty given the circumstances. The Tribunal modified the impugned order, setting aside the revocation of the Customs Broker License but affirming the forfeiture of the security deposit and the penalty of Rs. 50,000/-.Conclusion:The appeal was partly allowed, with the revocation of the Customs Broker License set aside, while the forfeiture of the security deposit and the penalty of Rs. 50,000/- were confirmed.