2023 (10) TMI 177 - AT - Customs

Tribunal upholds penalty for Custom Broker, stresses importance of due diligence and compliance

The Tribunal set aside the revocation of the Custom Broker Licence but upheld the forfeiture of the security deposit and the imposition of the Rs. ... Revocation of Customs Broker License - Forfeiture of Security deposit - levy of penalty under Regulation 18 read with Regulation 14 of CBLR, 2018 - fraudulent import - illegal clearance of consignment having cigarette - HELD THAT:- In the present case Sunil Dutt G- card holder in connivance with other accused managed to illegally cleared the consignment having cigarette and later deleted all the whatsapp chat/call records in connivance with their crime partners. It is found that Sunil Dutt has categorically admitted in his statement that he has not obtained any KYC documents from the actual importer and all the documents including the KYC were given to him by Sandeep Kumar inspector and he has never contacted and met the actual importer at any point of time. Thereby, he has violated the regulation 10(n) which prescribed that the custom broker has to verify correctness of the importer exporter code (IEC) number, goods and services tax identification number (GSTIN), identify of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. The appellant had failed to verify the correctness of IEC, identity and whereabouts of the firms with authentic data and information thereby violating the obligations cast upon it under Regulation 10 (n) of CBLR 2018. From the evidence on record, it appears that the custom broker was having the knowledge that container does not contain the scrap but something else. It is also fact that Sunil Dutt informed the CGST team after the goods were cleared and thereafter the CGST department seized the goods when the same was in transit. Therefore, there is no doubt he has helped the Custom Department to confiscate the illegal smuggled items which was cleared without payment of duty and without examination. There is no doubt that the appellant has not performed his duty with due diligence and utmost efficiency and has connived with Sandeep Kumar inspector and Rambir Superintendent in illegally clearing the consignment having cigarette and later on deleted all the whatsapp chats/call records with their crime partners which clearly shows that he has not fulfilled the obligation under regulation 10 of CBLR, 2018 but his act and conduct does not warrant the imposition of extreme penalty of revocation of custom broker licence depriving him of his livelihood. But certainly his conduct warrants, the imposition of penalty and forfeiture of security deposit. The revocation of custom broker licence of the appellant is not warranted and revocation is set aside - As far as the imposition of penalty and forfeiture of security deposit are concerned, the imposition of penalty of Rs. 50,000/- and forfeiture of security are justified in the facts and circumstances of the case. Appeal allowed in part. Issues Involved:1. Revocation of Custom Broker Licence2. Forfeiture of Security Deposit3. Imposition of PenaltySummary:1. Revocation of Custom Broker Licence:The appeal challenges the Order-in-Original dated 28.06.2022, which revoked the Custom Broker Licence of the appellant under Regulation 17 of CBLR 2018. The revocation was based on the appellant's involvement in a fraudulent import case where a consignment marked for 50% examination was cleared without proper customs examination and duty payment. The Ld. Commissioner found that the Custom Broker failed to verify the Importer Exporter Code (IEC) and other KYC norms, as mandated by Regulation 10(n) of CBLR 2018. The appellant argued that the inquiry was conducted in violation of Regulation 17(4) of CBLR 2018, as they were not given the opportunity to cross-examine certain individuals whose statements were relied upon. The Tribunal concluded that while the appellant failed to perform due diligence, revocation of the licence was not warranted and set aside the revocation.2. Forfeiture of Security Deposit:The Ld. Commissioner also ordered the forfeiture of the security deposit made by the Custom Broker at the time of obtaining the licence, under Regulation 14 of CBLR 2018. The Tribunal upheld the forfeiture, noting that the appellant's failure to comply with KYC norms and their involvement in the fraudulent clearance of the consignment justified this action.3. Imposition of Penalty:A penalty of Rs. 50,000/- was imposed on the appellant under Regulation 18 read with Regulation 14 of CBLR 2018. The appellant contested the penalty, arguing that the inquiry was flawed and that they were not involved in the clandestine removal of goods. The Tribunal, however, found that the appellant's conduct, including the failure to verify KYC documents and connivance with customs officials, warranted the penalty. The Tribunal confirmed the imposition of the Rs. 50,000/- penalty.Conclusion:The Tribunal set aside the revocation of the Custom Broker Licence but upheld the forfeiture of the security deposit and the imposition of the Rs. 50,000/- penalty, emphasizing the importance of due diligence and compliance with KYC norms by Custom Brokers.