CESTAT allows customs broker license appeal citing procedural delays and lack of evidence for violations

CESTAT Mumbai-AT allowed the appeal against revocation of customs broker license, forfeiture of security deposit, and penalty imposition. The court found undue delay in adjudication proceedings from September 2019 import transaction to May 2023 order without proper justification. Revenue failed to establish violations of CBLR 2018 Regulations 10(d), (e), (f), (m), and (q). The FSSAI rejection report was communicated to appellants only after goods clearance, making it impossible for them to advise customs authorities beforehand. No evidence supported allegations of information withholding, inefficiency, or non-cooperation by appellants. The court concluded that principles of natural justice were not observed and the order was factually incorrect and legally unsustainable.

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Issues Involved:
1. Revocation of Customs Broker (CB) license.
2. Imposition of penalty and forfeiture of security deposit.
3. Alleged violations of Customs Brokers Licensing Regulations (CBLR), 2018.
4. Timeliness of action under CBLR, 2018.
5. Compliance with principles of natural justice.

Summary:

1. Revocation of Customs Broker (CB) license:
The appellants, M/s Protocol Logistics Private Limited, Mumbai, filed an appeal against the Order-in-Original dated 04.05.2023, wherein the Principal Commissioner of Customs (General), Mumbai revoked their CB license under Regulation 17(7) of CBLR, 2018. The revocation was based on an offence report from Kolkata Customs, which alleged that the appellants facilitated the clearance of imported 'Betel nuts' despite a Non-conforming Certificate from FSSAI, treating the goods as prohibited.

2. Imposition of penalty and forfeiture of security deposit:
The impugned order also imposed a penalty of Rs. 5,00,000/- and forfeited the entire security deposit of the appellants. The appellants contended that they had already been penalized Rs. 5,00,000/- for the same violations in the Order-in-Original dated 31.03.2022 and argued against double jeopardy.

3. Alleged violations of CBLR, 2018:
The appellants were charged with contravening Regulations 10(d), (e), (f), (m), and (q) of CBLR, 2018. They argued that they were unaware of the FSSAI rejection report at the time of clearance and that the Customs authorities had cleared the goods after checking the NOC from FSSAI. The Tribunal found no evidence of the appellants' collusion with FSSAI or Customs authorities and concluded that the appellants could not be held responsible for the clearance of goods by Customs.

4. Timeliness of action under CBLR, 2018:
The appellants argued that the show cause notice (SCN) issued on 28.12.2022 was beyond the prescribed period of 90 days from the receipt of the offence report on 10.08.2022. The Tribunal noted the delay in initiating action and found no reasonable explanation for it, thus deeming the impugned order unsustainable on this count as well.

5. Compliance with principles of natural justice:
The Tribunal observed that the appellants were not given the opportunity to cross-examine key witnesses, including Customs and FSSAI officers, which violated principles of natural justice. The Tribunal found no evidence of violations of Regulations 10(d), (e), (f), (m), and (q) by the appellants and concluded that the impugned order was contrary to the factual position.

Conclusion:
The Tribunal set aside the impugned order, finding no merit in the revocation of the appellants' CB license, the imposition of penalty, or the forfeiture of the security deposit. The appeal was allowed in favor of the appellants.

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