Customs broker's license revocation overturned after proving no involvement in importer's cashew kernel mis-declaration scheme

CESTAT Mumbai allowed customs broker's appeal against revocation of license and forfeiture of security deposit for alleged mis-declaration in cashew kernel imports. The tribunal found the broker was not involved in the importer's scheme to import prohibited cashew kernels below minimum import price thresholds by mis-declaring goods as raw cashew nuts. While the importer violated Foreign Trade Policy conditions, the customs broker had no role in these violations. The tribunal set aside license revocation and deposit forfeiture but imposed Rs.10,000 penalty for failure to supervise employee compliance under Customs Brokers Licensing Regulations 2018.

---

---

Issues involved:
Revocation of Customs Broker (CB) license, imposition of penalty, and forfeiture of security deposit under Customs Brokers Licensing Regulations, 2018 (CBLR).

Summary:

1. Revocation of CB License:
The Principal Commissioner of Customs (General), Mumbai, revoked the CB license of the appellants under Regulation 17 (7) of CBLR, 2018, due to alleged involvement in mis-declaration of imported goods. The appellants filed an appeal against the revocation, arguing they had not violated any CBLR regulations and had exercised due diligence based on the documents provided by the importer.

2. Alleged Violations of Regulations 10(e) and 10(n):
The Principal Commissioner concluded that the appellants violated Regulations 10(e) and 10(n) by not exercising due diligence and failing to verify the correctness of the importer's details. The Tribunal found that the appellants had verified the importer's credentials through reliable documents and were not aware of any concealment. The Tribunal referenced the Delhi High Court's decision in M/s Kunal Travels (Cargo) to support that CHAs are not expected to verify the genuineness of each transaction beyond the provided documents.

3. Alleged Violations of Regulations 13(3) and 13(4):
The Principal Commissioner claimed the appellants violated Regulations 13(3) and 13(4) by employing an unauthorized person for examination of goods. The Tribunal found no strong evidence against the appellants for these violations, noting that the authorized representative of the appellants was present during the customs examination.

4. Violation of Regulation 13(12):
The Tribunal determined that the appellants failed to supervise their employee adequately, as required under Regulation 13(12), resulting in a failure to identify the mis-declared goods during customs examination. The Tribunal imposed a penalty of Rs.10,000/- on the appellants for this failure.

Conclusion:
The Tribunal set aside the revocation of the CB license and forfeiture of the security deposit, finding no violations of Regulations 10(e), 10(n), 13(3), and 13(4). However, a penalty of Rs.10,000/- was imposed for the violation of Regulation 13(12) due to inadequate supervision of the employee. The appeal was partly allowed.

---