2024 (1) TMI 199 - AT - Customs

Customs broker license suspension set aside after tribunal finds no requirement for physical address verification under CBLR

CESTAT Ahmedabad set aside the Commissioner's order continuing suspension of a customs broker license. The Commissioner found the broker failed to verify ... Suspension of Customs Broker License - time limitation - it is argued that in the present case action was initiated 7 years from the date of alleged offence - continuation of suspension - HELD THAT:- It is seen that the Commissioner in his order has observed that the appellant has failed to verify the antecedents of the exporters whereas there is a clear assertion on the part of the exporter that they had conducted the KYC on the basis of documents submitted by the exporter. There is no requirement under CBLR for the custom broker to physically verify the address. In these circumstances, there are no merit in the observations of the Commissioner on the basis of which the suspension was ordered to be continued. The impugned order is therefore set aside - appeal is allowed. Issues Involved:1. Legitimacy of the suspension of Customs Broker License under regulation 16(1) and 16(2) of CBLR 2018.2. Compliance with regulation 10 of CBLR 2018 by the appellant.3. Timeliness and necessity of the suspension action.4. Adequacy of due diligence by the appellant.Summary:Issue 1: Legitimacy of the suspension of Customs Broker License u/s 16(1) and 16(2) of CBLR 2018The appeal was filed against the order of the Commissioner suspending the Customs Broker License of the appellant u/s 16(1) of CBLR 2018, continued by a subsequent order u/s 16(2) of CBLR 2018. The appellant argued that the suspension was initiated seven years after the alleged offense, contrary to the immediate action requirement specified in regulation 16(1). The Tribunal noted that the CBIC Instruction No. 24/2023 mandates recording reasons for immediate suspension, which was not done in this case. The Tribunal found no merit in the Commissioner's observations for continuing the suspension and thus set aside the impugned orders.Issue 2: Compliance with regulation 10 of CBLR 2018 by the appellantThe appellant contended that they conducted due diligence as per regulation 10 of CBLR 2018 by verifying all relevant documents like Aadhar Card, PAN Card, IEC Certificate, etc., provided by the alleged exporter. The Tribunal observed that the appellant had indeed obtained all necessary KYC documents before filing the shipping bills and there was no requirement for the customs broker to physically verify the address of the exporter.Issue 3: Timeliness and necessity of the suspension actionThe appellant argued that the action was initiated seven years after the alleged offense, which contradicts the immediate action requirement of regulation 16(1). The Tribunal referenced the decision in National Shipping Agency 2008 (226) ELT 46(BOM) to emphasize that suspension should be an emergent power used only when immediate action is necessary. The Tribunal found that the Commissioner's order lacked the necessary reasoning for immediate suspension, as required by CBIC Instruction No. 24/2023.Issue 4: Adequacy of due diligence by the appellantThe appellant argued that they had complied with regulation 11(n) of CBLR, 2013 read with regulation 10(n) of CBLR, 2018, which requires due diligence. The Tribunal noted that the appellant had verified the KYC documents provided by the exporter and there was no evidence of the appellant's involvement in any fraudulent activities. The Tribunal concluded that the appellant had fulfilled their responsibilities as a customs broker and found no merit in the Commissioner's observations.Conclusion:The Tribunal set aside the impugned orders and allowed the appeal, concluding that the suspension of the Customs Broker License was not justified based on the provided evidence and the appellant's compliance with the required regulations.(Pronounced in the open court on 04.01.2024)