Customs broker license revoked for red sanders smuggling conspiracy under CBLR 2018 Regulations 10

CESTAT Mumbai upheld the revocation of customs broker license for conspiracy in smuggling red sanders through illegal export of prohibited goods. The appellants failed to fulfill obligations under Regulations 10(a), 10(e), 10(j), 10(k) and 10(n) of CBLR 2018. Despite acknowledging delay in adjudication (export occurred November 2015, revocation order passed March 2019), the tribunal found reasonable grounds existed. DRI investigation revealed fabricated documents where declared fabric glue/carpets were substituted with prohibited red sanders, violating Customs Act 1962 and Foreign Trade Policy. The tribunal confirmed revocation, penalty imposition, and security deposit forfeiture were appropriate given the customs broker's failure in due diligence obligations. Appeal dismissed.

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Issues Involved:

1. Delay in completion of proceedings for revocation of license.
2. Link between the smuggling activities and the licensed activities of the Customs Broker.

Summary:

1. Delay in Completion of Proceedings:

The Tribunal initially set aside the suspension of the Customs Broker (CB) license due to delays in the proceedings. The High Court of Bombay, however, disagreed with the Tribunal's interpretation, stating that the timelines in Regulation 20 of the Customs Brokers Licensing Regulations (CBLR) are directory, not mandatory. The High Court emphasized that reasons for delays should be recorded and justified. The Tribunal failed to consider detailed submissions and explanations for the delay, leading to the remand of the case for fresh adjudication.

2. Link Between Smuggling Activities and Licensed Activities:

The Customs Broker, M/s Srinivas Clearing & Shipping (I) Private Limited, was implicated in the smuggling of red sanders. The Directorate of Revenue Intelligence (DRI) investigation revealed that the CB's director, Shri Vijay Poojary, played a key role in the conspiracy. The CB was found to have violated several regulations under CBLR, including fabricating export documents and facilitating illegal exports. Despite arguments about delays and lack of direct involvement, the Tribunal upheld the revocation of the CB license, imposition of a penalty, and forfeiture of the security deposit, citing the CB's failure to exercise due diligence and compliance with regulatory obligations.

Conclusion:

The Tribunal dismissed the appeal, finding no reason to interfere with the impugned order of the Principal Commissioner of Customs (General), Mumbai, which revoked the CB license and imposed penalties due to the CB's involvement in smuggling activities and regulatory violations.

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