Customs Broker license revocation set aside due to lack of legal provision under Regulation 17(7) for future-dated deemed revocation

CESTAT Mumbai set aside the Principal Commissioner of Customs order for deemed revocation of Customs Broker license, forfeiture of security deposit, and penalty imposition. The tribunal found no legal provision under Regulation 17(7) for deemed revocation effective on future dates when appellate orders are set aside. The alleged violations of Regulations 10(a), 10(d), and 10(n) of CBLR 2018 were unsustainable as the broker was unaware of export mis-declarations discovered only through subsequent departmental investigation, had complied with KYC requirements, and natural justice principles were violated during proceedings.

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Issues Involved:
1. Compliance with Customs Brokers Licensing Regulations (CBLR), 2018.
2. Procedural adherence in inquiry proceedings.
3. Entitlement to cross-examination.
4. Merits of the allegations under Regulations 10(a), 10(d), and 10(n).

Summary:

1. Compliance with Customs Brokers Licensing Regulations (CBLR), 2018:
The appellants, M/s Suswashis Clearing and Forwarding Agency, were accused of violating Regulations 10(a), 10(d), and 10(n) of CBLR, 2018. The Principal Commissioner of Customs concluded that the appellants did not interact with the IEC holder/exporter, failed to verify the KYC documents properly, and did not advise the exporter to comply with the Act.

2. Procedural Adherence in Inquiry Proceedings:
The Tribunal examined whether the inquiry proceedings complied with Regulation 17 of CBLR, 2018. It was found that the Principal Commissioner of Customs passed the impugned order without following the prescribed procedure. Specifically, the Tribunal noted that the appellants' CB license had already been revoked by an earlier order, making the subsequent order for deemed revocation legally unsustainable. The Tribunal emphasized that there is no legal provision for issuing an order as "deemed revocation of CB license" to take effect on a future date.

3. Entitlement to Cross-Examination:
The Tribunal found that the appellants were denied the opportunity to cross-examine key witnesses, which is a violation of Regulation 17(4) of CBLR, 2018. The Tribunal cited the judgment of the Hon'ble Telangana High Court in the case of Shasta Freight Services Pvt. Ltd., upheld by the Hon'ble Supreme Court, which held that denial of cross-examination constitutes a breach of natural justice.

4. Merits of the Allegations under Regulations 10(a), 10(d), and 10(n):
- Regulation 10(a): The Tribunal found that the appellants obtained the export documents through intermediaries, which is not barred by CBLR. The Tribunal noted that the alleged ineligible export benefits were solely due to the actions of the exporter, and there was no role of the Customs Broker in these activities.
- Regulation 10(d): The Tribunal concluded that the appellants could not have advised the exporter to comply with the Act as they were unaware of the misdeclaration. The voluntary statement given by the appellants' proprietor was recorded almost three years after the investigation began, indicating no prior knowledge of the misdeclaration.
- Regulation 10(n): The Tribunal found that the appellants had complied with KYC norms by obtaining and verifying the necessary documents from the exporter. The Tribunal cited previous judgments supporting the view that the Customs Broker is not expected to verify the genuineness of every transaction but to process documents based on the provided information.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal in favor of the appellants. It concluded that there was no violation of Regulations 10(a), 10(d), and 10(n) of CBLR, 2018, and that the inquiry proceedings were conducted in violation of the principles of natural justice.

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