Customs broker license revocation overturned after tribunal finds insufficient evidence of misconduct

CESTAT Mumbai partially allowed appeal against customs broker license revocation. The customs broker was charged with overvaluation and misdeclaration by exporter client, failure to advise compliance, and failure to verify client antecedents. The tribunal found no evidence of broker's responsibility for value declaration or receipt of undue benefits. Only breach established was failure to contact exporter and verify client identity. CESTAT held this breach did not merit license revocation, setting aside revocation order and penalty while upholding security deposit forfeiture.

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Issues involved: Appeal against revocation of customs broker license, forfeiture of security deposit, and imposition of penalty under Customs Broker Licensing Regulations, 2013 in connection with alleged overvaluation and mis-declaration of textile articles in exports.

Summary:

1. The appeal was filed by M/s Shabari International, a customs broker, against the revocation of their license and other detriments under Customs Broker Licensing Regulations, 2013. The proceedings were initiated following completion of adjudicatory proceedings against the goods, exporter, and customs broker under the Customs Act, 1962.

2. The notice alleged breach of various obligations under Customs Broker Licensing Regulations, 2013. The inquiry report confirmed culpability in certain aspects, leading to the impugned order by the licensing authority, Commissioner of Customs, Nagpur.

3. The appellant's counsel argued that the findings were erroneous as the offense of undervaluation was beyond the customs broker's control. Reference was made to previous tribunal decisions highlighting limited scope for customs brokers in cases of contravention by importers/exporters.

4. It was pointed out that the appellant had filed shipping bills with a claim for drawback of a specific amount. Previous tribunal decisions were cited to argue against the imposition of penalties.

5. The Authorized Representative contended that the appellant was complicit in mis-declaring goods and failed to comply with obligations under the Regulations.

6. The offense by the exporter was identified as overvaluation for claiming drawback under the Customs Act, 1962. The appellant was not responsible for determining or declaring the value, and there was no evidence of receiving undue benefits.

7. The appellant was found to have contravened the obligation to advise compliance with the Customs Act, 1962, but there was no evidence to substantiate the charge.

8. Another charge was the failure to exercise due diligence, but there was no demonstrable evidence linking the appellant's actions to the overvaluation offense.

9. The appellant was charged with failure to verify client antecedents and operations, which was considered a fundamental obligation for customs brokers.

10. The tribunal found one charge to sustain against the appellant but concluded that the severity of penalties imposed was not warranted based on the circumstances and previous tribunal decisions.

11. The revocation of the license and penalty were set aside, while the forfeiture of the deposit was upheld. If the appellant chooses to operate the license, a fresh deposit will be required as per the regulations.

(Order pronounced in the open court on 01/04/2024)

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