2024 (5) TMI 1284 - AT - Customs

Customs broker's security deposit forfeiture upheld for failing to verify exporter's antecedents under CBLR 2013 Regulation 11(n)

CESTAT Bangalore dismissed the customs broker's appeal against forfeiture of security deposit for violation of CBLR 2013 Regulation 11(n). The broker ... Proceedings against the Customs Broker - Smuggling of Red Sander Logs - Forfeiture of Security Deposit - Barred by Limitation - Issuance of notice within 90 days from the date of receipt - No Opportunity for Cross-Examination - Violation of Regulation 11(n) of CBLR 2013 - HELD THAT:- From the record, it is clear that the alleged incident occurred in September 2013, the order prohibiting the appellant from executing work at the Chennai Customs Commissionerate under the jurisdiction of Chennai Customs Zone was issued by the Commissioner of Customs Imports Chennai on 05.12.2014 and the Occurrence Report was received by the parent Commissionerate on 16.12.2014. The show cause notice was issued on 02.03.2015, thus the notice was issued within 90 days from the date of receipt of the Occurrence Report which is within the specified limit as per Regulation (20) of CBLR 2013. As seen from record, it is clear that 3 dates were given to Shri Loganathan to appear for the cross-examination, which he failed to do so. Hence, the applicants claim that they are not provided an opportunity to cross-examine the persons concerned fails. Section 11(n) of CBLR, 2013 reads as ‘verify antecedent, correctness of Importer Exporter Code (IEC) number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information; From the above clause it is very clear that it is the responsibility of the Custom House Agent and his employees to ensure that the antecedents and other particulars of the Exporter are verified before signing any of the relevant documents. From the statements of the Managing Partner of the appellant and one of the employee, it is an admitted fact that the appellant fail to adhere to the provisions u/s 11 (n) of the CBLR 2013. Therefore, there is no doubt that the appellants have violated Section Regulation 11 (n) of the CBLR. In fact taking into overall allegations and based on the inquiry report observed that there is no finding to the effect that the Customs Broker, the appellant had conspired in the attempted smuggling operation and based on this observation he finds it improper to revoke the license of an entire firm on account of the failure of one employee in discharging his obligations with required diligence and sincerity. Hence for violation of regulation 11(n) the Commissioner penalised the appellant by forfeiture of the security deposit only to the extent of Rs.25000/-. The impugned order was upheld, and the appeal was dismissed. The forfeiture of the security deposit of a‚ 25,000/- was confirmed, Issues Involved:1. Whether the proceedings were barred by limitation.2. Whether the appellant was denied the opportunity to cross-examine witnesses.3. Whether the appellant violated Regulation 11(n) of the CBLR 2013.4. Whether the forfeiture of the security deposit was justified.Issue-wise Detailed Analysis:1. Whether the proceedings were barred by limitation:The appellant argued that the proceedings were barred by limitation as per Regulation 20 of the CBLR 2013, which mandates issuing a notice within 90 days from the date of receipt of the offence report. The appellant contended that the notice issued on 02.03.2015 was beyond the prescribed limit, making it unsustainable. However, the Commissioner clarified that the occurrence report was received on 16.12.2014, and the show cause notice was issued on 02.03.2015, thus within the specified 90-day limit. The Tribunal referenced the Hon'ble High Court of Bombay's decision in Principal Commr. of Cus. (General), Mumbai Versus Unison Clearing P. Ltd., which held that the time limits in Regulation 20 are directory, not mandatory, and deviations must be justified with reasons.2. Whether the appellant was denied the opportunity to cross-examine witnesses:The appellant claimed that the inquiry was flawed as they were not given an opportunity to cross-examine Shri Loganathan, whose statement was pivotal to the allegations. The Commissioner noted multiple attempts to facilitate the cross-examination of Shri Loganathan, who failed to appear on the scheduled dates. The Tribunal found that ample opportunities were provided, and the appellant's claim of being denied cross-examination was untenable.3. Whether the appellant violated Regulation 11(n) of the CBLR 2013:The appellant admitted to filing the Shipping Bill No.7365519 dated 07.09.2013 on behalf of M/s. M.M. Industries, which led to the smuggling of Red Sander logs. Statements from the appellant's employees revealed lapses in verifying the antecedents of the exporter, as required under Regulation 11(n) of the CBLR 2013. The Tribunal affirmed that the appellant failed to adhere to the regulation by not verifying the exporter's credentials, thus violating Regulation 11(n).4. Whether the forfeiture of the security deposit was justified:The Commissioner took a lenient view, noting no evidence of conspiracy by the appellant in the smuggling operation. The penalty imposed was limited to forfeiture of the security deposit of Rs. 25,000/- under Regulation 18 of CBLR 2013. The Tribunal upheld this decision, finding no reason to interfere with the impugned order, as the penalty was proportionate to the violation of Regulation 11(n).Conclusion:The Tribunal upheld the impugned order, confirming the forfeiture of the security deposit of Rs. 25,000/- and dismissed the appeal. The order was pronounced in open court on 21.05.2024.