Customs broker licence revocation set aside but penalty upheld for fraudulent export drawback claims

CESTAT Chennai partially allowed the appeal in a customs broker licence revocation case. The customs broker's licence was misused for fraudulent export of Uric Acid through over-valuation to claim higher drawback. CESTAT found all procedural timelines under Regulation 20 of Customs Brokers Licensing Regulations, 2013 were properly followed - show cause notice, inquiry report, and adjudication order were issued within prescribed 90-day periods. While acknowledging the broker allowed licence misuse for fraudulent transactions and document fabrication, CESTAT modified the Commissioner's order by setting aside licence revocation but upheld the penalty and security deposit forfeiture.

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Issues Involved:
1. Compliance with time limits prescribed in terms of Regulation 20 of Customs Brokers Licensing Regulations (CBLR), 2013.
2. Justification for revocation of the Customs Broker's Licence.

Summary:

Issue 1: Compliance with Time Limits

The appellant argued that the Department did not adhere to the mandatory time limits for issuing a Show Cause Notice (SCN) and conducting an inquiry as per Regulation 20 of CBLR, 2013. The appellant cited various judgments asserting that the time limits are mandatory. However, the Tribunal found that the relevant offence report dated 14.06.2017 was received by Chennai Customs on 18.09.2017. The SCN was issued on 17.12.2017, the inquiry report was submitted on 12.03.2018, and the Order-in-Original was issued on 01.06.2018. All actions were within the prescribed 90-day and nine-month time limits. Thus, the Tribunal concluded that the proceedings were not hit by limitation.

Issue 2: Justification for Revocation

The investigations revealed that the appellant allowed M/s. A.P. Cargo Enterprises to use their Customs Broker Licence for monetary consideration, leading to fraudulent export activities. The Tribunal noted that the appellant failed to exercise due diligence and contravened various provisions of CBLR, 2013. The Tribunal referred to the decision in Noble Agency Vs. Commissioner of Customs, Mumbai, emphasizing the trust and obligations of a Customs Broker. However, considering the appellant had been out of business for over six years, the Tribunal ordered the re-issuance of the licence subject to procedural requirements but upheld the imposition of a penalty and forfeiture of the security deposit.

In conclusion, the appeal was partly allowed, setting aside the revocation of the licence but maintaining the penalty and forfeiture of security.

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