Customs broker license revocation overturned, penalty reduced to Rs. 50,000 for address verification failure under regulation 10(e)

CESTAT Mumbai set aside revocation of customs broker license and forfeiture of security deposit, reducing penalty to Rs. 50,000. The broker was charged with violating regulations 10(e), 10(m), 10(q) and 13 of Customs Broker Licensing Regulations, 2018. CESTAT found only one charge proved - failure to verify client's actual business address. Other charges regarding incorrect information to client and non-cooperation with customs authorities were dismissed due to lack of evidence. The tribunal noted this was a single breach occasion involving one aspect, making license revocation disproportionate despite client's attempt to evade duty through erroneous origin declaration.

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Issues:
Violation of Customs Broker Licensing Regulations, 2018 - Charges of failure to ascertain correctness of information, failure in responsibility to verify details, failure to cooperate with customs authorities, and violation of regulation relating to employment of persons.

Analysis:

1. Failure to Ascertain Correctness of Information:
The appellant, a customs broker, was charged with failing to ascertain the correctness of information imparted to the client, as required by regulation 10(e) of Customs Broker Licensing Regulations, 2018. The enquiry report inferred this charge solely based on the lack of direct communication between the broker and the importer. However, the regulation emphasizes exercising due diligence to verify information rather than focusing on the correctness of information imparted. The charge lacked evidence of any incorrect information imparted to the client, making the finding untenable.

2. Failure in Responsibility to Verify Details:
The appellant was also charged with failing to verify details such as IEC, GSTIN, and client identity. While some verification was done by an employee, it was insufficient to establish the client's operation at the declared address. Despite documents' correctness, the lack of diligence in verifying the client's identity and place of operation constituted a breach of obligation, affirming this charge as proved.

3. Failure to Cooperate with Customs Authorities:
Another charge against the appellant was the failure to cooperate with customs authorities and join investigations. The appellant claimed inability to comply with summons due to pandemic restrictions, but this plea was not considered during the proceedings. The charge was found to be not tenable as there was no examination of the summons issued or justification for non-appearance before preferring the charge.

4. Violation of Regulation Relating to Employment of Persons:
The appellant was charged with violating regulation 13 concerning employment of persons and supervision. The appellant argued that only the 'G card' holder handled customs-related work, absolving responsibility for actions beyond customs clearance. The charge related to the use of unapproved staff for verification, which was not relevant as no verification was conducted. The charge did not sustain as it was not related to acts of omission or commission as a customs broker.

5. Final Decision:
Of the seven charges, only one survived, pertaining to not establishing the client's identity and verifying the declared business address. The Tribunal found the breach limited to one aspect and one charge, leading to the revocation of the customs broker license being deemed disproportionate. The penalty was reduced to Rs. 50,000 under regulation 18 of Customs Broker Licensing Regulations, 2018, and the revocation of the license and forfeiture of security deposit were set aside, allowing the appeal by modifying the impugned order.

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