Customs broker license revocation set aside despite violations of CITES and CBLR 2018 regulations

CESTAT Bangalore partially allowed the appeal against revocation of customs broker license. The broker was charged with concealing prohibited Red Sander wooden logs under CITES and violating CBLR 2018 regulations. Despite finding the broker guilty of repeated violations and knowingly filing Bills of Entry for prohibited items, the tribunal set aside license revocation considering impact on 23 employees' livelihood after 18 months of suspension. However, forfeiture of security deposit and Rs.50,000 penalty under Regulation 14 were upheld.

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Issues Involved:
1. Validity of the show-cause notice and whether it was barred by limitation.
2. Alleged violations of sub-regulations (d), (e), and (n) of Regulation 10 of CBLR, 2018 by the appellant.
3. Impact of revocation of the license on the livelihood of the appellant's employees.
4. Penalty imposition and forfeiture of security deposit.

Detailed Analysis:

1. Validity of the Show-Cause Notice and Limitation:
The appellant contended that the show-cause notice was barred by limitation as it was not issued within 90 days from the date of receipt of the offense report. The Commissioner, however, stated that the offense report dated 23.03.2022 was received on 01.09.2022 and the notice was issued on 13.09.2022, thus within the stipulated time under CBLR, 2018. The appellant argued that the license suspension on 25.03.2022 based on the offense report indicated earlier receipt. The Tribunal referred to the High Court of Karnataka’s judgment in Commissioner of Customs vs. M/s. Sri Manjunatha Cargo Pvt. Ltd., which held that the time limits in Regulation 17 of CBLR, 2018 are directory, not mandatory. Thus, the show-cause notice was deemed not time-barred.

2. Alleged Violations of Regulation 10 of CBLR, 2018:
The appellant was accused of violating sub-regulations (d), (e), and (n) of Regulation 10. The appellant argued that they conducted due diligence through proper documentation and had no obligation to physically verify the client's premises, thus no violation occurred. The Tribunal examined the Know Your Customer (KYC) form and found that the appellant failed to verify the identity of the exporter, as admitted by the Managing Partner. The Tribunal noted that the appellant had a history of violations, including filing Bills of Entry for prohibited items like Red Sander Logs.

3. Impact on Livelihood of Employees:
The appellant highlighted that the revocation of the license affected the livelihood of 23 employees. The Tribunal acknowledged this impact, noting that the license had been revoked for 18 months, affecting the employees' source of livelihood. The Tribunal emphasized the need for a balance between penalizing the appellant and ensuring the employees' livelihood.

4. Penalty Imposition and Forfeiture of Security Deposit:
The Commissioner had revoked the license, forfeited the security deposit, and imposed a penalty of Rs. 50,000 under Regulation 14 of CBLR, 2018. The Tribunal upheld the forfeiture of the entire security deposit and the penalty, considering the appellant's repeated violations. However, in the interest of justice and considering the livelihood of the employees, the Tribunal set aside the revocation of the license.

Conclusion:
The Tribunal concluded that the show-cause notice was not time-barred, upheld the findings of violations of Regulation 10, and recognized the impact on the employees' livelihood. The revocation of the license was set aside, but the forfeiture of the security deposit and the penalty of Rs. 50,000 were upheld. This decision balanced the need for regulatory compliance with the appellant's and their employees' right to livelihood.

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