Customs broker penalized for failing to advise client on SCOMET export authorization requirements under Regulation 10(d) CBLR 2018

CESTAT New Delhi held that a customs broker violated Regulation 10(d) of CBLR 2018 by failing to advise a client about authorization requirements for exporting Triethanolamine, a SCOMET item, to Mozambique. The tribunal rejected the broker's reliance on client declarations, emphasizing the broker's duty to know applicable laws. The SCN was deemed timely issued within 80 days of receiving the corrected offence report. While finding the violation serious, CESTAT set aside licence revocation and security deposit forfeiture as disproportionate, upholding only the Rs. 50,000 penalty. Appeal partly allowed.

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Issues:
a) Did the appellant violate Regulation 10(d) of CBLRRs.
b) Is the SCN time-barred as asserted by the learned counsel for the appellantRs.
c) If the appellant violated Regulation 10(d), is the penalty of revocation of licence, forfeiture of security deposit, and imposition of a penalty of Rs. 50,000/- upon the appellant proportionate to the violationRs.

Analysis:
1. Violation of Regulation 10(d): Regulation 10(d) mandates Customs Brokers to advise clients on compliance with relevant laws. The appellant, a licensed Customs Broker, failed to advise the exporter about the need for authorization before exporting Triethanolamine, a SCOMET item. The appellant's reliance on the exporter's declaration was deemed inadequate as the broker is expected to be knowledgeable about legal requirements, leading to a clear violation of Regulation 10(d).

2. Timeliness of SCN: The appellant argued that the Show Cause Notice (SCN) was time-barred, issued 255 days after receiving the offense report. However, the Commissioner clarified that the delay was due to incorrect information in the offense report regarding the involved Customs Broker. The SCN was issued within 80 days of receiving the corrected report, establishing that the delay was justified and not time-barred.

3. Proportionality of Penalty: The Tribunal assessed the proportionality of actions against the appellant for attempting to export a SCOMET item without authorization. Despite the seriousness of the violation, the appellant did not profit from the attempted export, and a penalty under the Customs Act had already been imposed. Considering the appellant's year-long suspension from work, the Tribunal upheld the penalty of Rs. 50,000 but set aside the revocation of license and forfeiture of the security deposit for a balanced outcome.

4. Final Decision: The Tribunal partially allowed the appeal, setting aside the revocation of license and forfeiture of the security deposit but upholding the penalty on the appellant. The appellant was granted consequential relief, emphasizing a balanced approach to justice in the case. The judgment was pronounced in court on 24.07.2024, concluding the legal proceedings comprehensively.

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