Customs broker license revocation overturned for failing due diligence under CBLR 2018 Regulation 10(a)

SUSWASHIS CLEARING AND FORWARDING AGENCY Versus PRINCIPAL COMMR. OF CUS. (GENERAL), MUMBAI

SUSWASHIS CLEARING AND FORWARDING AGENCY Versus PRINCIPAL COMMR. OF CUS. (GENERAL), MUMBAI - 2024 (388) E.L.T. 623 (Tri. - Mumbai) Issues Involved:
1. Violation of Regulation 10(a) of CBLR, 2018
2. Violation of Regulation 10(b) of CBLR, 2018
3. Violation of Regulation 10(d) of CBLR, 2018
4. Violation of Regulation 10(e) of CBLR, 2018
5. Violation of Regulation 10(m) of CBLR, 2018
6. Violation of Regulation 10(n) of CBLR, 2018

Detailed Analysis:

1. Violation of Regulation 10(a) of CBLR, 2018:
The adjudicating authority found that the appellants CB did not obtain authorization from the IEC holder but from an employee of a logistics company. The tribunal noted that the appellants declared the description of the imported goods as per the invoices supplied by the importer. The tribunal cited previous judgments and a DGFT circular to conclude that accepting documents from intermediaries is not barred by CBLR, provided there is no misuse of IEC. The tribunal found no strong grounds to hold that the appellants violated Regulation 10(a) but noted that they should have been more careful in scrutinizing the documents.

2. Violation of Regulation 10(b) of CBLR, 2018:
The Principal Commissioner concluded that the appellants violated Regulation 10(b) by allowing unauthorized persons to handle customs clearance. The tribunal found that the employees involved were either authorized or held valid 'H' cards. The tribunal concluded that the conclusion of unauthorized handling was contrary to the facts and thus not sustainable.

3. Violation of Regulation 10(d) of CBLR, 2018:
The Principal Commissioner concluded that the appellants failed to advise their client to comply with the provisions of the Act. The tribunal noted that the appellants were not aware of the misdeclaration, as all incriminating documents were recovered from another individual. The tribunal concluded that there was no possibility for the appellants to bring the misdeclaration to the notice of customs authorities, thus the violation of Regulation 10(d) was not sustainable.

4. Violation of Regulation 10(e) of CBLR, 2018:
The Principal Commissioner concluded that the appellants did not exercise due diligence. The tribunal noted that the appellants were not aware of the misdeclaration and that the Bills of Entry were assessed by customs authorities. The tribunal concluded that the charge of not exercising due diligence was without any basis of documents or facts, making the impugned order with respect to Regulation 10(e) not sustainable.

5. Violation of Regulation 10(m) of CBLR, 2018:
The Principal Commissioner concluded that the appellants did not act efficiently. The tribunal found no grounds of inefficiency or delay in the clearance of the imported goods. The tribunal concluded that the conclusion of violating Regulation 10(m) was not sustainable.

6. Violation of Regulation 10(n) of CBLR, 2018:
The Principal Commissioner concluded that the appellants did not verify the antecedents and correctness of the importer's documents. The tribunal noted that the appellants had obtained and submitted the required KYC documents. The tribunal cited previous judgments to support its view that the appellants complied with Regulation 10(n), making the impugned order on this issue not sustainable.

Conclusion:
The tribunal found no merits in the impugned order for revoking the license, forfeiting the security deposit, and imposing a penalty. However, the tribunal noted that the appellants failed to act proactively in scrutinizing documents received through an intermediary, justifying a penalty of Rs. 10,000. The appeal was allowed in favor of the appellants with the modification of imposing a penalty.