CESTAT overturns customs broker license revocation due to lack of evidence and procedural violations under Regulation 17

CESTAT Mumbai set aside the revocation of customs broker license, forfeiture of security deposit, and penalty imposed by Principal Commissioner of Customs. The tribunal found no evidence supporting allegations of mis-declaration and under-valuation of imports. Appellants had complied with KYC requirements under Regulation 10(n) by obtaining proper documents and verification. The inquiry proceedings violated prescribed timelines, taking 13 months instead of required 90 days. Procedural non-compliance with Regulation 17 rendered the order legally unsustainable. Appeal allowed in favor of appellant.

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Issues Involved:
1. Revocation of Customs Broker (CB) license.
2. Forfeiture of security deposit.
3. Imposition of penalty under Customs Brokers Licensing Regulations (CBLR), 2018.
4. Alleged violations of Regulations 10(e), 10(n), 10(q), 13(3), 13(4), 13(7), and 13(12) of CBLR, 2018.
5. Procedural compliance with Regulation 17 of CBLR, 2018.

Detailed Analysis:

1. Revocation of Customs Broker (CB) License:
The Principal Commissioner of Customs (General), Mumbai, revoked the CB license of the appellants under Regulation 17(7) of CBLR, 2018, due to alleged violations of various regulations. However, the Tribunal found that the impugned order was not legally sustainable since the CB license had already been revoked by an earlier order dated 30.12.2022. The Tribunal noted that there is no legal provision for issuing a "deemed revocation" order to take effect on a future date if the earlier order is set aside by an appellate authority.

2. Forfeiture of Security Deposit:
The impugned order also included the forfeiture of the entire security deposit. The Tribunal found this action to be redundant and legally unsustainable because the security deposit had already been forfeited in the earlier order dated 30.12.2022. The Tribunal emphasized that there can be only one order for the forfeiture of the security deposit under Regulation 17(7) of CBLR, 2018.

3. Imposition of Penalty:
The Principal Commissioner imposed a penalty on the appellants under Regulation 18 of CBLR, 2018. The Tribunal found that the imposition of the penalty was not justified as the findings in the impugned order were contrary to the facts on record. The Tribunal emphasized that the appellants had not violated the regulations as alleged.

4. Alleged Violations of Regulations 10(e), 10(n), 10(q), 13(3), 13(4), 13(7), and 13(12) of CBLR, 2018:

Regulation 10(e):
The Principal Commissioner concluded that the appellants failed to exercise due diligence in ascertaining the correctness of information related to the clearance of cargo. However, the Tribunal found that the appellants had obtained import documents through an intermediary, which is not barred by CBLR. The Tribunal noted that the alleged mis-declaration and undervaluation were actions taken by the importer, and there was no role of the Customs Broker in these activities.

Regulation 10(n):
The Principal Commissioner found that the appellants had not met the importers personally and were not diligent in the KYC verification process. The Tribunal, however, found that the appellants had verified the existence of the importers through digital mode and had complied with the KYC norms as per CBIC Circular No. 9/2010-Customs. The Tribunal held that the appellants had fulfilled their obligations under Regulation 10(n).

Regulation 10(q):
The Principal Commissioner initially found no violation of Regulation 10(q) but later contradicted this finding in the impugned order. The Tribunal noted this contradiction and found no evidence of non-cooperation by the appellants during the investigation. Therefore, the Tribunal held that the appellants had not violated Regulation 10(q).

Regulations 13(3), 13(4), 13(7), and 13(12):
The Principal Commissioner found that the appellants had employed unauthorized persons to handle customs clearance activities. The Tribunal, however, found that the appellants had obtained necessary approvals for their employees from the customs authorities. The Tribunal also noted that receiving documents through an intermediary is permitted, and there was no proof of unauthorized handling of documents. Therefore, the Tribunal held that the appellants had not violated these regulations.

5. Procedural Compliance with Regulation 17 of CBLR, 2018:
The Tribunal examined the procedural compliance with Regulation 17 and found that the impugned order was issued in violation of the prescribed procedures. The Tribunal emphasized that the inquiry proceedings must follow the steps outlined in Regulation 17, and the impugned order did not adhere to these requirements. The Tribunal also noted that there was no reasonable explanation for the delay in concluding the inquiry proceedings.

Conclusion:
The Tribunal set aside the impugned order dated 23.11.2023, finding no merit in the revocation of the CB license, forfeiture of the security deposit, and imposition of the penalty. The Tribunal allowed the appeal in favor of the appellants, emphasizing that the findings in the impugned order were contrary to the facts on record and not legally sustainable.

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