2024 (8) TMI 1348 - AT - Customs

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 ... Revocation of Customs Broker (CB) license - Forfeiture of security deposit and levy of penalty - violation of Regulations 10(e), 10(n), 10(q), 13(3), 13(4), 13(7)and 13(12) of CBLR, 2018 - Procedural compliance with Regulation 17 of CBLR, 2018 or not - mis-declaration and under valuation in respect of post imports - inquiry officer though appointed on 08.07.2022 had taken about 13 months to submit his report on 07.08.2023, whereas the Regulations provide for 90 days period from the date of issue of notice. Violation of Regulation 10(e) ibid - HELD THAT:- In the absence of any document to prove the claim of mis-declaration and under valuation of import goods on the part of the appellants, the findings given by the learned Principal Commissioner of Customs in the impugned order that the appellants has failed to exercise due diligence to ascertain the correctness of information is difficult to prove for fastening such liability on the appellants CB for holding them responsible for violation of Regulation 10(e) ibid. Violation of Regulation 10(n) ibid - HELD THAT:- The appellants CB had obtained the KYC documents from the importers and verified the existence of the importers through digital mode viz., Certificate of Importer-Exporter Code issued by the Additional Director General of Foreign Trade, Ministry of Commerce and Industry, Government of India; signature and account verification from bank. The inquiry authority had also accepted the same and dropped the charges against this violation in his inquiry report - CBIC had issued instructions in implementing the KYC norms for verification of identity, existence of the importer/exporter by Customs Broker in Circular No. 9/2010-Customs dated 08.04.2010, and verification of any two documents among specified documents is sufficient for fulfilling the obligation prescribed under Regulation 10(n) of CBLR, 2018. Thus, there are no legal basis for upholding the alleged violation of Regulation 10(n) ibid by the appellants in the impugned order. Violation of Regulation 10(q) - HELD THAT:- It is interesting to note that learned Principal Commissioner had examined the issue and had held that the appellants had not violated the said Regulation 10(q) ibid, though inadvertently he has mentioned the regulation as ‘10(n)’ instead of ‘10(q)’. However, in the order he has simply confirmed the violation by stating that the appellants CB had failed to discharge his duties cast upon him inter alia Regulation 10(q) ibid. Further, both sides have not brought to our knowledge of any corrigendum issued in this respect or in general of the impugned order. Procedural compliance with Regulation 17 of CBLR, 2018 - HELD THAT:- In terms of Regulation 17 ibid, the learned Principal Commissioner could have waited for the entire inquiry proceedings to be completed involving two separate proceedings and then pass necessary orders as provided in the CBLR. However, it is seen that despite the CB license already under suspension as on date of passing the impugned order, again one another deemed suspension to take effect from a future event and date was prescribed and even here neither the prescribed time lines for completion of inquiry proceedings were followed nor reasonable explanation offered for the delay in conclusion of CBLR proceedings - there is no legal provision under CBLR for taking such action by the licensing authority. The above casual manner of handling the customs broking license matters by the authorities below do not instill confidence with us to state that CBLR is properly implemented for the purpose for which it has been framed for carrying out the provisions of Section 146 of the Customs Act, 1962. Hence, on this account too, the impugned order is not legally sustainable. Allegation against Regulations 13(3), 13(4), 13(7) and 13(12) ibid - HELD THAT:- As the AC/DC of Customs in-charge of the Customs Broker Section, New Customs House themselves have approved the persons nominated by the appellants as authorised signatory for transacting business with customs in the above Public notices confirming that those two persons are duly authorised to transact with customs, and in the absence of any proof for such allegation, we are unable to accept the findings arrived at by the learned Principal Commissioner in the impugned order that the documents were handled in unauthorized manner. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in deemed revocation of the CB license of the appellants; for forfeiture of security deposit second time and for imposition of penalty, inasmuch as there is no violation of regulations 10(e), 10(n), 10(q) and 13(3), 13(4), 13(7) and 13(12) ibid, and the findings in the impugned order is contrary to the facts on record. Further, the impugned order is not sustainable as it has been issued in violation of Regulation 17(7) ibid. The impugned order is set aside - appeal allowed in favor of appellant. 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.