2024 (9) TMI 573 - HC - Customs

Customs broker license revocation invalid without mandatory offense report under Regulation 17 of 2018 regulations

The Principal Commissioner of Customs (General), Mumbai Versus M/s. P. Cawasji & Co.

The Bombay HC dismissed an appeal challenging CESTAT's order allowing revocation of a customs broker license. The customs authority had revoked the ... Revocation of Customs Broker Licence - forefeiture of security deposit with penalty - improper activities allegedly found to have been carried out by the said M/s. Akshay Exports - erasure of earlier Show Cause Notices issued under the Customs Act, 1962, deemed as 'Offense Report', renders the proceedings under Custom Brokers Licensing Regulations, 2018 non-est and in excess of power vested in licensing authority or not - no offense report when the notice under Regulation No. 17 of Custom Brokers Licensing Regulations, 2018 - separate offence report not served to the CB - issue has already been dealt with in another order of the CESTAT even though it was for another SCN - cryptic order without examining the facts of the case. HELD THAT:- The CESTAT has allowed the appeal on the basis that the two show cause notices that were issued by which the process of revocation was initiated has been based on the original two show cause notices dated 13th March 2009 and 11th March 2010 both of which have been quashed and set aside. Moreover, Regulation 17 of the said Regulations provides for receipt of “offence report” by the Licencing Authority i.e., Appellant. The Tribunal held that even though the timelines prescribed under the Regulations may not have been complied with still, and rightly so, the essential pre-requisite for commencement of proceedings as required under the Regulation 17 is the receipt of “offence report” by the Licencing Authority. There has been, admittedly, no “offence report” received. Infact, Appellant has not even considered Respondent’s submission that the proceedings could not have been initiated in the absence of “offence report” envisaged under the Regulations. In the Circular, it is mentioned that the Investigating Authority shall furnish its report to the Commissioner of Customs who had issued the CHA Licence within 30 days of the detection of an offence. The Court in Necko Freight Forwarders Ltd. [2018 (1) TMI 1185 - DELHI HIGH COURT] has held that the “offence report” as used in Regulation 20 (2) of the Customs House Agents Licencing Regulations, 2004 was understood as a report regarding detection of an offence. The Tribunal is agreed upon that the offence report is the foundation for initiation of proceedings by the Licencing Authority. Since admittedly there is no offence report, we cannot find any fault in the impugned order. Appeal dismissed. Issues:1. Revocation of Customs Broker Licence and penalty imposition.2. Previous penalties imposed on the Respondent.3. Fresh show cause notice leading to revocation of licence.4. Substantial questions of law raised in the appeal.Analysis:Issue 1: Revocation of Customs Broker Licence and penalty impositionThe Respondent's Customs Broker Licence was revoked, and a penalty of Rs. 50,000 was imposed under the Customs Brokers Licensing Regulations, 2018. The CESTAT allowed the appeal against this order, leading to the current appeal under Section 130 of the Customs Act, 1962. The Appellant's decision was challenged based on procedural irregularities and lack of compliance with the Regulations.Issue 2: Previous penalties imposed on the RespondentThe Respondent had faced penalties in the past related to activities of a client, M/s. Akshay Exports. The penalties were imposed under Section 112 (a) of the Customs Act, 1962. However, the CESTAT set aside the order passed by the Commissioner of Central Excise, Belapur, in response to the show cause notices issued in this regard. This previous matter was finalized as the order was not challenged further.Issue 3: Fresh show cause notice leading to revocation of licenceA fresh show cause notice was issued to the Respondent, initiating proceedings for revocation of the Customs Broker Licence and forfeiture of the security deposit. The Enquiry Officer found some charges not proved, but the Appellant disagreed and passed an Order-in-Original revoking the licence, imposing a penalty, and forfeiting the deposit. The CESTAT allowed the appeal against this order, questioning the validity of the proceedings and the absence of an 'offence report' as required by the Regulations.Issue 4: Substantial questions of law raised in the appealThe appeal raised several substantial questions of law, including the validity of the proceedings without an 'offence report,' the justification of setting aside the order based on technical grounds, and the adequacy of the CESTAT's examination of the case. The Tribunal based its decision on the absence of an 'offence report' and cited a judgment regarding the necessity of such a report for initiating proceedings. The Circular issued by the Central Board of Excise and Customs highlighted the importance of an 'offence report' for immediate suspension actions, emphasizing the procedural requirements under the Regulations.In conclusion, the appeal was dismissed, upholding the CESTAT's decision to allow the appeal against the revocation of the Customs Broker Licence and penalty imposition due to procedural irregularities and the absence of an 'offence report' as required by the Regulations.