2024 (12) TMI 170 - AT - Customs

Customs Broker license suspension set aside due to non-compliance with CBLR 2018 Regulation 16 requirements

Airmasters Freight Services Versus Commissioner of Customs, GST Bhawan

CESTAT Mumbai set aside the Commissioner of Customs' order continuing suspension of a Customs Broker's license. The appellant CB was charged with ... Immediate suspension of the appellant Customs Broker - it was alleged that the appellants CB did not exercise due diligence in discharging their obligation as required under sub-regulations 10(d), 10(e), 10(k) and 10(n) of CBLR, 2018 - distinct charges framed against the appellants enable the immediate suspension action and its continuation under Regulation 16 of the CBLR, 2018 - HELD THAT:- The Commissioner of Customs had come to the conclusion that the appellants CB had violated the stated sub-regulations (d), (e), (k) and (n) of Regulation 10 ibid, as they did not advice the exporter properly on the need to file declaration with correct details; they did not exercise due diligence and report of any non-compliance by the exporter, to the DC/AC for necessary action. Further, the learned Commissioner had found that the appellants CB could not produce the documents related to S/Bs, and that the exporter could not be located in the address furnished in the S/Bs during verification conducted by the department. Regulation 16 ibid, what is required to be done is to evidentially provide for the appropriateness for immediate suspension action of the CB license and its continuation, pending regular inquiry proceedings under Regulation 17 ibid. However, it is found there is no record to show such a procedure prescribed has been followed in this case. Therefore, it is found that the impugned order is not in conformity with the provisions of CBLR, 2018. There is no justification given by the learned Commissioner of Customs in the impugned order for invoking the provisions of immediate suspension and its continuation in the year April, 2023, nearly after more than four years, for an alleged act done by the exporter in overvaluation of export goods in the year January, 2019 to which the appellants CB have been made as a party/co-noticee - there are no specific grounds to evidentially prove that immediate suspension of the appellants CB license is required as an appropriate case, for initiating action under Regulation 16 of CBLR, 2018. Further, none of the parties are able to provide further information about the inquiry proceedings that is required to be initiated under Regulation 17 for bringing the case to a logical conclusion as per CBLR, 2018. There is no ground or evidence produced by the department to implicate the appellants CB in overvaluation of export goods. In fact, even in the proceedings initiated for the customs offences against the appellants CB, there is no such evidence forthcoming as seen from the adjudication order dated 12.06.2023, in order to claim that the learned Commissioner had gone by his preponderance of probability, in order to decide that the present case is an appropriate case for immediate suspension, on the basis of his subjective satisfaction of the facts and evidences - the impugned order is contrary to the requirement of the provisions of Regulation 16 of CBLR, 2018 and therefore it does not stand the scrutiny of law. There are no merits in the impugned order 04.05.2023 passed by the learned Commissioner of Customs, Nagpur in continued suspension of the CB license of the appellants, inasmuch as there is no finding given by the Commissioner of Customs for displaying the appropriateness of the case for invocation of such action, and justifying the continued suspension of CB license under Regulation 16 of CBLR, 2018. Further, the impugned order dated 04.05.2023 is also not sustainable as it has failed to establish the role of appellants CB in the alleged overvaluation of export goods to claim that regular inquiry proceedings are contemplated against such alleged violations of Regulations 10(d), 10(e), 10(k) and 10(n) ibid. The impugned order dated 04.05.2023 is set aside - it is also directed that the learned Commissioner of Customs to complete the inquiry proceedings under Regulations 17 of CBLR, 2018 expeditiously, preferably within a period of six months from receipt of a copy of this order - appeal allowed. Issues Involved:1. Legality of the immediate suspension and continuation of the Customs Broker (CB) license under the Customs Brokers Licensing Regulations (CBLR), 2018.2. Alleged violations of specific sub-regulations 10(d), 10(e), 10(k), and 10(n) of CBLR, 2018 by the appellants.3. Procedural compliance with Regulation 16 and Regulation 17 of CBLR, 2018.4. Justification for the immediate suspension of the CB license and its continuation.Issue-wise Detailed Analysis:1. Legality of Immediate Suspension and Continuation of CB License:The primary issue was whether the suspension of the Customs Broker license was legally sustainable under the CBLR, 2018. The Tribunal examined the provisions of Regulation 16, which allows for the suspension of a CB license in cases where immediate action is necessary, and an inquiry is pending or contemplated. The Tribunal noted that the suspension should not be routine or mechanical and must be justified with recorded reasons. In this case, the Tribunal found that the Commissioner of Customs did not provide adequate justification or evidence for the immediate suspension and continuation of the appellants' CB license, rendering the action unsustainable in law.2. Alleged Violations of CBLR, 2018 Sub-regulations:The appellants were accused of violating sub-regulations 10(d), 10(e), 10(k), and 10(n) of CBLR, 2018, which outline the obligations of a Customs Broker. These include advising clients on compliance, exercising due diligence, maintaining records, and verifying client information. The Tribunal found that the Commissioner of Customs had concluded violations without conducting an independent inquiry as required under Regulation 17. The Tribunal emphasized that the allegations were premature and that a proper inquiry should be conducted before making such determinations.3. Procedural Compliance with Regulation 16 and Regulation 17:The Tribunal scrutinized the procedural aspects under Regulations 16 and 17. Regulation 16 requires a post-decisional hearing and a reasoned order for suspension, which the Commissioner failed to provide. Regulation 17 outlines the procedure for inquiry, including issuing a show-cause notice, appointing an inquiry officer, and allowing cross-examination. The Tribunal found no evidence that these procedures were followed, highlighting a lack of compliance with the prescribed regulations, which undermined the legality of the suspension.4. Justification for Immediate Suspension:The Tribunal assessed whether the case justified immediate suspension. It noted that the alleged overvaluation occurred in January 2019, and the suspension was ordered in April 2023, more than four years later. The Tribunal found no evidence implicating the appellants in the overvaluation, nor any immediate necessity for suspension. The Tribunal also referenced CBIC instructions emphasizing that suspension should not be applied routinely and must be justified by recorded reasons. The absence of such justification in this case led the Tribunal to conclude that the suspension was not warranted.Conclusion:The Tribunal set aside the impugned order dated 04.05.2023, finding it legally unsustainable due to non-compliance with CBLR provisions and lack of justification for immediate suspension. The Tribunal allowed the appeal, directing the Commissioner of Customs to complete inquiry proceedings under Regulation 17 expeditiously and allowing the appellants to resume their business as Customs Brokers immediately.