2025 (6) TMI 1366 - AT - Customs

F Card revocation and Rs. 50,000 penalty set aside due to unsubstantiated charges under CBLR 2018

Shyamal Kumar Ghosh Versus Principal Commissioner of Customs (Airport & ACC Commissionerate), Kolkata

CESTAT Kolkata set aside the revocation of appellant's F Card and penalty of Rs. 50,000/- under CBLR 2018. The appellant's F Card became non-operational ... Suspension of CHA license - F Card (F Pass) No. S-108/01 (F) attached with the said CHA Firm also became non-functional - difference in quantity between the quantity as declared in the B/E and that were found physically - violation of Regulations 10(a), 10(b), 10(d), 10(m) and 10(q) of CBLR, 2018 - Penalty of Rs. 50,000/- imposed on the appellant under Regulation 18 of the CBLR, 2018. HELD THAT:- The appellant was an employee of the Customs Broker Firm M/s. S.K. Acharya and the F Card bearing No. S-108/01 (F) was issued to him on 06.03.2007. A perusal of the above F Card number clearly shows that the said F card had been tagged with the CB Firm M/s. SK Acharya bearing CHA License No. S-108, Code No. 2104. It is also observed that the F Card of the appellant was renewed from time to time and it was last renewed on 07.08.2019 (renewed up to 26.11.2026), when the Customs Broker, M/s. S K Acharya was operational. On 17.06.2022, the Customs Broker License of M/s. S.K. Acharya (PAN No. ABFFS9543N) was suspended relating to some purported irregularity. So, we observe that the natural corollary of the suspension of the License of the CB Firm S K Acharya was that the F-Card of the appellant, attached with the said CB Firm, also lost the status of being operative with effect from 17.06.2022. It is also observed that the appellant started to function as a freelancer based on his experience in the import-export matters in his individual capacity to earn his livelihood. It is observed that this activity of the appellant cannot be considered as an activity undertaken by him in his capacity as an F-Card Holder, as his F card was already inoperative. In this case, an Offence Report was forwarded by SIIB to the Commissioner of Customs indicating therein some discrepancies noticed in the consignments imported by M/s. Ashok Trading Co. and M/s. New Heera Sales Corporation. It is a fact on record that the clearance of the said consignments were dealt with by the CB Firm M/s. P.R. Logistics - the appellant played a limited role of liasoning in the form of intimating duty liability, sharing assessed Bill of Entry copy along with ICEGATE E-payment link for payment of said duty amount etc. It is clear that these activities were undertaken by him in his individual capacity and not as a F Card holder, as his F card is already non operational. Further, in the instant case, it is observed that the entire allegation against the appellant has been upheld on the basis of statement given by Shri Ashok Banka, Importer. There are no concrete evidence against the appellant in the offence report against the appellant. It is also found that there is no evidence brought on record by the Department against the appellant to establish that the appellant has violated the provisions of the Regulations 10(a), 10(b), 10(d), 10(m) and 10(q) of the CBLR, 2018. It is well settled that mere allegation alone is not sufficient to establish the role of the appellant in the alleged offence. Accordingly, the allegation of violation of the provisions of the Regulations 10(a), 10(b), 10(d), 10(m) and 10(q) of the CBLR, 2018 against the appellant herein are not substantiated. Consequently, the revocation of the F card of the appellant by the Pr. Commissioner of Customs (Airport & ACC Commissionerate) Custom House, Kolkata vide Order dated 27.03.2024, is legally not sustainable and hence we set aside the same. Penalty of Rs. 50,000/- imposed on the appellant under Regulation 18 of the CBLR, 2018 - HELD THAT:- It is observed that when the charge against the appellant is not sustainable, the question of imposition of penalty on him does not arise. Accordingly, the penalty imposed on the appellant is set aside. Conclusion - i) The Revocation of the F Card of the appellant as ordered in the impugned order set aside. ii) The penalty imposed on the appellant in the impugned order is set aside. Appeal disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Tribunal were:Whether the appellant, whose F-Category Identity Card (F-Card) was issued and tagged with the Customs House Agent (CHA) Firm M/s. S.K. Acharya, could be held liable for violations of Customs Brokers Licensing Regulations (CBLR), 2018, after the CHA Firm's license was suspended and the appellant's F-Card became inoperative;Whether the appellant's activities as a freelancer, post suspension of the CHA Firm's license, could be construed as functioning in his capacity as an F-Card holder;Whether the revocation of the appellant's F-Card and imposition of penalty under Regulations 10(a), 10(b), 10(d), 10(m), 10(q), and Regulation 18 of the CBLR, 2018 were legally sustainable given the facts and evidence;Whether the procedural safeguards under Regulation 17(9) of CBLR, 2018 were complied with, particularly regarding the linkage of charges against the F-Card holder and the Customs Broker Firm;Whether the evidence on record was sufficient to establish the appellant's violation of the cited regulations.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Status and Liability of the Appellant Post Suspension of CHA Firm's LicenseRelevant Legal Framework and Precedents: The appellant's F-Card was issued under the CBLR, 2018, which governs licensing and conduct of Customs Brokers and their employees. The linkage between an F-Card holder and the CHA Firm is crucial, as the F-Card's validity depends on the operational status of the associated CHA Firm. Regulation 17(9) of CBLR, 2018 prescribes procedural safeguards when charges are framed against both the Customs Broker and the F-Card holder.Court's Interpretation and Reasoning: The Tribunal observed that the appellant's F-Card was issued and tagged with M/s. S.K. Acharya, whose CHA License was suspended on 17.06.2022. The suspension of the CHA Firm's license naturally rendered the appellant's F-Card inoperative from that date. The appellant's subsequent activities as a freelancer were found to be independent of his F-Card status.Key Evidence and Findings: The appellant was not tagged with any other CHA Firm after the suspension of M/s. S.K. Acharya's license. The appellant acted as an intermediary with M/s. P.R. Logistics, a different Customs Broker, in a limited capacity involving liaison and communication of duty liabilities, without utilizing his F-Card.Application of Law to Facts: Since the F-Card was inoperative post suspension of the CHA Firm's license, the appellant's freelance activities could not be construed as actions undertaken in his capacity as an F-Card holder. Therefore, liability under the CBLR, 2018 for violations committed in connection with those activities could not be imposed on the appellant as an F-Card holder.Treatment of Competing Arguments: The Revenue contended that the appellant's role was integral to the alleged violations, relying on the offence report. However, the Tribunal found that the appellant's involvement was limited and did not amount to functioning as an F-Card holder.Conclusion: The appellant's F-Card was non-operational from 17.06.2022, and his freelance activities were outside the scope of his F-Card status, negating liability as an F-Card holder.Issue 2: Compliance with Procedural Requirements under Regulation 17(9) of CBLR, 2018Relevant Legal Framework: Regulation 17(9) of CBLR, 2018 states that charges against an F-Card holder can only be pursued following the procedure prescribed under Regulations 16 and 17 if charges have also been framed against the associated Customs Broker Firm.Court's Interpretation and Reasoning: The Tribunal noted that the charges against the appellant were not linked to the CHA Firm M/s. S.K. Acharya, as proceedings against the firm had been dropped by an order dated 20.09.2023. Therefore, the procedural requirements under Regulation 17(9) could not be invoked against the appellant.Application of Law to Facts: Since the CHA Firm was not charged, the appellant could not be proceeded against as an F-Card holder under the said regulation. The revocation of the F-Card on this basis was thus procedurally flawed.Conclusion: The procedural safeguards under Regulation 17(9) were not complied with, rendering the revocation order legally unsustainable.Issue 3: Sufficiency of Evidence to Establish Violations of Regulations 10(a), 10(b), 10(d), 10(m), and 10(q) of CBLR, 2018Relevant Legal Framework: Regulations 10(a), 10(b), 10(d), 10(m), and 10(q) of CBLR, 2018 prescribe duties and prohibitions for Customs Brokers and their employees, including adherence to correct documentation, truthful declarations, and compliance with customs laws.Court's Interpretation and Reasoning: The Tribunal found that the entire allegation against the appellant was primarily based on the statement of an importer, Shri Ashok Banka. No concrete or corroborative evidence was produced by the Department to establish the appellant's direct involvement in the alleged irregularities.Key Evidence and Findings: The offence report highlighted discrepancies in the quantity of imported goods but linked the clearance to M/s. P.R. Logistics. The appellant's role was limited to liaison activities, and no documentary or testimonial evidence implicated him in violations of the cited regulations.Application of Law to Facts: Mere allegations or unsubstantiated statements are insufficient to establish contravention of the CBLR, 2018. The Department failed to discharge the burden of proof against the appellant.Conclusion: The allegations of violation of Regulations 10(a), 10(b), 10(d), 10(m), and 10(q) against the appellant were not substantiated.Issue 4: Validity of Revocation of F-Card and Imposition of Penalty under Regulation 18 of CBLR, 2018Relevant Legal Framework: Regulation 18 of CBLR, 2018 empowers the Commissioner of Customs to impose penalties for violations of the regulations.Court's Interpretation and Reasoning: Since the Tribunal found the charges against the appellant to be unsubstantiated and the procedural requirements not complied with, the revocation of the F-Card and the penalty imposed were not legally sustainable.Application of Law to Facts: The penalty is contingent upon proven violations. With no evidence supporting the charges, the penalty lacked a valid foundation.Conclusion: The penalty of Rs. 50,000/- imposed on the appellant was set aside.3. SIGNIFICANT HOLDINGSThe Tribunal held:'Where in an offence report, charges have been framed against an F card holder in addition to the Customs Broker who has been issued a license under regulation 7, then procedure prescribed in regulations 16 and 17 shall be followed mutatis mutandis in so far as the prescribed procedure is relevant to the F card holder.'This principle was pivotal in determining that the appellant could not be proceeded against independently without charges framed against the associated Customs Broker Firm.The Tribunal concluded:The appellant's F-Card was non-operational following the suspension of the CHA Firm's license, and his freelance activities were outside the scope of his F-Card status;The procedural safeguards under Regulation 17(9) were not complied with, as no charges were framed against the CHA Firm;The Department failed to produce concrete evidence against the appellant to establish violations of Regulations 10(a), 10(b), 10(d), 10(m), and 10(q) of the CBLR, 2018;The revocation of the appellant's F-Card and imposition of penalty were legally unsustainable and were set aside.