2025 (7) TMI 728 - AT - Customs

Customs broker license revocation overturned after client abandoned goods and revoked appointment under CBLR 2018

M/s. Kushagra Shipping Agency Versus Principal Commissioner of Customs (Airport & ACC) Custom House, Kolkata

CESTAT Kolkata allowed the appeal and set aside the revocation of customs broker license and penalty. The tribunal found that once the importer abandoned ... Revocation of the CB License and imposition of penalty - failure to advice the importer to comply with the provisions of Customs Act, 1962 - violation of Regulation 10 (m), 10 (n) and Regulation 10(q) of CBLR 2018 - HELD THAT:- In the present case, it is observed that the bill of entry was filed on 14th September 2021 and on 18th September 2021, the importer informed the appellant that they have abandoned the goods and the appellant was asked not to proceed with the matter since the importer wanted the foreign supplier to take control of goods for the purpose of re-shipment. The appellant has given 'no objection' to the importer to appoint any other CB to deal with the clearance of the goods covered in the said bill of entry. Thus, once the appellant's appointment as CB has been revoked by the importer, they had no power to act as CB in this case. It is also on record that the foreign seller had already staked claim on the goods. It is observed that without instructions from client, the appellant could not do anything. Nonetheless, the appellant made arrangement of inspection of the goods. Violation of Regulation 10(m) of CBLR 2018 - appellant has delayed the proceedings by 38 days and hence they have not discharged their duties as a CB - HELD THAT:- The appellant has been penalized for violation of Regulation 10 (m) on the charge of not expeditiously providing inspection of the goods. In this regard, it is observed that the importer has restrained the appellant from acting as a Customs broker and taken 'no objection' from him for appointment of another Custom Broker. Thus, the liability and duty cast on the appellant as a Custom broker has ceased and after such cessation the appellant could not be made liable for delay, if any, on the clearance of the goods. Further, from the records, it is observed that the appellant did provide all the amenities for inspection. Thus, the findings of the adjudicating authority that the appellant has violated Regulation 10 (m) of CBLR 2018, is not substantiated. Violation of Regulation 10 (n) of Customs Broker Regulation 2018 - appellant did not verify the correctness of the importer exporter code number, etc. - HELD THAT:- It is observed that the importer was present throughout. They have appeared before the adjudicating authority and they were very much available - Further, it is observed that it is not the obligation of a Custom Broker to visit and verify the office premises of the importer for the purpose of performance of their duties. Accordingly, the allegation of violation of Regulation 10 (n) of Customs Broker Regulation 2018 in the impugned order is not sustained. Violation of the Regulation 10 (q) of the Customs Broker Licensing Regulation - HELD THAT:- The appellant had co-operated with the Custom Authorities. There is no evidence available on record that the appellant has not cooperated with the authorities. Once the importer has decided to relinquish the goods and asked the appellant not to proceed in the matter, the appellant had no further role in the matter. Therefore, the allegation that the appellant had violated Regulation 10 (q) of CBLR 2018 is not tenable. Accordingly, the charge of violation of Regulation 10 (q) of CBLR 2018, is not substantiated. Thus, the allegations in the impugned order that the appellant has violated the Regulations 10(d), (m), (n) and (q) of the CBLR, 2018 are substantiated and accordingly, the revocation of the licence on the allegation of the above said Regulations of CBLR, 2018 is not sustainable and hence the revocation of licence in the impugned order set aside. Since the allegations in the impugned order are held as not sustainable, no penalty imposable on the appellant and hence the penalty imposed on the appellant set aside. Appeal allowed. The core legal questions considered by the Tribunal in this appeal are:1. Whether the revocation of the Customs Broker (CB) License of the appellant on the grounds of violations of Regulations 10(d), 10(m), 10(n), and 10(q) of the Customs Broker Licensing Regulations (CBLR) 2018 is sustainable.2. Whether the imposition of penalty on the appellant for the alleged violations is justified.3. Whether the appellant was rightly held liable for the alleged violations despite the importer's decision to relinquish the goods and revoke the appellant's appointment as Customs Broker.4. Whether the appellant's alleged failure to advise the importer properly and cooperate with Customs authorities amounts to misconduct under the CBLR 2018.Issue-wise Detailed Analysis1. Violation of Regulation 10(d) of CBLR 2018 - Failure to Advise Importer ProperlyLegal Framework and Precedents: Regulation 10(d) requires Customs Brokers to advise importers to comply with Customs Act provisions. The Customs Act, 1962, particularly Section 23, governs relinquishment of goods by importers.Court's Interpretation and Reasoning: The Tribunal noted that the bill of entry was filed on 14th September 2021, and on 18th September 2021, the importer informed the appellant that they had abandoned the goods and instructed the appellant not to proceed further as the foreign supplier would take control for re-shipment. The appellant provided a 'no objection' to the importer's appointment of another Customs Broker. The importer's relinquishment under Section 23 was a prerogative and the appellant had no role once the importer decided to relinquish the goods.Key Evidence and Findings: The importer's letter dated 18th September 2021 relinquishing the goods; appellant's communication to Customs about the importer's instructions; absence of evidence that the appellant failed to advise the importer.Application of Law to Facts: Since the importer voluntarily relinquished the goods and revoked the appellant's appointment, the appellant could not be held liable for failing to advise the importer against relinquishment.Treatment of Competing Arguments: The appellant argued that the allegation was based on assumptions and that the importer acted on legal advice; the Tribunal accepted this reasoning and rejected the allegation.Conclusion: The charge of violation of Regulation 10(d) was not sustained.2. Violation of Regulation 10(m) of CBLR 2018 - Delay in Providing Inspection of GoodsLegal Framework and Precedents: Regulation 10(m) obliges Customs Brokers to perform duties with expedition and efficiency, including facilitating inspection of goods.Court's Interpretation and Reasoning: The adjudicating authority held that the appellant delayed proceedings by 38 days. However, the Tribunal observed that the importer had discharged the appellant and appointed another Customs Broker, thus terminating the appellant's duties. The appellant had, in any event, arranged inspection at their own cost.Key Evidence and Findings: Importer's 'no objection' letter; evidence of inspection arrangements by appellant; lack of evidence of appellant causing delay.Application of Law to Facts: Once the appellant ceased to be the Customs Broker, liability for delay in clearance did not attach to them. The appellant fulfilled inspection facilitation obligations.Treatment of Competing Arguments: The appellant contended cessation of duties and cooperation; the Tribunal found no substantiation for the delay charge.Conclusion: The charge of violation of Regulation 10(m) was not substantiated.3. Violation of Regulation 10(n) of CBLR 2018 - Failure to Verify Importer Exporter Code and Related DetailsLegal Framework and Precedents: Regulation 10(n) requires Customs Brokers to verify correctness of importer/exporter codes and related particulars.Court's Interpretation and Reasoning: The Tribunal noted that the importer was present throughout proceedings and appeared before adjudicating authorities. It is not the obligation of a Customs Broker to physically verify the importer's office premises.Key Evidence and Findings: Importer's presence and participation in proceedings; absence of requirement to physically verify premises.Application of Law to Facts: The appellant's verification duties were fulfilled by relying on importer's cooperation and documentation.Treatment of Competing Arguments: The appellant argued non-obligation to verify premises; the Tribunal accepted this argument.Conclusion: The charge of violation of Regulation 10(n) was not sustained.4. Violation of Regulation 10(q) of CBLR 2018 - Failure to Cooperate with Customs AuthoritiesLegal Framework and Precedents: Regulation 10(q) mandates Customs Brokers to cooperate with Customs authorities during inquiries and investigations.Court's Interpretation and Reasoning: The Tribunal found no evidence that the appellant failed to cooperate. The appellant's representative's absence on one occasion was due to hospitalization for COVID-19. The appellant provided truthful statements. The payment transactions cited had no bearing on the charges under Regulation 10(q).Key Evidence and Findings: Medical records/hospitalization of appellant's representative; absence of evidence of non-cooperation; irrelevant financial transactions.Application of Law to Facts: The appellant cooperated as required; no breach of Regulation 10(q) was established.Treatment of Competing Arguments: The appellant rebutted allegations of non-cooperation; the Tribunal accepted this defense.Conclusion: The charge of violation of Regulation 10(q) was not substantiated.5. Imposition of Penalty and Revocation of LicenseLegal Framework and Precedents: Penalties and license revocation under the Customs Act and CBLR 2018 are contingent on substantiated violations.Court's Interpretation and Reasoning: Since the Tribunal found that the charges under Regulations 10(d), (m), (n), and (q) were not sustained, the foundation for revocation and penalty fell away.Key Evidence and Findings: Lack of evidence supporting violations; appellant's cooperation and compliance; importer's instructions relieving appellant of duties.Application of Law to Facts: Without proven violations, revocation and penalty were not legally sustainable.Treatment of Competing Arguments: The appellant argued double jeopardy due to parallel proceedings under Section 124 of Customs Act; the Tribunal did not find separate proceedings warranted.Conclusion: The revocation of the Customs Broker License and penalty imposition were set aside.Significant Holdings'Once the importer has decided to relinquish the goods and asked the appellant not to proceed in the matter, the appellant had no further role in the matter. Thus, we observe that there is no truth in allegation made in the impugned order that the appellant did not advise the importer not to relinquish the goods.''The liability and duty cast on the appellant as a Customs broker has ceased and after such cessation the appellant could not be made liable for delay, if any, on the clearance of the goods.''It is not the obligation of a Customs Broker to visit and verify the office premises of the importer for the purpose of performance of their duties.''There is no evidence available on record that the appellant has not cooperated with the authorities.''We hold that the allegations in the impugned order that the appellant has violated the Regulations 10(d), (m), (n) and (q) of the CBLR, 2018 are not substantiated and accordingly, the revocation of the licence on the allegation of the above said Regulations of CBLR, 2018 is not sustainable and hence we set aside the revocation of licence in the impugned order.''Since the allegations in the impugned order are held as not sustainable, we hold that no penalty is imposable on the appellant and hence we set aside the penalty imposed on the appellant.'The Tribunal's final determinations on each issue were that the charges of violations under Regulations 10(d), 10(m), 10(n), and 10(q) of the Customs Broker Licensing Regulations, 2018 were not proven. Consequently, the revocation of the Customs Broker License and the penalty imposed on the appellant were set aside, and the appeal was allowed with consequential relief.