2025 (8) TMI 1238 - AT - Customs

Commissioner's maximum statutory penalty under Reg.22 and Reg.20(7) CBLR 2013 sustained; no licence revocation or security forfeiture

Commissioner of Customs Chennai M/s. Allwin Cargo Services

Commissioner of Customs Chennai M/s. Allwin Cargo Services - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether the penalty of Rs.50,000 imposed under Regulation 18/22 read with Regulation 20(7) of the Customs Brokers Licensing Regulations, 2013 is commensurate with the violations proved against the Customs Broker. 2. Whether, on the facts, revocation of the Customs Broker licence and forfeiture of the security deposit could lawfully be imposed in addition to, or instead of, the maximum penalty prescribed by Regulation 22. 3. Whether a Review Committee or higher authority can direct a remedy or punishment beyond the statutory power expressly conferred on the Commissioner under Regulation 20(7). 4. Applicability of the Principle of Proportionality in adjudicating sanctions under CBLR, 2013 and the relevance of the enquiry officer's report finding charges not proved in mitigation of sanction. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Legality and proportionality of the Rs.50,000 penalty Legal framework: Regulation 20(7) authorizes the Commissioner, after considering the inquiry report and representation, to either revoke suspension, revoke licence, or impose penalty not exceeding the amount mentioned in Regulation 22. Regulation 22 prescribes the maximum monetary penalty (Rs.50,000). Precedent treatment: The Tribunal referred to a prior decision involving a different Customs Broker where forfeiture of security and Rs.50,000 penalty were upheld; that decision was applied by distinguishing factual involvement in a live consignment versus past consignments here. Interpretation and reasoning: A conjoint reading of Regulations 20(7) and 22 shows the statutory ceiling on monetary punishment. The Adjudicating Authority imposed the maximum pecuniary penalty permitted by Regulation 22. Given the statutory cap, the amount cannot be deemed meagre as a matter of law; the authority exercised the discretion expressly provided. The Tribunal also weighed the enquiry officer's report (which found charges not proved) and the nature of the breaches (non-verification of multiple IECs and dealing with an intermediary) in concluding that the maximum monetary penalty was within the permissible range and not excessive on the facts. Ratio vs. Obiter: Ratio - the Commissioner's imposition of the maximum statutory penalty under Regulation 22 is lawful where the facts support violations, and the statutory cap precludes imposition of a higher monetary sanction. Obiter - observations regarding the adequacy of Rs.50,000 as a deterrent in abstract terms. Conclusion: The penalty of Rs.50,000 was legally permissible and commensurate with the proven violations; no interference with the penalty was warranted. Issue 2 - Lawfulness of revocation of licence and forfeiture of security deposit as alternative or additional sanctions Legal framework: Regulation 20(7) provides mutually exclusive options for the Commissioner - revoke licence or impose penalty up to the Regulation 22 cap (and/or revoke suspension). The Regulations do not contemplate combining revocation/forfeiture with the maximum penalty beyond the prescribed limits. Precedent treatment: The Tribunal distinguished an instance where forfeiture and penalty were upheld in relation to a Customs Broker directly linked to a live consignment involving seized contraband; here, complicity in smuggling regarding past consignments was not established to the same degree. Interpretation and reasoning: Where the statute confines the Commissioner's remedial options and caps monetary penalties, imposing the extreme sanction of licence revocation and forfeiture requires facts that meet the statutory and proportionality thresholds. The record showed that the enquiry officer had found the charges unproved and recommended relief; further, the respondent's misconduct related to non-verification and dealing through an intermediary rather than active participation in live smuggling. Given these facts and the regulatory scheme, revocation and forfeiture would be disproportionate and beyond what the Commissioner was required or mandated to impose. Ratio vs. Obiter: Ratio - regulation does not permit automatic or cumulative imposition of revocation/forfeiture along with or in excess of the statutory monetary ceiling absent commensurate factual foundation; proportionality must guide sanction choice. Obiter - commentary on livelihood impact of revocation on broker and employees. Conclusion: Revocation of the licence and forfeiture of security deposit would have been unduly harsh and not justified on the facts; the Commissioner's choice of the statutory maximum monetary penalty was appropriate. Issue 3 - Competence of Review Committee to require a sanction beyond statutory limits Legal framework: Statutory discretion under Regulation 20(7) vests the Commissioner with decision-making authority to revoke or impose penalty within Regulation 22 limits; review bodies cannot enlarge statutory powers. Precedent treatment: The Tribunal applied the principle that authorities cannot direct actions or sanctions beyond what the statute authorizes and relied on a previous decision for distinguishing factual differences but not for expanding statutory powers. Interpretation and reasoning: The Review Committee's statement that the Rs.50,000 penalty was not commensurate effectively sought an outcome inconsistent with the statutory scheme because Regulations do not permit greater monetary penalty. The Review Committee cannot require imposition of remedies beyond the Commissioner's statutory options; such insistence is beyond the scope of the Regulations. Ratio vs. Obiter: Ratio - a review authority cannot compel an outcome or a sanction that exceeds or alters the statutory options available to the adjudicating authority under the governing regulations. Obiter - none significant beyond the reasoning. Conclusion: The Review Committee exceeded its proper scope in urging greater sanctions; its recommendation could not lawfully displace the Commissioner's statutorily confined discretion. Issue 4 - Role of the enquiry officer's findings and the Principle of Proportionality in sanctioning Legal framework: Disciplinary/regulatory sanctioning must reflect the nature and gravity of proven misconduct; enquiry reports and mitigating factual elements inform proportionality analysis. Precedent treatment: The Tribunal relied on internal reasoning and compared with other factual scenarios where more severe sanctions were justified by direct linkage to illicit importation; it distinguished cases where the broker was directly linked to the live smuggling. Interpretation and reasoning: The enquiry officer's report that charges were not proved weighed materially in mitigation. Combined with the statutory cap and the facts showing non-verification and intermediary involvement rather than direct smuggling, the Tribunal applied the Principle of Proportionality to hold that revocation/forfeiture would be disproportionate. The Commissioner's imposition of the maximum statutory penalty reflected a measured exercise of discretion consistent with proportionality. Ratio vs. Obiter: Ratio - where the enquiry report and factual matrix do not establish direct complicity in serious smuggling, proportionality requires that extreme sanctions (revocation/forfeiture) should not be imposed merely because misconduct occurred; maximum statutory monetary penalty can be an appropriate and proportionate response. Obiter - general comments on proportionality in regulatory sanctions. Conclusion: The enquiry officer's mitigatory findings and the proportionality principle justified sustaining the adjudicating authority's order imposing the statutory maximum penalty and not revoking licence or forfeiting security. Overall Disposition The adjudicating authority lawfully exercised its statutory discretion under Regulation 20(7) and Regulation 22 by imposing the maximum monetary penalty permissible. Given the statutory scheme, the enquiry findings, and the proportionality analysis, revocation of licence and forfeiture of security were not warranted; the impugned order imposing the Rs.50,000 penalty was sustained and the appeal by the Department was dismissed.