2026 (1) TMI 731 - AT - Customs

Lawfulness of penalties and security forfeiture for customs brokers under CBLR: statutory Rs.50,000 cap upheld; forfeiture invalidated

Whether the penalty and forfeiture imposed under the CBLR, 2013 were lawful: the tribunal examined Regulation 8(1), Regulation 17(9) and Regulation 20 and ... Penalty upper limit - Revocation of Customs Brokers License apart from forfeiture of Security Deposit - failed to discharge the obligation cast upon them under the Regulation 17(9) of the CBLR, 2013 - Levy of penalty, which is not commensurate with the gravity of the offence committed - Whether the impugned order calls for any interference? - HELD THAT:- From the relevant clauses of governing Customs Brokers Licensing Regulations, 2013 and at regulation 8(1) and under Regulation 20, two things are clear to us, viz. the threshold of penalty for any violation insofar as Customs Brokers Licensing Regulations is concerned, is Rs. 50,000/- only; and secondly, the governing statute, i.e. CBLR does not provide for forfeiture of Security Deposit at all. Hence, we are of the view that the grievance of the Department has no solution at all, as could be understood from the Regulations, 2013. When the Rules prescribe an upper limit, imposing the maximum penalty as provided cannot therefore be held to be ‘not in commensurate’ and therefore, we do not find any infirmity in the impugned order, which is upheld. Ordered accordingly. Resultantly, Appeal filed by the Revenue is dismissed. Issues: Whether the appellate order imposing penalty of Rs.50,000/- without revoking the customs broker's licence calls for interference.Analysis: The regulation scheme prescribes bonding under Regulation 8(1), sets out offences including those under Regulation 17(9) and 18(c), and provides that revocation or imposition of penalty is governed by Regulation 18. Regulation 22 prescribes penalty amounts and Regulation 20(7) authorises the licensing authority, on considering the inquiry report and representations, to pass such orders as it deems fit. The statutory framework fixes an upper monetary limit for penalty at Rs.50,000/- and does not provide for forfeiture of the security deposit. Given that the inquiry found violations and the licensing authority considered the inquiry report and representations before imposing the maximum monetary penalty expressly permitted by the Regulations, there is no statutory basis to substitute revocation or forfeiture for the prescribed penalty where the authority has exercised its discretion to impose the maximum permissible fine.Conclusion: The impugned order does not call for interference; the penalty of Rs.50,000/- imposed under the Customs Brokers Licensing Regulations, 2013 is upheld and the appeal is dismissed in favour of the assessee.