2026 (1) TMI 733 - AT - Customs

Admissibility of section 108 recorded statements to prove CBLR regulation breaches - no admissible evidence, order set aside

Dominant issue: whether findings of breach of CBLR provisions rested on admissible evidence. The Tribunal held that statements recorded under section 108 ... Customs Broker Licence - imposing a penalty and forfeiting the entire amount of security deposit under Regulations 14 and 18 read with Regulations 17(7) of the Customs Broker Licencing Regulations, 2018 - Relevancy of statements u/s 138B - due diligence - supervision of employees - Duty to inform client of statutory compliance - Vicarious liability of employer - Whether, based on the available evidence on record, it can be said that the appellant had violated Regulations 10(d), 10(e), 10(f), 10(m) and 13(12) of CBLR and if so, whether the penalty imposed on the appellant is proportionate to the violations. - HELD THAT:- Since the Commissioner did not admit the statements as evidence, they also are not relevant and cannot be relied upon in these proceedings. Therefore, the finding that the appellant had violated Regulations 10(d) and 10(e) cannot be sustained. This finding is also based on the statement recorded before the Customs Officer under section 108 of the Act and the Commissioner has, as discussed above, not examined the persons who made the statements has witnesses and admitted them as evidence. Therefore, the statements are also not relevant under section 138D of the Act. Hence, the finding that the appellant violated Regulation 10(m) cannot be sustained. In short, all the findings in the impugned order regarding violation of various provisions of CBLR by the appellant were only based on various statements. The Commissioner could have summoned and examined the persons who made the statements and could have admitted their statements as evidence, but he did not. Not only the persons were not examined by Commissioner, but the statements of various persons have also not been relied upon in the SCN. In view of the above, the impugned order cannot be sustained and deserved to be set aside. Issues: (i) Whether, on the available evidence, the appellant violated Regulations 10(d), 10(e), 10(f), 10(m) and 13(12) of the Customs Broker Licencing Regulations, 2018; (ii) Whether the penalty and forfeiture imposed on the appellant are proportionate to any established violations.Issue (i): Whether the appellant violated Regulations 10(d), 10(e), 10(f), 10(m) and 13(12) of the Customs Broker Licencing Regulations, 2018.Analysis: The impugned findings of violation are founded predominantly on statements recorded from various importers under section 108 of the Customs Act, 1962. For such statements to be admissible and relevant in administrative proceedings, the procedure in section 138B of the Customs Act must be followed, which requires examination of the declarant as a witness and an express admission of the statement as evidence by the adjudicating authority. The adjudicating authority did not examine the declarants as witnesses nor record the requisite opinion admitting those statements as evidence. No other independent evidence has been shown to substantiate the violations relied upon.Conclusion: The findings of violation of Regulations 10(d), 10(e), 10(f), 10(m) and 13(12) cannot be sustained and are decided in favour of the appellant.Issue (ii): Whether the penalty and forfeiture imposed are proportionate to any established violations.Analysis: As the impugned order's substantive findings of breaches are unsustained for want of admissible evidence, there is no basis on record to uphold the penalty, forfeiture or revocation imposed on the appellant. The proportionality of penalty is therefore considered in the context that the underlying violations have not been proved by admissible evidence.Conclusion: The penalty, forfeiture and revocation imposed are not sustained; this conclusion is in favour of the appellant.Final Conclusion: The impugned order revoking the customs broker licence and imposing penalty and forfeiture is set aside and the appeal is allowed, with consequential relief to the appellant.Ratio Decidendi: Statements recorded under section 108 of the Customs Act, 1962 are not admissible in administrative adjudication unless the adjudicating authority examines the declarant as a witness and expressly admits the statement as evidence under section 138B; absence of such procedural compliance renders findings based solely on those statements unsustainable.