2026 (3) TMI 933 - AT - Customs

Foundational Findings must sustain disciplinary charges; absent supporting charges, consequential penalties cannot be maintained.

Imposition of a disciplinary penalty under Regulation 18 was challenged on the ground that the finding of violation of Regulation 10(m) lacked a sustained ... Imposition of penalty under Regulation 18 - violation of Regulation 10(m) of the Custom Broker Licensing Regulations, 2018. Validity of imposition of penalty on the custom broker for alleged breach of Regulation 10(m) of CBLR, 2018 - HELD THAT: - The Tribunal examined the inquiry findings and the adjudicating authority's order which had earlier dropped charges under other provisions of CBLR, 2018 and noted that the adjudicating authority had taken a lenient view in the parallel proceedings against the importer permitting re-export. The Tribunal found that the penalty imposed on the ground that the broker was aware of and had fabricated or concealed the original contract and thereby failed to exercise due diligence under Regulation 10(m) was unsustainable in the facts of the case, particularly where the other charges were dropped and the importer was granted relief. On that basis the imposition of penalty under Regulation 18, predicated on a violation of Regulation 10(m), could not be sustained and the impugned order was set aside. [Paras 15, 16, 17] The penalty imposed under Regulation 18 for alleged breach of Regulation 10(m) of CBLR, 2018 is unsustainable and the impugned order is set aside. Final Conclusion: The appeal is allowed; the Tribunal set aside the order imposing penalty under Regulation 18 of CBLR, 2018 for the alleged breach of Regulation 10(m) and granted consequential relief as per law. Issues: Whether the imposition of penalty of Rs.10,000/- under Regulation 18 of the Custom Broker Licensing Regulations, 2018 for alleged violation of Regulation 10(m) of the Custom Broker Licensing Regulations, 2018 on the facts of the case is sustainable.Analysis: The adjudication under challenge relates solely to confirmation of violation of Regulation 10(m) based on findings in the inquiry report; other charges under Regulation 10(d), 10(e), 10(i), 10(q) and 13(2) were dropped by the adjudicating authority. The impugned penalty was imposed on the premise that the broker was aware of conflicting sale contracts and facilitated obtaining NOC for return of goods despite changes in import policy. The Tribunal examined the sequence of communications, the adjudicating authority's lenient treatment of the importer (including permission to re-export) and the linkage between the dropped charges and the sustaining of Charge 4 under Regulation 10(m). The Tribunal found that the foundation for confirming Regulation 10(m) was not sustained on record and that the Commissioner had concurrently dropped the primary charges upon which the finding under Regulation 10(m) rested.Conclusion: The imposition of penalty of Rs.10,000/- under Regulation 18 of the Custom Broker Licensing Regulations, 2018 for alleged violation of Regulation 10(m) of the Custom Broker Licensing Regulations, 2018 is set aside and the appeal is allowed with consequential relief, if any, as per law.Ratio Decidendi: Where the foundational findings on which a disciplinary charge is based are not sustained and related charges are dropped, a consequential penalty imposed for the related regulation cannot be sustained.