TaxTMI 
TaxTMI 
2026 (1) TMI 436
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.... action was initiated against the Appellant and a Show Cause Notice No 05/2024 (F. No. GEN/CB/ACTN/47/2024-POL) dated 25.10.2024 was issued to the Appellant. Thereafter, the Inquiry Report dated 29.01.2025, concluded that: - a. The Appellant had obtained and verified all prescribed KYC documents, b. Reasonable due diligence had been exercised, c. There was no violation of Regulation 10(e) or 10(n) of CBLR, 2018. 1.4 Notwithstanding the favourable findings of the Inquiry Officer, the Principal Commissioner of Customs (Preventive), Tiruchirappalli, vide Order-in-Original No. 02/2025 dated 25.04.2025, disagreed with the Inquiry Report and held that the Appellant had failed to discharge obligations under Regulation 10(e) and 10(n) of CBLR, 2018. Accordingly, the Adjudicating Authority revoked the Customs Broker Licence under Regulation 17(7), ordered forfeiture of the entire security deposit of Rs.5,00,000/- under Regulation 14, and imposed a penalty of Rs.50,000/- under Regulation 18(1) of CBLR, 2018. 2. Being aggrieved by the said Order-in-Original, the Appellant has filed the present appeal before this Tribunal. 3. The Ld. Advocate Mr. Bindusaran,....
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....porter at the declared address, which was not satisfactorily established. 5.3 It was contended that the seriousness of the offence justified revocation, forfeiture and penalty, irrespective of whether the Appellant filed the Bill of Entry or not. 6. We have heard the rival submissions of both sides. We have also perused the appeal records, as well as the judicial precedents cited. 7. Upon such consideration, the following issues arise for our determination, namely, as to: - i. Whether the Appellant violated Regulations 10(e) and 10(n) of CBLR, 2018? ii. Whether revocation of licence, forfeiture of security and penalty are justified? iii. Whether the proceedings are barred by limitation under Regulation 17? 8.1 Before examining the issues framed above, it is necessary to briefly advert to the relevant statutory provisions governing the obligations, disciplinary mechanism and consequences under the Customs Broker Licensing Regulations, 2018 (CBLR, 2018). 8.2 Regulation 10 of CBLR, 2018 prescribes the obligations of a Customs Broker. The present proceedings allege violation of Regulation 10(e) and Regulation 10(n), which read, in substance, as....
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....IEC, GSTIN, identity of the client and functioning at the declared address using reliable and authentic documents. It does not mandate continuous surveillance or investigation beyond reasonable professional diligence. 9.2 The record clearly shows that the Appellant obtained all statutory KYC documents, verified IEC and GSTIN from government portals, obtained bank verification, lease deed, and sent verification letters which were delivered at the declared address. 9.3 The Inquiry Officer, after examining statements, documents and submissions, categorically held that the Appellant had taken reasonable steps and complied with Regulation 10(n). We find no cogent reason in the impugned order for discarding the Inquiry Report except for conjectural reasoning. 9.4 Alleged discrepancies such as differing signatures, withdrawal of funds, or business model of the importer do not fall within the statutory obligations of a Customs Broker. The Customs Broker is not expected to act as an investigating agency. 9.5 As regards Regulation 10(e), we find that the obligation to exercise due diligence arises in relation to work actually undertaken by the Customs Broker. In the present case,....
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....ter surfaced subsequently and was detected at the port of import, prior to any Bill of Entry being filed by the Appellant. Thus, as held in Shakti Cargo Movers, subsequent fraud by the importer cannot retrospectively invalidate KYC verification that was otherwise compliant at the relevant time. 10.6 Therefore, we find that the revocation, forfeiture and penalty are grossly disproportionate and unsustainable. Issue (iii): Limitation under Regulation 17 11.1 We find that Regulation 17(1) of the CBLR 2018 mandates issuance of a show cause notice to the Customs Broker within ninety days from the date of receipt of the offence report. In the present case, it is an admitted position from Para 2 of the SCN that the offence report was received on 23.07.2024 and, the SCN was issued on 25.10.2024 and the statutory period of ninety days expired on 22.10.2024. Therefore, the initiation of proceedings beyond the date of expiry is thus clearly in contravention of Regulation 17(1) ibid. 11.2 In view of the mandatory nature of the timeline prescribed under Regulation 17(1), the issuance of the show cause notice beyond the stipulated period renders the proceedings time-barred and uns....