TaxTMI 
TaxTMI 
2026 (8) TMI 1409
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.... Regulations, 2018 ['CBLR, 2018']. 2. The principal question arising for consideration in the present Appeal is whether the findings recorded by the CESTAT, affirming the revocation of the Appellant's Customs Broker licence, forfeiture of the security deposit and imposition of penalty, give rise to any substantial question of law warranting interference by this Court. The controversy essentially concerns the legal effect of the Appellant's admitted conduct in permitting his Customs Broker licence and credentials to be used by his G-card holder for consideration and in filing a Shipping Bill in the name of an exporter without obtaining authorisation from such exporter. FACTUAL MATRIX: 3. In order to appreciate the controversy involved in the present Appeal, the relevant facts, in brief, are required to be noticed. 4. The Appellant was holding Customs Broker Licence No. R-94/97, which was stated to have been originally granted in the year 1995 and regularised in the year 1997. The licence was valid during the period relevant to the present proceedings. The Appellant was engaged in the business of Customs clearance and was operating inter alia from the Air Cargo Complex, E....
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....he Directors of M/s Soleado Impex. The case of the Department was that Shri Mohit Taneja had requested the Appellant to file the Shipping Bill not in the name of his own firm, but in the name of Deepnidhi, and that the Appellant had acted upon such request. Thus, the Shipping Bill in respect of the consignment containing Red Sanders came to be filed in the name of Deepnidhi without its authorisation or knowledge. 11. It is also relevant to notice the role attributed to Shri Devender Kumar in the investigation. Shri Devender Kumar was the G-card holder associated with the Appellant. His office was situated at L-9, Sunder Singh Building, near Mahipalpur Chowk, New Delhi, separate from the premises of the Appellant. A search of the Appellant's premises was conducted on 16.12.2019 in the presence of the Appellant and independent witnesses. No incriminating document was found from the said premises. A separate search was also conducted at the premises of Shri Devender Kumar, during which certain documents, including a computer system, were resumed for further investigation. 12. During the investigation, the Appellant's statement was recorded on 16.12.2019. The Appellant stated, in....
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.... submissions and evidence placed on record by the Appellant. It was contended that the Appellant had undertaken verification of the IEC and GST particulars of the exporter and that there was no material to establish that the Appellant had any knowledge of the prohibited goods sought to be exported. 17.2. It was further submitted that the alleged arrangement with Shri Devender Kumar, the G-card holder, could not be treated as a transfer or sale of the Customs Broker licence. According to the Appellant, the amount received from Shri Devender Kumar represented clearance charges/agency commission and there was no transfer of proprietary rights in the licence. It was contended that the expression "sub-letting", relied upon by the Department, does not find place in Regulation 10 of the CBLR, 2018. 17.3. It was next submitted that there was no evidence of any knowledge, connivance or active facilitation on the part of the Appellant in the attempted export of Red Sanders. The fact that the Appellant's premises were searched and no incriminating material was recovered therefrom was also relied upon. It was contended that, in the absence of any material establishing mens rea or active ....
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....s Broker licence, in violation of Regulation 1(4) of the CBLR, 2018, which expressly provides that a licence shall not be sold or otherwise transferred. 18.3. It was further submitted that the Appellant had failed to discharge his statutory obligations of verification and due diligence. In particular, the Appellant had filed the Shipping Bill in the name of M/s Deepnidhi International without obtaining any authorisation from, or even contacting, the said exporter, and had failed to properly verify the identity and functioning of the exporter. It was contended that the Appellant had thereby violated the obligations prescribed under Regulations 10(a) and 10(n) of the CBLR, 2018. 18.4. It was then submitted that the Appellant could not disown responsibility for the acts of his G-card holder, particularly when he had himself permitted the use of his licence and credentials for consideration. It was contended that the violations were not merely technical or procedural in nature, but constituted serious breaches of the duties and obligations attached to a Customs Broker licence, particularly when the transaction involved an attempted export of prohibited Red Sanders. 18.5. Relia....
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.... to discharge in the course of his business. 22. In the present case, the finding with regard to the Appellant having permitted Shri Devender Kumar to use his Customs Broker licence and dongle for consideration does not rest merely upon an inference drawn by the Department. The Appellant himself, in his statement recorded during investigation, admitted that he was receiving Rs. 10,000/- per month from Shri Devender Kumar and that he had lent his licence and dongle to him for a price. The CESTAT has also noticed the Appellant's admission before it regarding the receipt of the said amount. 23. The submission that the amount received by the Appellant represented clearance charges or agency commission does not satisfactorily explain the admitted fact that the Appellant had lent his licence and dongle to Shri Devender Kumar for consideration. The distinction, therefore, is between permitting a G-card holder to act on behalf of the Customs Broker and parting with the use of the Customs Broker's licence and dongle for a fixed monetary consideration. The latter conduct is expressly prohibited by Regulation 1(4) of the CBLR, 2018. 24. The Appellant's submission that there could be ....
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.... recorded by the CESTAT, that the Shipping Bill was filed in the name of Deepnidhi without obtaining any authorisation from it. 28. More significantly, the investigation revealed that the Appellant had not even contacted Deepnidhi before filing the Shipping Bill in its name. Thus, this is not a case where the Appellant had obtained an authorisation from the exporter but subsequently acted upon incorrect information supplied by the client. The very person in whose name the Shipping Bill was filed had neither engaged the Appellant for the transaction nor authorised him to represent it before the Customs authorities. 29. The Appellant was thus not merely confronted with a case of incorrect information supplied by a client. He was approached by a third party, Shri Mohit Taneja, with a request to file the Shipping Bill in the name of another exporter, and instead of declining to undertake such a transaction or advising as to the legal requirement of obtaining the exporter's authorisation, proceeded to file the Shipping Bill in the name of Deepnidhi. The finding under Regulation 10(d) is consequently supported by the material on record. 30. Regulation 10(n) of the CBLR, 2018 fur....
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....rson in whose name the Customs transaction was undertaken. The present case is therefore materially distinguishable from a case involving an authorised client furnishing information which subsequently turns out to be incorrect. 34. The circumstances surrounding the filing of the Shipping Bill assume further significance when considered along with the Appellant's admitted arrangement with Shri Devender Kumar. The Appellant had permitted his licence and dongle to be used by his G-card holder for consideration, and the Shipping Bill in question was thereafter filed in the name of an exporter without obtaining its authorisation. These circumstances cannot be viewed as isolated or purely technical lapses. They demonstrate a failure on the part of the Appellant to maintain the degree of control and diligence expected of the holder of a Customs Broker licence. 35. It is true that the record, as noticed by the CESTAT, may not establish that the Appellant himself had knowledge that the consignment contained Red Sanders. However, such knowledge is not a necessary ingredient for establishing the specific regulatory violations which are independently established against him. The discipli....
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....bligations prescribed under the applicable Regulations. The Appellant's conduct, particularly his admitted parting with the use of his licence and dongle for consideration and his filing of the Shipping Bill in the name of an exporter without its authorisation, falls short of that standard. 39. Having upheld the findings of violation, the next question is whether the punishment imposed upon the Appellant calls for interference. The Commissioner has revoked the Customs Broker licence, forfeited the security deposit of Rs.75,000/- and imposed a penalty of Rs.50,000/-. The question of proportionality must necessarily be examined having regard to the nature and cumulative effect of the violations established against the Appellant. 40. In the present case, the violation is not confined to a solitary deficiency in documentation. The Appellant admittedly permitted his licence and dongle to be used by Shri Devender Kumar for consideration of Rs. 10,000/- per month. In addition, the Shipping Bill relating to the consignment was filed in the name of Deepnidhi without obtaining any authorisation from that entity. The transaction further concerned an attempted export of approximately 1,1....