2015 (4) TMI 1159 - AT - Customs

Prohibition of CB License - appellant had violated Regulation 11(a) (not obtaining authorization from the importer to act as Customs Broker) of the CBLR 2013 and Regulation 17(9) (exercising supervision over the conduct of his employees in the transaction of business) - Held that - there is not even a iota of evidence to the effect that the appellant was aware of the fraudulent activities of Mr. Pravin Jha - Only because a person misuses an Identity Card (Customs Pass in this case) issued by his employer which entitled him to access the Customs area, cannot and does not lead to a belief or suspicion in every case that the employer is aware of the misdeed in the absence of evidence to the contrary. We are therefore not convinced that the appellant is guilty of violating Regulation 11(a). Similarly, the finding that Regulation 17(9) is violated is not established because the employee has acted on his own accord and has not acted in the transaction of business of his employer. The Tribunal held in the case of K.S. Sawant & Co. v. Commissioner of Customs 2013 (12) TMI 119 - CESTAT, MUMBAI that procurement of business through an intermediary does not amount to sub-letting of business in every case. In the present case the facts are even more diluted and the appellant has neither filed the Bill of Entry nor allowed his license to be used. Therefore, the punishment of prohibiting him from using the license in Mumbai Zone is unwarranted. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Prohibition of Customs Broker License under CBLR 2013 Regulations - Violation of Regulations 11(a) and 17(9) - Misuse of Customs pass by employee - Vicarious liability of employer - Appellant's appeal against the order of Commissioner of Customs.

Analysis:
The judgment revolves around the appeal by a Customs Broker against the order of Commissioner of Customs prohibiting them from working in Mumbai Customs Zones-I, II & III under Regulations 23 of Customs Broker Licensing Regulation (CBLR) 2013. The issue stemmed from an employee, Mr. Pravin Jha, assisting a private individual in taking delivery of goods without proper documentation, misusing his Customs pass issued by the appellant. The Commissioner found the appellant in violation of Regulations 11(a) and 17(9) of the CBLR 2013, leading to the prohibition of their license. The case was forwarded for inquiry to the Chennai Customs Commissionerate. The appellant challenged this order, claiming ignorance of Mr. Jha's actions and arguing that the punishment was disproportionate, citing a relevant case law.

The Tribunal analyzed the submissions from both sides and concluded that while Mr. Jha's actions warranted punishment, there was no evidence to suggest the appellant's involvement or awareness of the fraudulent activities. The Tribunal noted that the appellant terminated Mr. Jha's employment upon discovering the misconduct. It emphasized that the appellant's license prohibition lacked evidence of their connection to the importer or Mr. Atish, for whom Mr. Jha facilitated the illegal activity. The judgment highlighted the importance of establishing employer liability in such cases and rejected the notion of automatic vicarious liability. The Tribunal referenced precedent cases to support its decision and criticized the delay in the prohibition of the license, ultimately setting aside the order and allowing the appellant to resume work as a Customs Broker in the specified zones.

In conclusion, the judgment delves into the nuances of employer liability, employee misconduct, and the burden of proof in cases of regulatory violations within the customs brokerage industry. It underscores the need for clear evidence linking the employer to the employee's actions and emphasizes the principle of proportionality in imposing regulatory sanctions. The detailed analysis provided by the Tribunal offers valuable insights into the application of CBLR 2013 regulations and the legal standards governing customs brokerage practices.