2016 (4) TMI 1214 - AT - Customs

Restoration of CHA licence - Appellant has challenged the suspension on the ground that no action lies against them under the Customs Brokers Licensing Regulations 2013 as they in the absence of access to the customs clearance systems had not undertaken any work - Held that - the appellant though a holder of a customs brokers licence continued to function within the logistics chain as it did before obtaining its own licence. It is normal bona fide practice in the trade for a freight forwarder to engage a customs broker to handle the clearance formalities of its customers. There is no bar on the services of a customs broker being contracted by freight forwarders or even other customs brokers. It is the contracted customs broker who in the present instance is M/s. Vignesh Freight Forwarders Pvt. Ltd. to ensure compliance with the provisions of the Customs Act 1962. There is no allegation of non-compliance of contravention of the Customs Act 1962 against appellant or contracted customs broker. Further there is no prescription on the manner and terms of employment of individuals by customs brokers. To the extent that a broker has sought for and obtained passes for individuals claimed to be their employees the brokers are responsible vicariously for any contravention of the provisions of the CA 1962 or breach of the Regulations by such employees - the appellant has not rendered any service as a customs broker in relation to import or export consignment and is therefore outside the ambit of the said Regulations - suspension order set aside and licence directed to be restored - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Challenge against the suspension of customs broker license.
2. Interpretation of Customs Brokers Licensing Regulations, 2013.
3. Compliance with the schedule for initiating inquiry proceedings.
4. Vicarious liability of customs brokers for acts of their employees.
5. Restoration of license and operationalizing the same.

Analysis:

Issue 1: Challenge against the suspension of customs broker license
The appellant challenged the suspension of their customs broker license, arguing that no action could be taken against them under the Customs Brokers Licensing Regulations, 2013 as they had not engaged in any customs brokering activities due to lack of access to customs clearance systems. The appellant contended that any contravention could only arise during the course of functioning as a customs broker. The Tribunal considered the grounds for suspension and the appellant's arguments in this regard.

Issue 2: Interpretation of Customs Brokers Licensing Regulations, 2013
The Tribunal analyzed the specific articles of charge against the appellant under the Regulations. It noted that the appellant, a freight forwarder, had obtained a new customs broker license and operated through a sister concern for customs clearances. The Tribunal examined the allegations of contraventions related to the use of another entity's license, sub-letting of license, and failure to prevent employees from obtaining customs passes. The Tribunal emphasized the importance of compliance with the Customs Act, 1962 and the Regulations for customs brokers.

Issue 3: Compliance with the schedule for initiating inquiry proceedings
The Tribunal observed that the licencing authority had failed to adhere to the prescribed schedule for issuing notices to initiate inquiries and subsequent actions. This non-compliance was considered a significant ground for quashing the suspension and other proceedings against the appellant under the Customs Brokers Licensing Regulations, 2013.

Issue 4: Vicarious liability of customs brokers for acts of their employees
The Tribunal discussed the vicarious liability of customs brokers for the actions of their employees. It clarified that brokers are responsible for ensuring compliance with customs regulations by their employees. The Tribunal differentiated between the roles of customs brokers and other entities involved in the logistics chain, emphasizing that only the licensed broker directly handling a consignment could be held accountable for any violations.

Issue 5: Restoration of license and operationalizing the same
Based on the analysis of the issues raised, the Tribunal set aside the suspension order and directed the restoration of the appellant's license. It instructed the Commissioner to promptly enable the appellant to resume customs broker activities independently. The Tribunal's decision aimed to uphold the legal principles governing customs brokering while ensuring procedural fairness and compliance with regulatory requirements.