2019 (9) TMI 1372 - AT - Customs

Revocation of Customs Broker License - forfeiture of security deposit - misconduct conducted by applicant - HELD THAT - Regulation 18(c) empowers the Principal Commissioner or the Commissioner of Customs to either revoke the licence of a Customs Broker and order for forfeiture of part or whole of the security furnished by it or impose penalty not exceeding ₹ 50,000/- in case of the Customs Broker committing any misconduct , which in the opinion of the Principal Commissioner or the Commissioner renders him unfit to transact any business in the Customs Station. The word misconduct has not been defined in either the Act or the CBLR. In the absence thereof it would have to be interpreted to mean violation or contravention of the provisions of the relevant regulations of CBLR, such as Regulations 10, 11, 12, 13, 14, 15, 17 and 17 of CBLR. Neither the show cause notice nor the Inquiry Report, on the basis whereof the impugned order has been passed, indicate as to the alleged misconduct which has been committed by the appellant firm for which its CB licence became liable to revocation by the Commissioner or for the Commissioner to be satisfied that the appellant had rendered itself unfit to transact any business in the Customs Station. In the absence thereof, the impugned order is contrary to Regulation 18(c) of CBLR - Further, in the show cause notice there is no allegation of any omission or commission, under either the Act or the CBLR, by the appellant as a Customs Broker. There is also no allegation that the appellant was involved with importation of any of the subject consignments involved or in any manner aided or abetted the importation of the subject consignments or in the alleged wrongful actions in the said importation by the persons concerned. There is also no material disclosed in either the Inquiry Report or the impugned order as to how and on what basis it could be held that the appellant had failed to bring the alleged serious lapses of Sadguru Forwarders Pvt. Ltd. to the Customs authorities, in the absence of there being any evidence on record to establish that the appellant firm was aware of the alleged activities of the said Sadguru Forwarders Pvt. Ltd. It is thus apparent that this finding is based on assumptions and presumptions and hence is unsustainable. This allegation of the appellant not complying with Regulation 11(d) is neither in the show cause notice nor in the Inquiry Report. The Commissioner has therefore traversed beyond the show cause notice - the allegations and findings are exclusive to the said Sajal Das and it has been concluded that Sajal Das had committed gross misconduct by participating in the acts of omission and commission stated therein. However without assigning any reason or basis in support thereof, simpliciter on the basis of the said conclusion, without any discussion or reasoning, the appellant has been held as unfit to transact any business in the Customs Station and its licence has been revoked, along with forfeiture of its entire security deposit. This is patently erroneous and impermissible. The impugned order of the Commissioner revoking the appellant s CB licence and forfeiting its deposit with the Department is erroneous and unsustainable - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Revocation of Customs Broker Licence.
2. Forfeiture of Security Deposit.
3. Allegations of Misconduct and Violation of Regulations.
4. Procedural Lapses and Legal Validity of the Show Cause Notice and Inquiry Report.
5. Personal Allegations Against a Partner and Their Impact on the Appellant Firm.

Detailed Analysis:

1. Revocation of Customs Broker Licence:
The appeal challenged an Order-in-Original dated July 5, 2019, which revoked the appellant's Customs Broker licence under Regulation 20(7) of the Customs Brokers Licensing Regulations, 2013 (CBLR). The appellant, a licensed Customs Broker, argued that the revocation was unwarranted as there was no evidence of misconduct or violation of the CBLR or any other regulations. The Tribunal found that neither the show cause notice nor the Inquiry Report indicated any specific misconduct by the appellant firm that would justify revocation under Regulation 18(c) of CBLR.

2. Forfeiture of Security Deposit:
The Commissioner also ordered the forfeiture of the full security deposit furnished by the appellant under Regulation 18 of CBLR. The appellant contended that there was no basis for such forfeiture as no misconduct was established. The Tribunal agreed, noting that the show cause notice and Inquiry Report did not provide any evidence of the appellant's involvement in any wrongful acts or omissions that would warrant forfeiture of the security deposit.

3. Allegations of Misconduct and Violation of Regulations:
The show cause notice alleged misconduct based on activities of a partner, Sajal Das, and an ex-employee, Md. Nasir Uddin. The appellant argued that there were no specific allegations or findings of contraventions of Regulations 10, 11, or any other provisions of CBLR against the firm. The Tribunal found that the allegations were primarily against Sajal Das in his personal capacity and not as a representative of the appellant firm. The Tribunal also noted that the findings of the Commissioner were based on assumptions and lacked concrete evidence.

4. Procedural Lapses and Legal Validity of the Show Cause Notice and Inquiry Report:
The appellant argued that the show cause notice and Inquiry Report were procedurally flawed and lacked legal validity. The Tribunal found that the Commissioner had introduced new allegations in the impugned order that were not part of the show cause notice or Inquiry Report, thereby traversing beyond the scope of the original allegations. Citing precedents, the Tribunal held that such actions were contrary to law and unsustainable.

5. Personal Allegations Against a Partner and Their Impact on the Appellant Firm:
The allegations against Sajal Das included facilitating smuggling activities and receiving payments from importers. The appellant argued that these actions were personal to Sajal Das and not connected to the firm's operations. The Tribunal found no evidence linking the appellant firm to the alleged misconduct of Sajal Das. The Tribunal also noted that Sajal Das had refused to handle the subject consignments and there was no evidence of the firm's involvement in any fraudulent activities.

Conclusion:
The Tribunal concluded that the impugned order revoking the appellant's Customs Broker licence and forfeiting its security deposit was erroneous and unsustainable. The appeal was allowed, and the impugned order was set aside, with consequential relief granted to the appellant.

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