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2019 (10) TMI 1351 - HC - CustomsRevocation of Customs Broker license - forfeiture of security - penalty - the allegation was that the CB did not undertake due diligence by verifying the antecedents of the importer and the premises from which the importer was operating, and had thus violated, inter alia, Regulations 11(a) and 11(d) of the CB Regulations - HELD THAT - The Court is of the view that this was a selective reading of the evidence on record, which actually shows that all the parties were actually acting in consort. Be that as it may, specific to the allegation against the present Appellant, the ingredients of the Regulation 11(a) of the CB Regulations do not appear to have been made out, particularly in view of the admission by Mr. Sachin Gulati that he did meet the employees of the Appellant. Correspondingly, even the ingredients of the Regulation 11(d) of the CB Regulations, do not appear to have been made out. The CESTAT has rendered a finding on the violation of Regulation 11(d) only on the basis that the Appellant had not even met the actual importer. It is plain that the plea of the Department that there ought to have been both a revocation of the license and forfeiture of security, since both go together, has been negated by this Court. In other words, even according to the Department, if there is no cancellation of licence then there cannot be a forfeiture of security. Penalty - HELD THAT - The Court having held that neither Regulation 11(a) nor Regulation 11(d) of the CB Regulations were attracted in the facts of the present case, there was no justification for imposition of any of the penalties on the Appellant. Appeal allowed.
Issues:
Appeal against CESTAT order on violation of Customs Brokers Licensing Regulations, 2013. Analysis: 1. The appellant, a Customs Broker, challenged the CESTAT order dated 21st September, 2017, which found the appellant in violation of Regulations 11(a) and 11(d) of the Customs Brokers Licensing Regulations, 2013, imposing forfeiture of the security deposit and a penalty of ?50,000. 2. The allegations arose from the import of nutritional supplements by M/s. Unisys Enterprises, engaging the appellant as the CB, leading to a show cause notice issued by the Directorate of Revenue Intelligence (DRI) alleging violations of the FSSAI Act, 2006. 3. A subsequent show cause notice was issued by the Customs Department to the appellant, questioning compliance with CB Regulations, which triggered an inquiry exonerating the appellant from any contraventions. 4. The Inquiry Officer found no violations by the appellant, including Regulations 11(a) and 11(d), stating that meeting the importer directly was not legally required, and dealing through a mediator was sufficient. 5. However, the Commissioner of Customs disagreed, attributing the import to another individual, Mr. Aman Vachher, and held that the partners of M/s. Unisys Enterprises were unaware of the import made by Mr. Vachher. 6. The CESTAT's order was challenged before the High Court, highlighting a selective reading of evidence and failure to consider crucial findings from the inquiry report, leading to a conclusion that all parties were acting in concert. 7. The High Court observed that the allegations under Regulations 11(a) and 11(d) were not substantiated, especially given Mr. Sachin Gulati's admission of meeting the appellant's employees, rendering the penalties unjustified. 8. In a related appeal by the Department, the High Court noted that the punishment imposed on the appellant was excessive, considering the expectations placed on CB holders and the impractical standards set by the authorities. 9. The High Court dismissed the Department's appeal, emphasizing that revocation of license and forfeiture of security must go together, and since the license was not revoked, the security deposit could not be forfeited. 10. Consequently, the High Court allowed the appellant's appeal, setting aside the CESTAT's order for forfeiture of the security deposit and penalty, as Regulations 11(a) and 11(d) were deemed inapplicable in the case.
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