2016 (4) TMI 720 - AT - Customs

Suspension of Customs broker licence - G Card holder employee of the appellant alleged to have been involved in fraud of manipulating the value of export goods and using the license for import of paper / paper products by various importers - Held that - in the absence of at least a prima facie case indicating the role of the appellant in various frauds, suspension of license will be harsh and unjustified. Further, more importantly, it is found that though the suspension was confirmed on 20.11.15, till date no show cause notice has been issued to the appellant. The time limit as prescribed in CBLR 2013, has apparently not been followed. In the present case, the role of G card holder and the involvement of appellant either directly or through his G card holder are yet to be clearly alleged / established as no progress could be made in the inquiry. In the absence of any prima facie finding to that effect, suspension of license which amounts to stoppage of appellants business is not justified. Therefore, impugned order is unsustainable. - Decided in favour of appellant

Summary

Issues:
Challenge against suspension of Customs Broker license based on employee's alleged fraudulent activities without clear evidence or inquiry.

Analysis:
The appellant, a licensed Customs Broker, challenged the suspension of their license by the Commissioner of Customs (Gen), New Delhi, due to alleged involvement of their employee in fraudulent activities. The grounds of challenge included: A. The appellant should not be held responsible for the personal acts of their employee; B. No inquiry or investigation established the appellant's role in any wrongful act; C. No show cause notice was issued under CBLR 2013 before confirming the suspension. The Tribunal noted that the inquiry did not bring out the role of the employee in question, and investigation was hindered by key persons absconding. The Tribunal emphasized that without prima facie evidence linking the appellant to the frauds, suspension of license would be unjustified. Additionally, the failure to issue a show cause notice within the prescribed time under CBLR 2013 was highlighted as a procedural flaw.

In citing precedents such as Eltece Associates vs. CC, Chennai and Manjunatha Shipping Services vs. Commissioner, the Tribunal stressed the mandatory nature of the time limit prescribed in CBLR for suspension or revocation of license. The Tribunal also referred to cases like Lohia Travels & Cargo vs. CC and Rudolph Thomas Lobo & Co. (P) Ltd. vs CC (Gen) Mumbai, which emphasized the importance of adhering to the time limit. The decision in Buhariwala Logistics vs. CC, New Delhi highlighted that an employer cannot be penalized for an employee's personal fraudulent acts beyond the scope of duty. In the absence of clear evidence implicating the appellant in the fraudulent activities, the Tribunal concluded that the suspension of the license was not justified and set aside the impugned order, allowing the appeal.

In conclusion, the Tribunal found that the suspension of the Customs Broker license was not sustainable due to the lack of evidence linking the appellant to the fraudulent activities of their employee. The failure to issue a show cause notice within the prescribed time frame and the mandatory nature of the time limit for suspension or revocation of license under CBLR 2013 were crucial factors in the decision to set aside the suspension order. The judgment emphasized the importance of establishing a prima facie case before taking punitive actions against license holders in such cases.