2016 (4) TMI 971 - AT - Customs

Revokation of CHA licence and forfeiture of security deposit - Non-declaration of retail sale price on auto parts imported for assessment under Section 4 A of the Central Excise Act, 1944 for CVD - Failure to verify the presence of the importers in the given address. Held that - the bill of entry was filed by the appellant after the goods were detained by the officers of DRI. The said bill of entry was filed on first check basis for verification of the goods before assessment. In such a situation, we find that no malafide or intentional violation of any provisions of the Customs Act can be alleged on the part of the Customs broker. Regarding KYC norms and obligations under Regulation 11, we find that case as made out in the original order is neither convincing nor sustainable. The Tribunal also observed that it is a settled law that the punishment has to be commensurate and proportionate to the offence committed. In the present case, it is noticed that the punishment of revocation is not justifiable even if it is to be admitted that physical verification of the importer s premises could have avoided the filing of bill of entry by the appellant. Even in such a situation, the violation in respect of the cargo viz. the non-declaration of the RSP on the auto parts, a debatable point of interpretation, cannot be held against the appellant to result in the revocation of their licence. Here, it is to be noted that the bill of entry was filed after the detention of the goods for inquiry by the DRI Officers and request for physical verification of the cargo before assessment has been made in the form of first check bill of entry. It is found that the impugned order passed on dis-agreement with the inquiry report has not brought out clear sustainable ground for such extreme action of revocation of licence. Violation of CBLR, 2013 has not been brought out as all the points have been elaborately discussed in the inquiry report and no sustainable ground for differing with the same could be made out. - Decided in favour of appellant

Summary

Issues:
Revocation of Customs House Agent's license, Forfeiture of security deposit, Imposition of penalty, Allegations of contraventions of Customs Act, 1962, Compliance with Customs Brokers Licensing Regulations, 2013, Interpretation of KYC norms and obligations, Physical verification of importer's premises, Justifiability of revocation of license, Commensurate punishment for the offense committed.

Analysis:

1. Revocation of License and Imposition of Penalty:
The appeal challenged the revocation of the Customs House Agent's license, forfeiture of security deposit, and imposition of a penalty based on allegations of contraventions of the Customs Act, 1962. The Commissioner had revoked the license and imposed penalties despite the inquiry report finding no violations of the Customs Brokers Licensing Regulations, 2013. The High Court quashed the initial order but allowed the Commissioner to reconsider the decision. The Tribunal found that the impugned order lacked a sustainable case for revocation as the appellant had not intentionally violated any provisions of the Customs Act. The punishment was deemed unjustifiable, especially considering the lack of clear sustainable grounds for such extreme action.

2. Compliance with Regulations and KYC Norms:
The appellant argued that they had fulfilled their obligations under Regulation 11 and Circular No.9/2010-Cus regarding KYC norms for clients. The inquiry report supported the appellant's compliance with the CBLR, 2013, and the Tribunal concurred, noting that the appellant had verified essential documents and information before taking up the work for the importer. The lack of physical verification of the importer's premises was not deemed a violation under the existing legal framework.

3. Physical Verification and Interpretation of Obligations:
The focus of the allegation leading to the license revocation was the failure to physically verify the presence of importers at the given address. The Tribunal emphasized that there was no legal requirement for such physical verification, and the appellant had fulfilled their obligations by verifying the necessary documents. The Tribunal also highlighted that the bill of entry was filed after the goods were detained, indicating no intentional violation of Customs Act provisions by the appellant.

4. Justifiability of Punishment and Legal Precedents:
In assessing the justifiability of the punishment, the Tribunal referenced the Setwin Shipping Agency case, emphasizing that the punishment must be commensurate and proportionate to the offense committed. The Tribunal found that the punishment of license revocation was not justifiable, especially considering the nature of the alleged violation regarding non-declaration of retail sale price on imported auto parts. The impugned order was set aside based on the lack of clear sustainable grounds for revocation.

In conclusion, the Tribunal set aside the impugned order, emphasizing the lack of sustainable grounds for revocation and the unjustifiability of the punishment imposed on the appellant. The judgment underscored the importance of proportionate punishment and adherence to legal obligations in customs-related matters.