2016 (12) TMI 319 - AT - Customs

Revocation of CHA licence - benefit under the Duty Exemption Pass Book (DEPB) scheme - misdeclaration of exports - Held that - A licencing system, with stringent requirement of authorization and issue of passes, is of little avail if it fails in enforceability. Not only was a shipping bill, signed by an unauthorized person, allowed to be filed but it is stated authoritatively that the unauthorized person was present at the examination of the cargo. It is surprising that such person, lacking credentials, was allowed access to customs areas and indeed allowed to participate in proceedings. If such be the ease of insinuation, the contention of the appellant that they were unaware of the illicit use of their licence is acceptable as within the realm of the possible. It would appear that there is no let or hindrance to any person filing a bill of entry or shipping bill without the knowledge of the broker whose authority is usurped. In these circumstances, we find no merit in the acceptance of the report of the inquiry officer by the licencing authority as sufficient grounds for revocation of licence and forfeiture of security deposit. Independent inquiry was not carried out before proceeding with penalty under regulation 20 of Customs Brokers Licencing Regulations, 2013. Action was based on evidence that was seemingly sufficient for initially imposing penalty under section 114 of Customs Act, 1962 but found to be inadequate in appellate proceedings. The evidence that was the foundation of the penalty having been discredited in its hierarchical progression, its tertiary use in proceedings under the Regulations, itself a vitiating factor, lacks sanctity. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Revocation of customs broker licence under Customs Broker Licence Regulations, 2013.

Detailed Analysis:

1. Imposition of Penalty and Initiation of Proceedings:
- Penalty imposed under section 114 of Customs Act, 1962 on an individual for involvement in misdeclared exports.
- Alleged misuse of customs broker licence by an unauthorized individual.
- Penalty imposed on the partner of the customs broking firm for allowing unauthorized use of the licence.

2. Revocation of Licence and Inquiry Process:
- Revocation of licence and forfeiture of security deposit under Customs Broker Licence Regulations, 2013.
- Charges framed for inquiry included contraventions of various regulations related to customs broking activities.
- Inquiry officer's lack of understanding of the duties assigned to him and the principles of natural justice.

3. Inquiry Officer's Report and Lack of Compliance:
- Inquiry officer's reliance on statements recorded under section 108 of Customs Act, 1962.
- Lack of compliance with natural justice principles in the inquiry process.
- Absence of evidence other than statements of involved individuals in the inquiry report.

4. Unauthorized Use of Licence and Lack of Evidence:
- Unauthorized individual involved in handling the smuggled consignment.
- Charges against the appellant deemed as embellishment without evidence.
- Lack of agreement between individuals to hold one responsible for the misuse.

5. Failure of Customs Authorities and Lack of Enforcement:
- Lack of proper supervision and enforcement by customs authorities.
- Unauthorized person allowed to handle customs activities without proper authorization.
- Inadequacy of the licencing system in preventing unauthorized use of licences.

6. Impact of Appellate Proceedings on Licence Revocation:
- Appeal against penalty imposed under Customs Act, 1962 led to the penalty being set aside.
- Lack of independent inquiry before imposing penalty under Customs Broker Licence Regulations, 2013.
- Discrediting of evidence in appellate proceedings affecting the validity of the revocation order.

7. Conclusion and Decision:
- Appeal allowed, and the impugned order of revocation set aside.
- Pronouncement of the decision on 04/11/2016 by the Appellate Tribunal CESTAT MUMBAI.

This detailed analysis covers the issues involved in the revocation of the customs broker licence, highlighting the procedural irregularities, lack of evidence, and the impact of appellate proceedings on the final decision.