2017 (10) TMI 1267 - AT - Customs

Revocation of CB license - penalty - Regulation 11(a) - Held that - Both the partners of M/s. Unisys Enterprises have disclosed in their statements to DRI that they were not aware of the details of the imports and had never met Shri Sameer Jha, proprietor of CB. From this, it emerges that the appellant has failed to obtain the authorization from the actual importer and violation of regulation 11(a) stands established. Imposition of Regulation 11(d) - Held that - it stands established that the appellant has not even met the actual importer and as such requesting of advising the client for compliance of various legal positions does not arise. In view of the above failure to observe regulation 11(d) stands established. Imposition of Regulation 11(e) - Held that - Regulation 11(e) requires due diligence to ascertain the correctness of information which he imparts to client - In the facts of the present case, both the partners of M/s. Unisys Enterprise, have admitted that they were unaware of the actual imports made in their name. Further, the appellant also has admitted that they never met the owner of the firm. From this it appears that the appellant failed to exercise due diligence to ascertain the correctness of information which he imparted to the client with reference to work related to clearance of cargo. Imposition of Regulation 11(n) - Held that - Regulation 11(n) requires the CB to verify the antecedents, correctness of IEC code no., identity of the client and its functioning at the declared address - In the present case, we find that the appellant has simply accepted the address appearing in the driving license of Shri Sachin Gulati, partner of M/s. Unisys Enterprise. The appellant failed to notice that the address in the IEC document is different. Had the appellant made any serious verification, he would have known that the IEC of the firm was being used by a third person, Shri Aman Vachhar - violation of Regulation 11(n) stands established for failure to verify antecedents, correctness of IEC details. The appellant is guilty of violations of CBLR 2013 - ends of justice will be met by imposing a penalty of ₹ 50,000/- on the appellant, in addition to the forfeiture of the whole amount of security deposit - appeal allowed in part.

Summary

Issues:
Revocation of Customs Broker License based on alleged violations of CBLR 2013.

Detailed Analysis:

Issue 1: Alleged Violations of CBLR 2013
The case involved the appellant, a custom broker licensed in Delhi Customs, who faced proceedings for the confiscation of imported food supplements in violation of FSSAI Act 2006. The Directorate of Revenue Intelligence (DRI) initiated investigations, leading to proceedings against the appellant for revocation of the CB license. The Enquiry Officer exonerated the appellant, but the Commissioner disagreed and revoked the license, citing irregularities in the import process. The appellant challenged the decision, arguing lack of access to documents for rebuttal and the severity of the penalty.

Issue 2: Defense and Justification
The appellant's counsel argued that the Enquiry Officer's exoneration should have prevailed, emphasizing the absence of appellant's involvement in the fraudulent import as ruled in a previous penalty imposition case. The defense highlighted the lack of access to documents for rebuttal and requested a reconsideration of the severe penalty of license revocation.

Issue 3: Violations of CBLR 2013
The DRI investigation revealed irregularities in the import process, including misdeclaration of weight, absence of MRP, and lack of necessary NOCs. The import was linked to the misuse of an IEC Code number belonging to another entity, implicating the appellant indirectly. The Commissioner noted connections between key individuals involved in the import, indicating the appellant's failure to diligently perform duties to prevent such violations.

Issue 4: Regulatory Violations
The appellant faced allegations of violating multiple regulations under CBLR 2013, including failure to obtain proper authorization, advise the importer on compliance, exercise due diligence, and verify antecedents and IEC details. The appellant's failure to meet these regulatory requirements was established through evidence of unauthorized use of the IEC Code and lack of verification regarding the actual importers.

Issue 5: Decision and Penalty Imposition
The Tribunal found the appellant guilty of violations but deemed license revocation too severe a penalty. Instead, a monetary penalty of ?50,000 was imposed, along with the forfeiture of the security deposit, as a more proportionate response to the regulatory breaches. The appeal was partially allowed, setting aside the license revocation and imposing the specified penalty, thereby concluding the case.

This comprehensive analysis outlines the key issues, arguments presented, regulatory violations established, and the final decision reached by the Tribunal, providing a detailed overview of the legal judgment.