2018 (5) TMI 929 - AT - Customs

Renewal of CHA License - rejection of renewal on the ground that penalties were imposed u/s 114 of the Customs Act - Held that - the renewal of the Custom Broker Licence cannot be refused only for the reason that the appellant has been penalised u/s 114 - Regulation 18 (proviso) makes it abundantly clear that the actions taken under the CBLR, 2013 will be without prejudice to the action that may be taken under Customs Act, 1962, thereby making it explicit that the proceedings under the Act as well as the Regulation are distinct and separate. The licencing authority is directed to consider the renewal of the customs broker licence subject to fulfilment of the necessary formalities - appeal allowed - decided in favor of appellant.

Summary

Issues:
Renewal of Custom Broker Licence under Regulation 9(2) - Misconduct as grounds for non-renewal.

Analysis:
The appeal was filed against the rejection of the application for the renewal of a Custom Broker Licence. The Commissioner of Customs refused the renewal based on Regulation 9(2), which allows non-renewal in cases of misconduct. The appellant argued that misconduct should be as defined under Regulation 18(c) of the CBLR, 2013, and no proceedings were pending against them under CBLR, 2013. The penalties imposed on the appellant were cited as instances of alleged misconduct by the Revenue. The penalties were imposed under Section 114 of the Customs Act for fraudulent exports. The appellant contended that penalties alone should not be considered misconduct without a formal inquiry as per Regulation 9(2).

The Tribunal noted that the Customs Broker Licence was up for renewal after ten years, and although it was initially revoked under Regulation 18 of the CBLR, 2013, the revocation was set aside in favor of the appellant. The refusal to renew the licence was based on penalties imposed under Section 114, deemed as misconduct by the adjudicating authority. However, the Tribunal emphasized that penalties alone do not constitute misconduct under Regulation 9(2) without a formal inquiry to establish contravention of regulations.

The CBLR, 2013 provides a comprehensive framework for Custom Broker Licences, outlining procedures, obligations, and actions against brokers. The Tribunal interpreted Regulation 9(2) in light of Regulation 11, emphasizing that penalties under Section 114 do not automatically qualify as misconduct without a formal enquiry into regulatory contraventions. The Tribunal highlighted that actions under CBLR, 2013 are distinct from those under the Customs Act, 1962, ensuring separate proceedings.

Ultimately, the Tribunal set aside the impugned order and allowed the appeal, directing the licensing authority to reconsider the renewal of the customs broker licence, subject to fulfilling necessary formalities. The judgment clarified that penalties alone should not be grounds for non-renewal without establishing misconduct through a formal inquiry as per the regulations.