2019 (4) TMI 40 - AT - Customs

Revocation of CHA License - forfeiture of security deposit - time limitation - smuggling of Red Sander logs - Held that - The issue of order of revocation more than ninety days after the submission of the Inquiry Officer s report has been followed in the breach. There are umpteen number of decisions which have consistently taken the view that mere discrepancy in obtaining authorization from a client is not sufficient to revoke the licence or that absence of physical verification of the importer is also not a sufficient ground for revocation of licence. The order of revocation cannot be sustained not only on merits, but also on the ground of transgression of the mandatory time limit prescribed in the regulation - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Interception and examination of the export consignment.
2. Allegations under Customs Brokers Licensing Regulations (CBLR), 2013.
3. Inquiry Officer's findings and competent authority's order.
4. Timeliness of the revocation order.
5. Legal precedents and their applicability.
6. Merits of the revocation order.

Detailed Analysis:

1. Interception and Examination of the Export Consignment:
The appellants, holders of Customs Broker Licence issued by Chennai Customs Commissionerate, handled a consignment declared as 100% Cotton Tufted Floor mats. Upon detailed examination by the Directorate of Revenue Intelligence (DRI), the consignment was found to contain 207 Nos of Red Sander logs weighing 5.250 MT, valued at ?2,10,00,000, along with 15 Nos Mats LDPE bags and 7 Nos waste cotton yarn LDPE bags.

2. Allegations under Customs Brokers Licensing Regulations (CBLR), 2013:
Proceedings were initiated under CBLR, 2013, alleging that the appellants failed to collect the KYC of the exporter and ascertain the correctness of the IEC and identity of the client, as prescribed in Regulations 11(a) and 11(n). An Inquiry Officer was appointed, and a Show Cause Notice was issued on 03.05.2018.

3. Inquiry Officer's Findings and Competent Authority's Order:
The Inquiry Officer's report, submitted on 18.07.2018, concluded that the appellants failed to comply with Regulation 11(a) but not Regulation 11(n). Consequently, the competent authority ordered the revocation of the licence under Regulation 20(7), forfeiture of ?25,000 from the security deposit under Regulation 18, and imposed a penalty of ?50,000 under Regulation 22.

4. Timeliness of the Revocation Order:
The appellant's counsel argued that the revocation order dated 30.10.2018 was issued more than ninety days after the submission of the Inquiry Officer’s report, violating the prescribed time limit. The Tribunal found merit in this assertion, citing the Hon’ble Madras High Court judgment in M/s. A.M. Ahamed & Co., which emphasized the mandatory nature of the time limits prescribed in Regulation 22.

5. Legal Precedents and Their Applicability:
The Tribunal referenced several legal precedents supporting the mandatory nature of the time limits:
- M/s. Saro International Freight System Vs. Commr. of Cus., Chennai-VIII.
- M/s. IndAir Carrier Pvt. Ltd. Vs. Commissioner of Customs (General).
- M/s. Impexnet Logistic Vs. Commissioner of Customs (General).
- The decision of CESTAT, Chennai in M/s. Elite Shipping Services Vs. The Commissioner of Customs, Tuticorin, which reiterated the mandatory nature of the time limits in CHALR.

6. Merits of the Revocation Order:
The Tribunal noted that mere discrepancy in obtaining authorization from a client or absence of physical verification of the importer is insufficient to revoke the licence. Citing cases like M/s. P.P. Dutta Vs. Commissioner of Customs, New Delhi, and M/s. Dominic & Co. Vs. Commissioner of Customs (G), Mumbai, it was established that such grounds do not warrant revocation.

Conclusion:
The Tribunal concluded that the revocation order could not be sustained due to the transgression of the mandatory time limit and lack of sufficient grounds on merits. Consequently, the impugned order was set aside, and the appeal was allowed with consequential benefits as per law.