2019 (11) TMI 1133 - AT - Customs

Revocation of Customs Broker (CB) License - forfeiture of security deposit - Time Limitation - illegal import of goods - case of appellant is that since the department has not followed the time limit prescribed in the Regulations which is mandatory, the order of revocation of license cannot sustain - HELD THAT - In the present case, the offence report is dated 11.6.2018. However, Show Cause Notice has been issued on 14.9.2018 which is beyond the period prescribed in Regulation 20. Similarly, the proceedings for revocation have been completed beyond the period of nine months and the order for revocation has been issued on 23.5.2019 which is against the Board Circular 9/2010. Sub-clause (5) of Regulation 20 states that a report of inquiry shall be submitted within a period of 90 days from the date of issuance of the Show Cause Notice under sub-Regulation (1) - In the present case, the Show Cause Notice was issued on 14.9.2018 and the inquiry report was submitted only on 21.2.2019 which is beyond 90 days prescribed in sub-regulation (5). The Hon'ble High Court in the case of SANTON SHIPPING SERVICES VERSUS THE COMMISSIONER OF CUSTOMS, THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL 2017 (10) TMI 621 - MADRAS HIGH COURT had occasion to consider whether the time-limit prescribed in the Regulation for proceedings of revocation of license is mandatory or directory. It was held that non-compliance of the time limit prescribed in the Regulation is fatal and the order of revocation of license passed without complying with the time limit cannot sustain. Merits of the case Regulation 10(d), (e) and (n) of CBLR, 2018 r/w CBLR, 2013 - Regulation 10(d), (e) and (n) of CBLR, 2018 r/w CBLR, 2013 - case of department is that appellant allowed Shri A. Sathish to use their Customs Broker license as well as to use the login id so as to facilitate illegal imports - HELD THAT - There is no evidence adduced by the department to show that the appellant had allowed other persons to use their license and login id. Apart from a bald statement in the Show Cause Notice, there is nothing on record to prove these allegations - When the KYC details have been obtained, the appellant cannot be found fault alleging that he did not directly meet the IEC holder before filing the Bill of Entry or doing any such transaction as Customs Broker. In KUNAL TRAVELS (CARGO) VERSUS COMMISSIONER OF CUSTOMS (IMPORT GENERAL) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI 2017 (3) TMI 1494 - DELHI HIGH COURT observed that it would be far too onerous to expect the CHA to inquire into and verify the genuineness of IE Code given to it by a client for each import / export transaction. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Violation of Customs Broker Licensing Regulations (CBLR), 2018 r/w CBLR, 2013.
2. Allegations of allowing unauthorized imports and misuse of IEC by the appellant.
3. Compliance with the time limits prescribed in the Regulations for revocation of license.
4. Merits of the case regarding the alleged violations by the appellant.

Analysis:

Issue 1: Violation of CBLR
The appellant, a Customs Broker license holder, faced allegations of allowing unauthorized individuals to act as Customs Brokers under their license, facilitating illegal imports. The appellant was accused of failing to advise clients to comply with regulations, allowing misuse of IEC, and not verifying antecedents of importers, leading to illegal importation of goods. The original authority revoked the appellant's license, forfeited the security deposit, and imposed a penalty. The appellant challenged this decision before the Tribunal.

Issue 2: Allegations of Unauthorized Imports
The department alleged that the appellant facilitated illegal imports by allowing unauthorized individuals to use their license and login id. The appellant was accused of failing to file Bill of Entry for high-valued goods, not verifying the importer's antecedents, and colluding with unauthorized persons to import goods. The appellant argued that they had obtained KYC documents and relied on representations made by the unauthorized individual. The Tribunal found no direct involvement of the appellant in the illegal import and noted that KYC details were obtained, indicating due diligence on the part of the appellant.

Issue 3: Compliance with Time Limits
The appellant contended that the department failed to comply with the time limits prescribed in the Regulations for revocation of the license. The appellant argued that the delay in issuing the Show Cause Notice and completing the proceedings rendered the revocation order unsustainable. Citing various judgments, the appellant emphasized the mandatory nature of the time limits prescribed in the Regulations. The Tribunal agreed that non-compliance with statutory time limits for revocation proceedings rendered the order invalid, citing relevant case law.

Issue 4: Merits of the Case
On the merits of the case, the appellant argued that the allegations of violations under CBLR were baseless and lacked evidence. The appellant maintained that they had followed procedures, obtained KYC documents, and were not directly involved in any illegal import activities. The department contended that the appellant's actions facilitated illegal imports and warranted the revocation of the license. However, the Tribunal found that the department failed to substantiate the allegations against the appellant, leading to the decision to set aside the impugned order and allow the appeal.

In conclusion, the Tribunal set aside the order revoking the appellant's license, forfeiting the security deposit, and imposing a penalty, ruling in favor of the appellant based on the lack of evidence supporting the allegations and the non-compliance with statutory time limits for revocation proceedings.