2020 (7) TMI 33 - AT - Customs

Revocation of CHA License - forfeiture of security deposit - penalty - fraudulent import of Areca Nuts and Black Pepper - misdeclaration of country of origin and thereby mis-using ISFTA and SAFTA - HELD THAT - The respondent commissioner passed the impugned order of revocation and penalty without examining any evidence, and without ensuring that the appellant CHA/CB is given proper opportunity of hearing to meet the allegations in the show cause notice. Neither the evidence were seen by the Adjudicating Authority, nor a copy of the same was provided to the appellant, CB. This error is glaring, particularly in respect of the investigation by the DRI, Bangalore, as no report for the same is even cited in the show cause notice or suspension order. It is further evident that when the Adjudicating Authority himself did not have the relied upon documents, etc., there is no question of the same being made available to the appellant-CHA, resulting in gross violation of the process of the court, and the principles of Natural Justice. Mere reliance on the Suspension Order and the allegations in the show cause notice by the ld. Commissioner in passing the impugned order, has vitiated the impugned order, leading to mis-carriage of justice. There is violation of the provisions of Section 138 (B) and (C) of the Customs Act, as the evidence being statement of other persons relied upon in the adjudication proceedings, has not been examined nor made available for cross examination. Further, there is no certificate as provided under Section 138 (C) of the Customs Act, in support of the electronic record relied in the show cause notice like email, whatsapp conversation, etc. - The Suspension order and the SCN do not provide the detail of the said imports. Further, the SCN to those importers was issued after the issue of SCN to the appellant CB, thus cannot be read in evidence, unless the facts were incorporated in the SCN. Matter remanded to the Respondent Commissioner for de novo adjudication after providing RUD‟s, giving opportunity to cross-examine the witness of Revenue - appeal allowed by way of remand.

Summary

Issues Involved:
1. Revocation of Customs Broker Licence
2. Forfeiture of Security Deposit and Imposition of Penalty
3. Allegations of Fraudulent Import and Mis-declaration of Country of Origin
4. Violation of Customs Broker Licensing Regulations (CBLR)
5. Principles of Natural Justice and Due Process

Detailed Analysis:

1. Revocation of Customs Broker Licence:
The primary issue in this appeal is whether the revocation of the Customs Broker licence no. R-11/DEL/CUS/2009, valid until 31.10.2022, was lawful. The revocation was based on allegations that the Customs Broker facilitated the fraudulent import of Areca Nuts and Black Pepper by mis-declaring the country of origin to misuse the Sri Lanka Free Trade Agreement (ISFTA) and South Asian Free Trade Agreement (SAFTA).

2. Forfeiture of Security Deposit and Imposition of Penalty:
The order also included the forfeiture of a security deposit of ?75,00,000 and a penalty of ?50,000. The Customs Broker was accused of colluding with importers to declare goods of Indonesian and Vietnamese origin as Sri Lankan, resulting in the evasion of customs duty.

3. Allegations of Fraudulent Import and Mis-declaration of Country of Origin:
The Customs Broker, Vinod Kumar Sharma, admitted in his statements that he was aware that the Areca Nuts and Black Pepper were not of Sri Lankan origin. Instead, the goods were shipped from Indonesia/Singapore and Vietnam to Sri Lanka, where documents were falsified to show Sri Lankan origin. The Customs Broker advised importers to misdeclare the origin to avail concessional duty rates.

4. Violation of Customs Broker Licensing Regulations (CBLR):
The Customs Broker was found to have violated several regulations under CBLR 2018/2013, including:
- Regulation 10(a): Failing to obtain proper authorization from the importers.
- Regulation 10(d) & (e): Not advising clients to comply with customs laws and failing to report non-compliance to customs authorities.
- Regulation 10(n): Not verifying the correctness of Importer Exporter Code (IEC) and other client information.

5. Principles of Natural Justice and Due Process:
The appellant argued that the impugned order was passed without providing the relied upon documents (RUDs) and without allowing cross-examination of witnesses, violating principles of natural justice. The adjudicating authority did not possess or review the relevant evidence, relying instead on secondary reports and confessional statements without proper verification or cross-examination. The Customs Broker's right to livelihood was significantly impacted by the revocation of the licence.

Judgment:
The Tribunal found that the respondent commissioner passed the impugned order without proper examination of evidence and without ensuring that the Customs Broker was given a fair opportunity to defend against the allegations. The Tribunal noted the absence of verification from Sri Lankan authorities regarding the certificates of origin and the lack of compliance with Section 138(B) and (C) of the Customs Act concerning the admissibility of electronic records and statements.

The Tribunal set aside the impugned order and remanded the matter to the Respondent Commissioner for de novo adjudication. The Commissioner was directed to provide all relevant documents, allow cross-examination of witnesses, and complete the re-adjudication expeditiously, preferably within four months.

Conclusion:
The appeal was allowed by way of remand, emphasizing the need for adherence to principles of natural justice and due process in adjudication proceedings.