2021 (6) TMI 782 - AT - Customs

Seeking restoration of revoked license - customs broker licence - forfeiture of security deposit - levy of penalty - emplacement of offence report within the scheme of revocation - Regulation 18 of Customs Brokers Licencing Regulations, 2018 - HELD THAT - It is seen that the show cause notices of 2009 and 2010, being the earliest documentation of any allegation that the appellant may have been involved in misuse of authorizations, was the proximate cause of action for recourse to Customs Brokers Licencing Regulations, 2018. In the absence of any other document that claims to be the offence report , these notices must be taken to be the said reports for triggering proceedings thereafter. Leaving aside the issue of the elapse of time between the said show cause notices under Customs Act, 1962 and the notice under regulation no. 17 of Customs Brokers Licencing Regulations, 2018, the erasure of the proposals against the customs broker contained in those very show cause notices as early as September 2019 had wiped the offence reports out of existence well before the notice for revocation was issued. In other words, the proceedings were commenced without the metaphorical starter pistol and thus renders the subsequent inquiry and impugned order to be stillborn. The emplacement of offence report within the scheme of revocation is not intended to be stultified under any circumstance and permitting of any dilution can only be at the cost of perverting the legislative intent of section 146 of Customs Act, 1962. Strict adherence to legislated empowerment cannot but be insisted upon even before merit of the detriment can be interfered with. In the light of the discussion, which takes note of the manifest lack of offence report when notice under regulation no. 17 of Customs Broker Licencing Regulations, 2018 was issued, we are constrained to negate the very proceedings that followed along with the consequences thereon in the form of revocation of licence, forfeiture of security deposit and imposition of penalty - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Revocation of customs broker license and forfeiture of security deposit.
2. Imposition of penalty under Customs Brokers Licensing Regulations, 2018.
3. Procedural adherence to Customs Brokers Licensing Regulations, 2018.
4. Validity of initiating proceedings without an 'offence report'.

Issue-Wise Detailed Analysis:

1. Revocation of Customs Broker License and Forfeiture of Security Deposit:
M/s P Cawasji & Co sought restoration of their customs broker license and return of the forfeited security deposit. The license was revoked under regulation no. 14, and a penalty of ?50,000 was imposed under regulation no. 18 of Customs Brokers Licensing Regulations, 2018. The revocation stemmed from alleged misuse of authorizations for duty-free clearance of goods by M/s Akshay Exports between 2003-04 and 2005-06. The Tribunal had previously set aside penalties imposed on the customs broker in related adjudication proceedings.

2. Imposition of Penalty under Customs Brokers Licensing Regulations, 2018:
The customs broker was penalized ?50,000 under regulation no. 18. The penalty was contested on grounds that the licensing authority proceeded with the penalty despite the inquiry officer finding breaches only of regulation no. 11(d) and 11(m), not all charges as claimed by the licensing authority.

3. Procedural Adherence to Customs Brokers Licensing Regulations, 2018:
The Tribunal noted the procedural irregularities, emphasizing that proceedings initiated in 2020 should have adhered to the Customs Brokers Licensing Regulations, 2018, rather than a mix of 2004, 2013, and 2018 regulations. The Tribunal criticized the licensing authority for not demonstrating proper application of mind and for issuing a cluttered notice and order.

4. Validity of Initiating Proceedings Without an 'Offence Report':
The Tribunal highlighted the necessity of an 'offence report' as a prerequisite for initiating proceedings under regulation no. 17 of Customs Brokers Licensing Regulations, 2018. The absence of such a report was deemed a critical flaw. The show cause notices from 2009 and 2010, which were the basis for initiating proceedings, had been nullified by a Tribunal order in 2019, thus invalidating the subsequent inquiry and revocation order.

The Tribunal referred to the High Court of Delhi's decision in Necko Freight Forwarders Ltd, which underscored the importance of an 'offence report' for commencing proceedings. The Tribunal concluded that without the 'offence report', the proceedings were stillborn and the subsequent actions of revocation, forfeiture, and penalty were invalid.

Conclusion:
The Tribunal set aside the impugned order, restoring the customs broker license, returning the forfeited security deposit, and nullifying the penalty. The decision emphasized strict adherence to procedural requirements and the foundational role of the 'offence report' in initiating revocation proceedings.