2021 (12) TMI 857 - AT - Customs

Revocation of customs broker licence - forfeiture of security deposit under regulation 18 - penalty under regulation 22 of Customs Broker Licensing Regulations, 2013 - mis-declaration warranting recourse to section 117 of Customs Act,1962 - HELD THAT - The combining of invoice with packing list is not unusual in international trade. Both originate with the consignor and are filed along with the bill of entry for assessment and examination by the customs authorities. There is no allegation that any of the documents had been tampered with before being presented to customs authorities or that any had been suppressed by the appellant. The appellant, under the Customs Broker Licensing Regulations, 2018 and section 146 of Customs Act, 1962, is the agent of the importer. Any lack in the documentation issued by the consignor, except in circumstances evidencing complicity of the importer or the agent in contrivance of documents, cannot be held against the person who filed the bill of entry. It is only upon an examination that inadequacy of description is verifiable and there is no finding in the impugned order that the appellant herein had access to the goods before being subjected to examination. The non-submission of a separate packing list has, thus, been wrongly construed as breach of obligation devolving on the customs broker under the relevant regulation. The importer of the goods was, doubtlessly, an existing person who did participate in proceedings and did comply with the adjudication order - Admittedly, the appellant had not undertaken a sufficiently diligent verification and, instead, choose to rely upon the IEC registration which, fortunately for him, was genuine. To condone breach of this obligation would only encourage casual disregard of that obligation. The enquiry authority and the licensing authority cannot be faulted for considering this lapse on the part of the customs broker to be a breach of obligation. Penalty - HELD THAT - The imposition of all three penalties for this one breach is unduly harsh. If the harshness of every available penalty is to be visited upon each and every breach of obligation, there would be no difference between magnitude of offence and major breaches will be resorted to with impunity - the fiscal penalty of ₹ 50,000/- imposed under regulation 18 of Customs Broker Licensing Regulations, 2018 suffices for the established offence and the other detriments are disproportionate. The appeal is allowed to the extent of setting aside the revocation of licence and the forfeiture of deposit ordered in the impugned order.

Summary

Issues:
Revocation of customs broker license under Customs Broker Licensing Regulations, 2013, misdeclaration of goods, delay in issuance of notice, breach of regulations, penalty imposition, application of 'know your customer (KYC)' norms, non-submission of packing list, delay in inquiry report, verification of import-export code, combination of invoice with packing list, proportionality of penalties.

Analysis:

1. The appeal in this case stemmed from the revocation of the customs broker license of M/s RR Shipping Agency due to misdeclaration of goods against specific bill of entries. The revocation was based on regulations under Customs Broker Licensing Regulations, 2013, along with penalties and forfeiture of the security deposit.

2. The proceedings were initiated after the detection of misdeclaration, but the notice was issued much later, raising concerns about the application of outdated regulations. The appellant's counsel argued that certain charges were not proven, and there were delays in the proceedings, breaching timelines set in the Customs Broker Licensing Regulations, 2018.

3. The appellant contended that the breaches were not substantial, emphasizing that the delay in the inquiry report was due to officer transfers. The appellant admitted to not fully verifying the 'know your customer (KYC)' details but argued that the importer had participated in the investigation and complied with the adjudication order.

4. The appellant highlighted that combining the invoice with the packing list is common practice in international trade and argued that the lack of a separate packing list should not be considered a breach. The appellant, as the importer's agent, should not be penalized for deficiencies in the consignor's documentation unless complicity is proven.

5. The tribunal acknowledged the importance of 'know your customer (KYC)' norms but found the penalties imposed disproportionate to the established offense. While upholding the fiscal penalty, the tribunal set aside the revocation of the license and forfeiture of the deposit, emphasizing the need for proportionality in penalty imposition.

6. The tribunal's decision focused on maintaining a balance between regulatory compliance and fair punishment, ensuring that penalties align with the severity of the offense. The judgment highlighted the significance of diligence in verifying customer details while cautioning against unduly harsh penalties for individual breaches.

7. In conclusion, the tribunal allowed the appeal, overturning the revocation of the license and forfeiture of the deposit, and emphasized the importance of proportionate penalties in regulatory enforcement.

(Pronounced in Open Court on 17/12/2021)