2022 (7) TMI 1198 - HC - Customs

Liability of a Customs Broker - liability as per Regulation 17(9) of the Customs Broker Licensing Regulation 2013 - whether payment of differential amount duty, by the respondent to the appellant does not prove admission of liability and involvement of the respondent functioning as importer itself? - statements made by the director of the respondent admitting the offence and the involvement thereto binds the respondent company - doctrine of proportionality - HELD THAT - In terms of clause (d) of Regulation 11, the respondent was bound to advise his client to comply with the provisions of the Act and in case of non-compliance, the respondent should bring the matter to the notice of the Customs Authorities. In terms of clause (n) of Regulation 11, the respondent has to verify the antecedents, the correctness of the importer, exporter code no. identity of his client and functioning of his client at the declared address by using reliable, independent, authenticate document, data or information. Admittedly, the conduct of the respondent clearly shows that he has breached the said provision. It is also noted the legal principle of Preponderance of Probabilities which is required to be applied and not proof beyond reasonable doubt. Bearing this in mind, when we examine the order passed by the licensing authority dated 21.09.2017 by which the license was revoked, the statement of Shri Subhasish Bhattachariya, Director of the respondent company recorded under Section 108 of the Act on 03.09.2016, 05.09.2016 and 11.11.2016 were taken note of. There is a clear admission that there was a mis-declaration in the weight of the imported consignment, and that the weigh bridge operator of CONCOR-CFS Kolkata used to ask staff of the respondent about the declared weight in the Bill of Lading or IGM and used to issue weighment slip matching with the declared weight. Further he had stated that the customs authorities never checked the weight of the packing materials of the bills of the old and used clothing but relied on the declaration in the imported documents. Further he had stated that after examination by the customs, the weighment slips were destroyed by the respondent company. Shri Marinmoy Das, another Director of the respondent in his statement under Section 108 of the Act recorded on 15.09.2016 stated that no weighment slips were found from their office by the DRI as they were destroyed as per the instructions of the importer because the weight of the consignment were not as per declaration. The manipulated weighment slips were not only handed over to the representatives of the respondent and the actual weight and 6 containers were available in the computer installed in the Weigh Bridge. The weigh bridge operator has specifically implicated the Director of the respondent and the G Card holder who dealt with the cargo on behalf of the respondent. The statement recorded from the transporter shows that the declared weight of the container is much less than the actual weight. The importers did not respond to the summons issued under Section 108 of the Act and the same were returned undelivered with remark not found/ not existed . Therefore, the licensing authority concluded that the said importers are paper firms and the respondent has kept the department in the dark about the identity of his client and thus allowing them to evade customs duties. Furthermore, the respondent company had deposited a sum of Rs. 65.40 lakhs by 26 demand drafts stated to be on behalf of the importers - the tribunal has picked holes in the evidence brought on record by the licensing authority which not only probabilises but also establishes the violation committed by the respondent thereby giving no room for interference. It is pointed out that licence granted to the respondent is to expire on 22.07.2022 and in the event this Court does not agree with his submissions, the relief as granted by the Hon ble Supreme Court can be considered in the case of the respondent. The order passed by the tribunal suffers from errors of law and perversity calling for interference - the appeal filed by the revenue is allowed and the substantial questions of law are answered in favour of the revenue.

Issues Involved:
1. Liability of the respondent under Regulation 17(9) of the Customs Broker Licensing Regulation 2013.
2. Implications of the payment of differential duty amount by the respondent.
3. Binding nature of statements made by the director of the respondent admitting the offense.

Detailed Analysis:

1. Liability under Regulation 17(9) of the Customs Broker Licensing Regulation 2013:
The court examined whether the respondent, a Customs Broker, was liable for the acts or omissions of its employees as stipulated under Regulation 17(9) of the Customs Broker Licensing Regulation (CBLR) 2013. The respondent's license was revoked due to manipulation in the net weight of imported goods. The Directorate of Revenue Intelligence (DRI) reported the offense, leading to the suspension and subsequent revocation of the respondent's license. The tribunal had previously reversed this decision, citing inconsistencies in statements. However, the court emphasized that the tribunal failed to consider the preponderance of probability and the respondent's obligations under Regulation 11 of CBLR 2013. The court concluded that the respondent failed to fulfill its duties, including verifying the importer's identity and ensuring compliance with customs regulations, thereby justifying the revocation of the license.

2. Implications of the Payment of Differential Duty Amount:
The court addressed whether the payment of Rs. 65.40 lakhs by the respondent constituted an admission of liability. The tribunal had found the payment insufficient to prove the respondent's involvement as the de facto importer. However, the court disagreed, noting that the payment indicated the respondent's acknowledgment of the duty liability. The respondent's failure to produce the importer and the voluntary payment of the differential duty further supported the conclusion that the respondent acted as the de facto importer. Thus, the court held that the payment was a significant factor in establishing the respondent's liability.

3. Binding Nature of Statements by the Director:
The court considered whether the statements made by the respondent's director, admitting the offense, were binding on the respondent company. The tribunal had noted contradictions in the director's statements and the statements of other individuals involved. However, the court emphasized that the standard of proof in such cases is based on the preponderance of probabilities, not beyond reasonable doubt. The statements recorded under Section 108 of the Customs Act indicated clear admissions of guilt and manipulation of weights, which were not retracted. The court found no inconsistencies significant enough to undermine the evidence presented by the licensing authority. Therefore, the court concluded that the director's statements were binding on the respondent company and supported the revocation of the license.

Doctrine of Proportionality:
The tribunal had invoked the doctrine of proportionality, deeming the revocation of the license too harsh. The court, however, found this reasoning based on misplaced sympathy. It reiterated that the respondent had no vested right to handle cargo in a Customs area, and the license came with conditions that the respondent failed to meet. The court referenced several Supreme Court judgments to assert that judicial review of administrative actions is permissible only if the decision is illegal, unreasonable, irrational, or procedurally improper. The court concluded that the revocation of the license was proportionate to the violations committed by the respondent.

Conclusion:
The court found that the tribunal's order suffered from errors of law and perversity. It upheld the revocation of the respondent's license, answering the substantial questions of law in favor of the revenue. The appeal filed by the revenue was allowed, and the tribunal's decision was overturned.

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