2022 (9) TMI 326 - AT - Customs

Revocation of Customs Broker License - Period of limitation - relevant date for issuing SCN after the offence report - illegal withdrawal of Duty Drawback by filing export documents on behalf of six non-existent firms - aiding the export of overvalued Floor Coverings - opportunity to customs broker to cross examine the persons examined in support of the grounds forming the basis of proceedings - HELD THAT - The records indicate that earlier the license of the appellant was suspended on 24.02.2015, which order was confirmed on 23.03.2015. This suspension order was challenged by the appellant before the Delhi High Court on the ground that though the offence report was submitted on 16.02.2015, the show cause notice was issued on 24.09.2015 much beyond the statutory period of ninety days contemplated under regulation 20(1) of the 2013 Regulations. The department issue another show cause notice dated 22.10.2019 proposing penalty for the past exports against the same exporters. The appellant alleges that the show cause notice dated 22.10.2019 was issued on the basis of the earlier investigation carried out against 21 non-existent exporters for availing ineligible duty drawback and the report of said offense had earlier been forwarded by a letter dated 16.02.2015. A show cause notice dated 24.01.2020 was then issued to the appellant proposing to revoke the Customs Broker License of the appellant by considering the show cause notice dated 22.10.2019 issued under the provisions of the Customs Act as the offence report - The Department clearly committed an error in initiating proceedings for revocation of the Customs Broker License of the appellant by issuing the show cause notice dated 24.01.2020 treating the show cause notice dated 22.10.2019 as the offence report. The show cause notice dated 24.01.2020 proceeding to revoke the license of the appellant could not have treated the show cause notice dated 22.10.2019 as the offence report because the said show cause notice dated 22.10.2019 arises out of the offence report dated 16.02.2015. The impugned order dated 30.09.2022 passed by the Commissioner, therefore, cannot be sustained and is set aside - Appeal allowed.

Summary

Issues:
1. Revocation of Customs Broker License under Customs Broker Licensing Regulations, 2018 for connivance in illegal activities.
2. Compliance with statutory timelines for issuing show cause notices and revocation orders.
3. Allegations of aiding illegal export activities and violation of Customs Broker Licensing Regulations.
4. Denial of opportunity for cross-examination and procedural fairness in the inquiry process.

Analysis:

Issue 1: Revocation of Customs Broker License
The appeal challenged the revocation of the Customs Broker License of the appellant by the Commissioner of Customs based on connivance with individuals involved in illegal activities related to overvalued 'Floor Coverings.' The revocation was carried out under regulation 14 of the Customs Broker Licensing Regulations, 2018. The appellant was accused of filing export documents on behalf of non-existent firms, leading to the illegal withdrawal of Duty Drawback.

Issue 2: Compliance with Statutory Timelines
The timeline for issuing show cause notices and revocation orders was a crucial aspect of the case. The Delhi High Court had previously quashed show cause notices issued beyond the mandatory period of 90 days from the receipt of the offense report. The appellant argued that the subsequent show cause notice and revocation order were also issued beyond the prescribed period, rendering them unsustainable in law.

Issue 3: Allegations of Illegal Activities and Violations
The Department alleged that the appellant had a significant role in clearing consignments involved in illegal activities. It was claimed that the appellant failed to comply with regulations by not obtaining proper authorizations and knowingly aiding in the export of overvalued goods. The Department highlighted violations of various regulations under the Customs Broker Licensing Regulations, 2018.

Issue 4: Procedural Fairness and Denial of Cross-Examination
The appellant raised concerns regarding procedural fairness, specifically the denial of an opportunity to cross-examine witnesses during the inquiry process. It was argued that the failure to provide this opportunity, as mandated by regulation 17(4) of the 2018 Regulations, compromised the fairness of the proceedings.

In conclusion, the Tribunal found merit in the appellant's arguments regarding the erroneous initiation of proceedings and the failure to comply with statutory timelines. The revocation order was set aside, emphasizing the importance of procedural fairness and adherence to legal timelines in such matters. The appeal was allowed, and the impugned order dated 30.09.2020 was deemed unsustainable and set aside.