2022 (12) TMI 21 - HC - Customs

Revocation of Customs Broker License - Forfeiture of security deposit - penalty - doctrine of proportionality - whether punishment is disproportionate even though the charges under Regulation 11(a), 11(d), 11(e) and 11(n) were proved? - mis-declaration of the value of the imported goods - HELD THAT - The mis-declaration as regards the value of the goods was also made good by the beneficiary importer. The stand of the respondent before the authorities below consistently had been that it had verified the credentials of the IEC holder from the website of the DGFT and that the KYC documents were accordingly scrutinized as per its obligations in terms of the CBLR, 2013. It was also the stand of the respondent that the CBLR, 2013 did not envisage a physical verification of the antecedents of the importer as the Customs Broker is located in Mumbai and an importer may be situate elsewhere in the Country. In the present case, since the authorities below have all held that there was failure on the part of the respondent to follow the KYC norms and since the respondent is not in appeal against the order of the CESTAT, the only issue that is required to be considered is whether the order passed by CESTAT to the extent it set aside the order of the Adjudicating Authority for revocation of the Customs Broker licence of the respondent on the grounds of proportionality is sustainable or not? - The doctrine of proportionality is a well recognized concept of judicial review which Courts invoke to test the punishments imposed which are disproportionate to the alleged misconduct. Considering the fact that the respondent had, in fact, discharged a part of its obligation under the CBLR, 2013, although not in its entirety, we feel that the order with regard to revocation of the Customs Broker Licence would have been excessive in the facts and circumstances of the case and the issue has been rightly dealt with by the CESTAT. Appeal dismissed.

Summary

Issues involved:
1. Consideration of proportionality in revocation of Customs Broker license.

Detailed Analysis:
Issue 1: Consideration of proportionality in revocation of Customs Broker license
The case involved an appeal under section 138 of the Customs Act, 1962 against an order passed by the Customs Excise and Service Tax Appellate Tribunal (CESTAT) regarding the revocation of a Customs Broker's license. The questions of law framed for consideration included whether the revocation of the license was proportionate to the proven charges under various regulations. The respondent, a licensed Customs Broker, was accused of assisting in customs duty evasion by a third party. The Adjudicating Authority revoked the broker's license and imposed penalties based on negligence and failure to comply with obligations under the Customs Broker Licensing Regulation, 2013 (CBLR, 2013). The CESTAT, while upholding the penalties, found the revocation of the license disproportionate and set it aside. The High Court analyzed the concept of proportionality in punishment, citing legal precedents such as Ranjit Thakur v. Union of India and others, emphasizing that punishment should suit the offense and the offender, avoiding vindictiveness or undue harshness. The Court also referred to Chairman-cum-Managing Director, Coal India Ltd. v. Mukul Kumar Choudhuri & others, highlighting that punishment should be proportionate to the fault and reasonable in similar circumstances. The High Court concluded that considering the respondent's partial compliance with obligations under CBLR, 2013, the revocation of the license would have been excessive. Consequently, the Court dismissed the appeal, finding no substantial question of law.

This detailed analysis of the judgment showcases the legal considerations and principles applied by the High Court in assessing the proportionality of revoking a Customs Broker's license based on the facts and circumstances of the case.