2023 (1) TMI 60 - AT - Customs

Revocation of Customs Broker Licence - forfeiture of security deposit - imposition of penalty - non-ascertainment of the premises from which the importer operated and unwonted reliance placed on an intermediary who allegedly misused the Import Export Code (IEC) of another entity for import of branded goods - HELD THAT - The appellant had not verified the premises of the importer in person. Undoubtedly, there is no prescription, in procedure or instruction, that the premises of the client should be visited in person or verified appropriately. Norms for familiarity with the background of client are mandated and it is the contention of the Learned Counsel that these were conformed to. It is also seen that the enquiry proceedings restricted itself to the technical aspect of the allegation without endeavouring to ascertain if acts of omission or commission as custom broker had, in fact, contributed to the act of smuggling. The appellant has, at the same time, been unable to evince due to discharge of obligation. The licensing authority has revoked the licence of the appellant herein besides forfeiting the security deposit and imposing further penalty. Considering the nature of lapse on the part of the customs broker , the ends of justice would be met by setting aside the revocation while allowing the forfeiture of security deposit and imposition of penalty to sustain. Appeal disposed off.

Summary

Issues: Revocation of license, forfeiture of security deposit, imposition of penalty under Customs Broker Licensing Regulation, 2018

Revocation of License:
The appeal by M/s Sonak Shipping Services against the revocation of their license under regulation 14 of the Customs Broker Licensing Regulation, 2018 was based on the clearance of goods imported by their clients, M/s Pratibha Traders, allegedly comprising goods subject to 'anti-dumping duty'. The licensing authority found breaches of various regulations and imposed detriments. The appellant argued that the initiation of proceedings was based on non-ascertainment of the importer's premises and misuse of Import Export Code (IEC) by an intermediary. The appellant contended that there was no requirement for a customs broker to visit the client's premises and that the timelines in the regulation were breached. However, it was observed that the appellant had not verified the importer's premises, and the enquiry focused on technical aspects without determining the broker's contribution to smuggling. The licensing authority revoked the license, but the tribunal set aside the revocation, maintaining the forfeiture of the security deposit and penalty.

Forfeiture of Security Deposit and Imposition of Penalty:
The proceedings under the Customs Broker Licensing Regulation, 2018 resulted in the forfeiture of the security deposit and a penalty of Rs. 50,000 under regulation 18. The appellant argued that the pandemic justified non-compliance with timelines and that the issue was not merely unfamiliarity with the importer's premises but the misuse of IEC by an intermediary. The tribunal noted that there was no requirement to visit the client's premises in person, but norms for familiarity with the client's background were mandated. The enquiry did not establish the broker's contribution to smuggling, and the appellant failed to discharge their obligation. The tribunal upheld the forfeiture of the security deposit and penalty, considering the nature of the broker's lapse, while setting aside the license revocation.

Conclusion:
The tribunal disposed of the appeal by M/s Sonak Shipping Services, setting aside the revocation of the license but upholding the forfeiture of the security deposit and imposition of the penalty. The decision was pronounced in open court on 22.12.2022.