2023 (3) TMI 956 - AT - Customs

Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - export of prohibited goods (red sanders logs), declaring it as VAT BLUE 20 - appellant s submission was that the Shipping Bill was not filed by it or with its knowledge or consent - HELD THAT - It is undisputed that the appellant had not filed the Shipping Bill at all and the exporter in whose name the Shipping Bill was filed was not its client. Therefore, if the exporter violated laws and attempted to smuggle out red sanders, by no stretch of imagination can the appellant be faulted. To come to such a conclusion, it must be presumed firstly that the exporter was the appellant s client (which it was not) and that the appellant was aware that the Shipping Bill was filed (which it was not), that the appellant was aware that the exporter violated the laws (which it was impossible considering that the appellant was not even aware of the Shipping Bill) and ultimately that the appellant had not advised the exporter. Any Facility Notice by the Commissioner is to facilitate the processes and procedure in the Custom House and it does not take the shape of a statutory regulation. Therefore, even if there was a violation of any instructions in such notice, it does not automatically be concluded that the Regulations have been violated. The violation of the Regulation has to be established. At any rate, if the appellant mainly operates in Delhi, it has no reason to keep checking the system for Shipping Bills and Bills of Entry filed in various Custom Houses across the country and also checking what instructions were issued by the respective commissioners. So long as it follows the instructions in the Customs formations where it operates, the appellant cannot be faulted. Further, it is found that if the system is not designed to send an alert to the Customs Broker if a Shipping Bill is filed in its name in the service centre at the Custom House and only sends an alert if it is filed online, it cannot be fathomed how the appellant can be faulted if this loophole in the system was exploited by another person after making a fake Customs card. The impugned order cannot be sustained - Appeal allowed.

Summary

Issues involved: Appeal against revocation of Customs Brokers licence, penalty imposition, negligence of Customs Broker in checking filed Shipping Bills, violation of Regulation 10(d) of CBLR 2018.

Revocation of Customs Brokers licence and penalty imposition:
The appellant, a licensed Customs Broker, filed an appeal against the Order-in-Original revoking its licence, forfeiting the security deposit, and imposing a penalty of Rs. 50,000. The case involved an incident where a Shipping Bill filed in the Nhava Sheva Custom House contained prohibited goods instead of the declared goods. The Additional Commissioner found that while the appellant did not file the Shipping Bill, it was negligent in not checking which Shipping Bills were filed in its name as directed by the Commissioner of Customs. The appellant argued that it had no knowledge or consent regarding the filed Shipping Bill and that the penalty was unjustified.

Allegation of negligence and compliance with Regulation 10(d) of CBLR 2018:
The appellant contended that it had no reason to suspect the filing of the Shipping Bill in its name, especially since it primarily operated in Delhi, not Nhava Sheva. The appellant's representative argued that the allegation of negligence was unsustainable as the system did not have a mechanism to alert Customs Brokers of Shipping Bills filed in the service centre. The Revenue's representative supported the impugned order, asserting that the appellant should have been more vigilant and reported the incident. However, the Tribunal noted that the appellant had not filed the Shipping Bill, the exporter was not its client, and the appellant was unaware of the violation, making the allegation of negligence unfounded.

Decision and Conclusion:
The Tribunal considered the submissions and found that the impugned order could not be sustained. It was observed that the appellant could not be faulted for the exporter's violation when it had no involvement in filing the Shipping Bill and was unaware of the incident. The Tribunal emphasized that the appellant's compliance with regulations should be based on its operational areas and not on checking systems across various Custom Houses. Ultimately, the appeal was allowed, and the impugned order was set aside, providing consequential relief to the appellant.

*(Order Pronounced in Court on 21.03.2023.)*