2023 (6) TMI 322 - AT - Customs

Revocation of Customs Broker License - export of cut and polished diamonds - alleged misuse of several persons to secure importer exporter code (IEC) numbers - adherence to time-lines and denial of opportunity to cross-examine persons whose testimony was relied upon - regulation 17 of Customs House Broker Licensing Regulations, 2018. HELD THAT - The Hon ble Supreme Court, in PR. COMMISSIONER OF CUSTOMS VERSUS SHASTA FREIGHT SERVICE PVT. LTD. 2022 (10) TMI 473 - SC ORDER , had dismissed special leave petition (SLP) against order of the Hon ble High Court of Telengana only owing to stated disinclination of appellant to pursue the dispute and that the Hon ble High Court of Telangana had held that the Enquiry Officer could not have violated the mandate of law. It would have been a different matter if the Enquiry Officer had chosen not to rely upon the statements of those two witnesses, but to proceed only on the basis of other available documents. But in more than one place, the Enquiry Officer affirmed his reliance upon the statements of witnesses, among other things. Therefore, the impugned order based upon such an enquiry report is contrary to the procedure prescribed by Regulation 20(4) and clearly in violation of the principles of natural justice. The proceedings under the Customs Act, 1962 emanated from alleged conspiracy to export cut and polished diamonds through entities existing only on paper for the sole purpose of receiving proceedings for evading oversight and control by the agencies of the State. There is no dispute that the exports did occur; non-receipt of remittance in foreign exchange fall outside the obligation devolving customs brokers whose functioning, under the Regulations, is limited to filing of shipping bills and securing of let export orders before outward transmission beyond customs area. In such circumstances, the sole responsibility that may be laid at the door of customs broker pertains to ascertainment of identity of the exporters. The want of diligence in doing so has been held against the customs broker herein by relying upon the admissions of several of the importer-exporter code (IEC) holders that denied connection with the export consignments and, more particularly, on that of an employee of the appellant on the specifics of the verification undertaken by the customs broker. As the case revolves around beneficiary exporter, operating under the cover of entities existing on paper and evidence of existence of such operator being hearsay, it was behoved the licensing authority to allow cross-examination rather than deny solely on the ground that the statements had not been retracted - Failure to place the request in this perspective discredits the denial of cross-examination on the part of the licensing authority. The impugned order is clearly bereft of such finding. Learned Authorised Representative has contended that the delay occurred owing to insistence on notice insisting upon cross-examination of their employee; an assertion of right to defence in proceedings is, of itself, not dilatory and, especially, in the light of our finding that no justifiable cause for rejection of cross-examination is available on record - the decision of the Hon ble High Court of Bombay in THE PRINCIPAL COMMISSIONER OF CUSTOMS (GENERAL) MUMBAI VERSUS UNISON CLEARING PVT. LTD., AND OTHERS. 2018 (4) TMI 1053 - BOMBAY HIGH COURT does not come to the assistance of the licencing authority. It is clear that the time-lines specified in regulation 17 of Customs House Broker Licensing Regulations, 2018 had not been adhered to. No purpose would be served by directing cross-examination now because that will only approve non-adherence to timelines; we cannot condone that which is not condonable. It is not found necessary to delve further into the deviation from the specificity, warranted in show cause notice, by the arrangement of obligations in regulation 10 of Customs Broker Licencing Regulations, 2018. The impugned order is set aside - appeal allowed.

Summary

Issues Involved:
1. Justification for revoking customs broker license.
2. Adherence to procedural timelines.
3. Denial of cross-examination opportunity.
4. Specific charges under Customs Broker Licensing Regulations, 2018.

Summary:

1. Justification for revoking customs broker license:
Under consideration was the appeal by M/s A B Paul & Company against the order of the Commissioner of Customs (General), which revoked their customs broker license, forfeited their security deposit, and imposed a penalty of Rs. 50,000 under regulation 18 of Customs House Broker Licensing Regulations, 2018. The appellant argued that their role in the export of 'cut and polished diamonds' did not justify such severe penalties, especially since only four out of fourteen entities were alleged to exist.

2. Adherence to procedural timelines:
The appellant contended that the timelines prescribed in regulation 17 of Customs House Broker Licensing Regulations, 2018, were not adhered to. The licensing authority dismissed this argument, citing unavoidable administrative reasons and referencing the Hon'ble High Court of Bombay's decision in Principal Commr. Of Cus. (General), Mumbai v. Unison Clearing P Ltd, which held that the time limit in Regulation 20 is directory, not mandatory.

3. Denial of cross-examination opportunity:
The appellant requested cross-examination of witnesses whose statements were relied upon to impose penalties. The licensing authority denied this request, referencing the Inquiry Officer's observation that there was no retraction of statements and thus no need for cross-examination. The appellant cited several judgments arguing that cross-examination is mandatory, but the licensing authority relied on decisions like Kanungo & Co. Vs. Collector of Customs, which held that the principles of natural justice do not necessarily cover the right to cross-examine in such matters.

4. Specific charges under Customs Broker Licensing Regulations, 2018:
The appellant was charged with breaches of regulation 10(a), 10(d), 10(e), 10(k), 10(m), 10(n), and regulation 13(11). The inquiry report held these breaches as proved. The appellant argued that the licensing authority conducted proceedings in a prejudicial manner and did not consider evidence of the exporters' existence. The licensing authority focused on statements from specific individuals and dismissed the appellant's claim of non-adherence to timelines.

Conclusion:
The Tribunal found that the denial of cross-examination was unjustified and that the licensing authority failed to demonstrate justification for delays in proceedings. Consequently, the impugned order was set aside, and the appeal was allowed.