2023 (6) TMI 473 - AT - Customs

Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - collusion of Customs Brokers with risky exporters in the execution of frauds - handling consignments for multiple untraceable exporters - Regulation 10 (n) of the Customs Broker Licensing Regulations, 2018 - HELD THAT - In Perfect Cargo Logistics 2022 (4) TMI 1005 - CESTAT NEW DELHI , the Tribunal observed This conclusion that the exporters did not exist is based on a communication said to have been received from DGARM, which both the inquiry officer and the Commissioner took as conclusive proof not only of the fact that the exporters did not exist but also, by implication, conclusive proof that the appellant had not conducted the verification as required under Regulation 10(n). The facts of the present case are similar, except that the copy of the communication sent by DGARM was made available to the appellant. Other documents were not made available to the appellant. The appellant has contended that all the documents, as required by the Circular, were supplied by the appellant but a perverse finding has been recorded by the Commissioner that the provisions of Regulation 10 (n) of the 2018 Regulations has not been complied with merely because of the facts stated in the communication dated 17.08.2020 sent by DGARM. Appeal allowed.

Summary

Issues:
Revocation of Customs Broker license under Regulation 10 (n) of the Customs Broker Licensing Regulations, 2018 based on communication from DGARM.

Issue 1: Revocation of Customs Broker License

The case involved the revocation of a Customs Broker license under Regulation 10 (n) of the Customs Broker Licensing Regulations, 2018 based on a communication from the Directorate General of Analytics and Risk Management (DGARM) to field formations. The communication highlighted the possible collusion of Customs Brokers with risky exporters in executing frauds related to IGST refund frauds. The communication identified 62 Customs Brokers who handled consignments for multiple untraceable exporters, indicating a violation of KYC guidelines under the Customs Broker Regulations and Board Circular No. 09/2010-Cus dated 08.04.2010.

Issue 2: Show Cause Notice and Inquiry Process

Following the communication from DGARM, a show cause notice was issued to the appellant, and an enquiry officer was appointed. The appellant was required to submit evidence, and after the submission of written comments, the Commissioner revoked the Customs Broker License, forfeited the security deposit, and imposed a penalty of Rs. 50,000. The Commissioner's order highlighted the failure of the Customs Broker to exercise due diligence and comply with KYC guidelines, leading to the revocation of the license.

Issue 3: Tribunal Decision and Legal Precedent

In the appeal, the appellant relied on a previous decision by the Tribunal in a similar case to argue against the revocation of the Customs Broker License. The Tribunal observed that the show cause notice in the present case was based solely on a communication from DGARM without providing any supporting documents to substantiate the allegations. The appellant contended that all required documents were submitted as per the Circular, but a finding against compliance with Regulation 10 (n) was made solely based on the communication from DGARM. Following the legal precedent, the Tribunal set aside the Commissioner's order, emphasizing the lack of concrete evidence supporting the revocation of the license.

This summary highlights the issues related to the revocation of a Customs Broker license under Regulation 10 (n) of the Customs Broker Licensing Regulations, 2018 based on a communication from DGARM, the show cause notice and inquiry process, and the Tribunal's decision based on a legal precedent.