2023 (9) TMI 421 - AT - Customs

Revocation of CB license - forfeiture of security deposit - levy of penalty - allegation is that the appellants have processed the shipping bills without proper antecedent verification of exporters by using any reliable means, even after knowing that the export goods belong to a third person, other than the exporter - HELD THAT - The Regulations and the Board s circular provide that certain specific features of an importer/ exporter needs to be verified in terms of specified documents mentioned in Annexure to the said Circular dated 08.04.2010, in order to fulfill the obligations by a Customs Broker. In the present case, it is also on record that the export entities being proprietorship firms, the particulars regarding the legal name of the exporter firms and their addresses have been verified by the CB on the basis of specified documents. In this regard, we also refer to the Public Notice No.26/2019 dated 14.10.2019 issued by the Commissioner of Customs (Export), Air Cargo Complex informing the trade that the public notices issued in respect of verification of documents in respect of first time of import of goods is mutatis mutandis applicable to first time export goods also. The appellants CB in this case cannot be held responsible in cases where they have verified the identity of the exporter through prescribed records. Further, in the present case the appellants have also obtained the first time export verification of the exporters conducted by the appropriate customs authorities and a specific approval has been given by the Competent Authority and the same has been communicated by the Deputy Commissioner of Customs, DC, stating that the exporters/Customs Broker is allowed to initiate for the first time import/export through Precious Cargo Customs Clearance Centre having Customs-EDI port code INDPC4. Thus, the conclusion arrived at by the Principal Commissioner in the impugned order to the extent that the appellants have violated in not fulfilling the obligation cast on them under Sub-regulation 10(n) is not legally sustainable. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants and directing them to surrender the original customs broker license as well as ordering for forfeiture of the entire security deposit furnished by the appellants customs broker - the impugned order is justifiable to the limited extent of imposition of penalty of Rs.50,000/- against them - appeal allowed in favour of the appellants.

Summary

Issues Involved:
1. Revocation of Customs Broker License.
2. Imposition of Penalty.
3. Forfeiture of Security Deposit.
4. Compliance with Customs Brokers Licensing Regulations (CBLR), 2018.

Comprehensive Summary:

1. Revocation of Customs Broker License:
The appellants, M/s Lingama Logisol Private Limited, challenged the revocation of their Customs Broker license by the Principal Commissioner of Customs (General) under Regulation 17(7) of the CBLR, 2018. The revocation was based on an investigation report revealing that the appellants had handled exports for two fraudulent exporters, M/s Swastik Enterprises and M/s Ganesh Exports, who had used non-functional and non-existent addresses for illegal export of cut & polished diamonds. The Tribunal examined the obligations under Regulation 10(a), 10(d), 10(k), and 10(n) of CBLR, 2018, and found that the appellants had not violated Regulation 10(a) and 10(k) as they had obtained written authorizations and maintained necessary records. However, they failed to fulfill obligations under Regulation 10(d) by not informing Customs about the non-compliance of exporters, and under Regulation 10(n) by not verifying the functioning of the exporters at their declared addresses using reliable, independent, and authentic documents.

2. Imposition of Penalty:
The Tribunal upheld the imposition of a penalty of Rs. 50,000/- on the appellants for failing to fulfill their obligation under Regulation 10(d) of the CBLR, 2018. The appellants knew that the export goods belonged to third persons other than the exporters and failed to bring this to the notice of the Customs department.

3. Forfeiture of Security Deposit:
The Tribunal set aside the forfeiture of the entire security deposit furnished by the appellants. It was found that the appellants had complied with the verification requirements under Regulation 10(n) by obtaining necessary documents and approvals from the competent Customs authorities for the first-time export verification of the exporters.

4. Compliance with Customs Brokers Licensing Regulations (CBLR), 2018:
The Tribunal analyzed the specific obligations under Regulation 10 of the CBLR, 2018. It concluded that the appellants had not violated Regulation 10(a) and 10(k) as they had obtained written authorizations and maintained records properly. However, they failed under Regulation 10(d) by not informing Customs about the non-compliance of exporters and under Regulation 10(n) by not verifying the functioning of the exporters at their declared addresses. The Tribunal referred to various case laws and Circulars issued by the Central Board of Excise & Customs (CBEC) to support its findings.

Conclusion:
The Tribunal modified the impugned order by setting aside the revocation of the Customs Broker license and the forfeiture of the security deposit but upheld the imposition of a penalty of Rs. 50,000/-. The appeal was allowed in favor of the appellants with the modification indicated above.