2023 (11) TMI 839 - AT - Customs

Levy of penalty on the customs broker under Regulation 14 read with Regulation 18 of the Customs Broker Licensing Regulations 2013/2018 - ineligible drawback claimed - proof of mala fide and wilful misrepresentation by the customs broker or not - HELD THAT - The impugned order though is an independent order issued in terms of the Customs House Licensing Regulations 2013/2018, the offence remains the same that ineligible drawback claimed by the exporter ADPL. In the impugned order, the enquiry officer in his report found that It is seen from the facts of the case that the customs broker has informed the exporter about the non-availability of drawback and exporters have on their own violation opted to go for drawback under Section 75. As such, there is nothing forthcoming in the show-cause notice or the Order-in-Original that the customs broker has imparted any wrong information to the exporter. In fact, the allegation was that while they have given right caution to the exporter, they have not intimated the Department when the exporter chose to do the other way. There are no specific case of failure to exercise due diligence in imparting information to their client. Hence, the charge of failure to comply with Regulation 10(e) cannot be held against the Customs Broker . The Commissioner in the impugned order based on the findings of the inquiry officer held that I concur with the enquiry officer that the allegation of violations of Regulation 10(e) as unsustainable since the said provision requires due diligence in imparting to the customer. In this case, the exporter was aware of the provisions and carried out the claim of drawback on their own violation and it is not coming out that the customs broker has advised wrongly. The Tribunal vide its Final Order had clearly held that since the exporter had challenged the eligible claim of drawback before the revisionary authority the matter was sub-judice and it also observed that the department had failed to prove that there is a mala fide and wilful misrepresentation by the customs broker and accordingly penalty was set aside on the set of facts of ineligible drawback claimed by the exporter. Considering all these facts and taking into account the unblemished record of the customs broker as held by the Commissioner, the penalty imposed upon the appellant is set aside - The appeal is allowed.

Summary

Issues involved:
The issues involved in the judgment are imposition of penalty on a customs broker for alleged violation of Customs Broker Licensing Regulations, 2013/2018 due to filing shipping bills under ineligible drawback claim by the exporter, and subsequent appeal against the penalty.

Issue 1: Alleged violation of Customs Broker Licensing Regulations

The case involved M/s. Access World Wide Cargo, a holder of Customs Broker License, being penalized for filing shipping bills under ineligible drawback claim by the exporter, Aakansha Distributors (P) Ltd. The Commissioner imposed a penalty of Rs. 50,000 on the customs broker under Regulation 14 read with Regulation 18 of the Customs Broker Licensing Regulations 2013/2018. The appellant challenged this penalty order before the Tribunal.

Issue 2: Appeal against penalty imposition

The appellant argued that a previous order imposing penalty under Section 114AA of the Customs Act, 1962 was set aside by the Tribunal in a previous proceeding. The Tribunal had observed that there was no proof of mala fide or wilful misrepresentation by the customs broker. The appellant contended that the penalty was imposed erroneously, and the Commissioner's findings were factually incorrect. Subsequently, a show-cause notice was issued invoking the provisions of Customs Broker Licensing Regulations, 2013/2018, leading to the present impugned order imposing a penalty of Rs. 50,000. The appellant further argued that the penalty should have been dropped as none of the conditions under Regulation 14 were attracted, and there was no violation of the Customs Broker Licensing Regulations.

Final Decision:

After considering the arguments from both sides, the Tribunal noted that the customs broker had informed the exporter about the non-availability of drawback, and the exporter had chosen to claim drawback under Section 75 on their own violation. The Tribunal found that there was no failure on the part of the customs broker to exercise due diligence in imparting information to the client. The Commissioner concurred with the inquiry officer's findings that the allegation of violations of Regulation 10(e) was unsustainable as the exporter was aware of the provisions and carried out the claim of drawback voluntarily. The Tribunal, based on the previous order and the unblemished record of the customs broker, set aside the penalty imposed on the appellant. The appeal was allowed, and the penalty was revoked.