2023 (12) TMI 85 - AT - Customs

Revocation of Customs Broker License - forefeiture of security deposit - levy of penalty - Over-valuation of goods - failure of exercising supervision required to ensure proper conduct over the employee. It is the contention of the appellant that there is nothing in the show cause notice as well as the order passed by the learned Commissioner which could associate or attribute the appellant for the offence relating to over-valuation of the export goods. HELD THAT - While deciding the question of over valuation on part of the exporter, there is nothing on record to in any way conclusively link the conduct of the said offence with the connivance of the Customs Broker. There is nothing to decisively link the appellant with the commissioning of the said fraud and mere oral, unverified testimony cannot substitute as proof in the matter. It is also not established from records that the chartered engineer was fixed by the appellant. Further, the declaration of the export value is the sole prerogative of the exporter and not that of the Custom Broker, who files the Customs documents as per information supplied by the exporter/importer as the case be. If any conscious contumacious conduct is ascribed to the Custom Broker it has to be led by positive evidence which in this case is none. Also, there is nothing in the order or the show cause notice to link, the appellant with the non-realization of the export proceeds in respect of export shipments made in the past. There are no infringement of Regulation 10(q) as well in the matter as it is on record that the appellant has always co-operated in the enquiry. The fact that the chartered accountant could not expressly prove that the Custom Broker or his employee was the person who had represented before him as the exporter, only goes in to strengthen the appellant s case. Therefore, the allegation only exposes the hollowness of the department s claim with reference to Regulation 13(12) of CBLR, 2018 - the allegations levelled by the department as misdirected and mis-founded. To implicate the appellant with the commissioning of the fraud, the charge has to be led by positive and reliable evidence and vague hypothesis and presumptions cannot be the basis for any unilateral action initiated against the Broker - the department has failed to make out any sustainable case of violation of the provisions of the CBLR, 2018 by the Custom Broker. The order passed by the learned Commissioner being not legal and correct is therefore liable to be set aside - the order of revocation of the Customs Broker license is annulled.

Summary

Issues involved: Alleged involvement in export fraud, Violation of Customs Broker Licensing Regulations 2018

Alleged involvement in export fraud:
The appellant, a Customs Broker, was accused of being involved in an export fraud scheme where certain consignments were over-valued to defraud the government. The investigations revealed discrepancies in the valuation of goods exported by M/s. Gupta Vyapaar, leading to suspicions of fraud. The appellant denied any knowledge or involvement in the fraudulent activities carried out by the exporter.

Violation of Customs Broker Licensing Regulations 2018:
A show cause notice was issued to the appellant alleging violations of various regulations under the Customs Broker Licensing Regulations 2018. The appellant was charged with failure to comply with obligations such as advising clients on compliance with customs regulations, ensuring speedy and efficient discharge of duties, verifying client details, and cooperating with customs authorities. The department accused the appellant of not exercising proper supervision over employees and being involved in facilitating export fraud.

Judgment:
The tribunal considered the contentions of both sides and found that there was no conclusive evidence linking the appellant to the export fraud. It was noted that the Customs Broker's role is limited to filing customs documents based on information provided by the exporter, and the responsibility for declaring export values lies with the exporter. The tribunal found no evidence of malafide intent on the part of the Customs Broker and concluded that the allegations against the appellant were misdirected and mis-founded.

The tribunal emphasized the importance of positive and reliable evidence to establish charges against the Customs Broker and highlighted the lack of substantial evidence in this case. It was concluded that the department failed to make a sustainable case of violation of the Customs Broker Licensing Regulations 2018. As a result, the tribunal quashed the order revoking the Customs Broker license and provided the appellant with all consequential benefits as per the law.

This judgment was pronounced in open court on 01.12.2023 by the members of the tribunal, Mr. Ashok Jindal (Member - Judicial) and Mr. Rajeev Tandon (Member - Technical).