2023 (12) TMI 1154 - AT - Customs

Revocation of Customs Broker License - forfeiture of security deposit - Violation of Advance Authorisation scheme - duty free import which were diverted in the local market illegally instead of using the same imported goods for manufacture of export goods - contravention of Regulations 10(d) and 10(n) of CBLR, 2018 - HELD THAT - Sufficient and reasonable opportunity was given to the appellants before passing an order, in respect of charges framed against them and there is no infirmity of the impugned order in not following the principles of natural justice in this regard. The appellants have duly filed the ex-bond bills of entry as per the documents given by the importers and they were not aware of the purported diversion of the imported goods. In the instant case, the violations was found by the department only on the basis of specific intelligence developed by DRI, KZU and communicated in their offence report dated 30.06.2021, much later after the clearance of ex-bond warehoused goods, and hence the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. Further, as the purported diversion of imported goods was not known to the appellants, the non-compliance by the importer of license/Advance Authorisation conditions in respect of imported goods could not have been brought to the notice of the Deputy Commissioner of Customs (DC) or Assistant Commissioner of Customs (AC) by the appellants CB - violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable. Violation under Regulation 10(n) - HELD THAT - Circular No. 9/2010-Customs dated 08.04.2010 clearly explains the provision of CBLR/CHA Regulations which require the Customs Brokers to verify the antecedents, correctness of Import Export Court (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data and information. The said guidelines provide for the list of documents that is required to be verified and that are to be obtained from the client importer/exporter. it is also provided that any two documents of among such specified documents is sufficient for fulfilling the obligation prescribed under Regulation 13(o)/10(n) of CHALR, 2004/CBLR, 2018. In the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department - there are no legal basis for upholding of the alleged violation of Regulation 10(n) ibid by the appellants in the impugned order. In the instant case, the suspension was continued during the inquiry proceedings for about 12 months till the completion of inquiry proceedings and revocation of CB license by the impugned order - the order of revocation of appellant s CB license has been passed on 23.09.2022 i.e., about 14 months and 23 days from the date of offence report. Though the time lines indicated in the CBLR, 2018 provide for completion of the inquiry proceedings, if calculated from the date of receipt of offence report, would require such an order under Regulation 17(7) ibid to be issued within 270 days, we find that there is no case for inordinate delay as the adjudication was done within a reasonable period of time. The appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, particularly when the import documents were obtained from the importers through an intermediary in ensuring that all documents relating to imports are genuine, the KYC documents given by the importer are also genuine and that these are not fake or fabricated. Thus, to this extent the appellants CB are found to have not complied with the requirement of sub-regulation 10(n) and thus imposition of penalty in not being proactive for fulfilling of regulation 10(n) of CBLR, 2013 alone, is appropriate and justifiable. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the CB license of the appellants; and for forfeiture of entire security deposit, inasmuch as there is no violation of Regulation 10(d) of the CBLR, 2018, and the findings in the impugned order is contrary to the facts on record - in view of the failure of the appellants to have acted in a proactive manner in fulfilment of the obligation under Regulation 10(n) ibid, particularly when they had received the documents from importer through intermediary, it is justifiable to impose a penalty of Rs.10,000/-, which would be reasonable. Appeal allowed in part.

Summary

Issues Involved:
1. Whether the appellant Customs Broker fulfilled obligations under CBLR, 2018.
2. Whether the revocation of the Customs Broker license and forfeiture of the security deposit was justified.
3. Whether the imposition of penalty was appropriate.

Summary:

1. Fulfillment of Obligations under CBLR, 2018:
The Tribunal examined whether the appellant Customs Broker (CB) complied with Regulations 10(d) and 10(n) of CBLR, 2018. The Principal Commissioner concluded that the CB had violated these regulations by not verifying the authenticity of the KYC documents and aiding proxy importers. However, the Tribunal found that the CB had obtained and submitted the necessary KYC documents and authorization letters from the importer, M/s Bruno Exports, Delhi. It was noted that the CB had no knowledge of the subsequent diversion of goods by the importer, which occurred after customs clearance. The Tribunal referenced previous decisions, including HIM Logistics Pvt. Ltd. Vs. Commissioner of Customs, New Delhi, to support the view that the CB had fulfilled their obligations under Regulation 10(d) and 10(n).

2. Justification for Revocation and Forfeiture:
The Tribunal found no merit in the Principal Commissioner's decision to revoke the CB license and forfeit the entire security deposit. The CB had acted based on the documents provided by the importer and was unaware of any illegal activities post-clearance. The Tribunal emphasized that the CB cannot be held responsible for actions taken by the importer after customs clearance. The Tribunal also highlighted that the CB had performed due diligence in verifying the importer's details, albeit through an intermediary.

3. Imposition of Penalty:
While the Tribunal did not uphold the revocation of the license and forfeiture of the security deposit, it recognized a lapse in the CB's proactive verification of documents obtained through an intermediary. Citing the Supreme Court's decision in K.M. Ganatra & Co., the Tribunal imposed a reduced penalty of Rs.10,000/- on the CB for not fully complying with Regulation 10(n) of CBLR, 2018.

Conclusion:
The Tribunal modified the impugned order, revoking the CB license and forfeiture of the security deposit, but imposed a penalty of Rs.10,000/- for partial non-compliance with Regulation 10(n). The appeal was allowed in favor of the appellants.