2024 (2) TMI 210 - AT - Customs

Levy of penalty on Customs Broker - Forfeiture of the security deposit - Role of the employee of the CB - illegal export of prohibited goods - allegations pertaining to Regulation 10(a), 10(e) and 10(n) of CBLR, 2018 - Doctrine of proportionality - HELD THAT - There appears to be no doubt that fraud has been committed by manipulating the documents to enable the illegal export of prohibited goods but there is no evidence to say that the appellant connived or was aware of the modus-operandi. However, it cannot be ignore that by virtue of a license granted under the Regulations, a customs broker is eligible and entitle to carry on the work of clearance of goods for import and export. As laid down in various decisions, CHA occupies a very important position in the Customs House. He is supposed to safeguard the interests of both the importers and the Customs and therefore a lot of trust is kept in CHA by the importers or exporters as well as by the NOBLE AGENCY VERSUS COMMISSIONER OF CUSTOMS, MUMBAI 2002 (2) TMI 171 - CEGAT, MUMBAI . Therefore, the appellant when he admits that he did not verify the address of the exporting company as they were in Amritsar and also did not raise any query for non production of the authorization from the exporter company had violated the obligations cast on a customs broker under the Regulations. Considering the extent of violation that can be attributed to the appellant and the fact noted by the Commissioner that active role was played by Shri Kumod Kumar Choudhary, employee of the CB and role of CB has not come out anywhere in the investigation as also CB has taken immediate action against the employee, applying the doctrine of proportionality the forfeiture of security deposit is far beyond proportion and imposition of penalty of Rs. 50,000/- is sufficient. The impugned order is modified to the extent that forfeiture of the security deposit needs to be set aside and only the order whereby the penalty has been imposed is affirmed - appeal allowed in part. Revocation of Customs Broker License - Revenue appeal for not revoking the License - Held that - We do not find that the appellant had any knowledge that illegal exports were attempted or there was any active or passive facilitation on the part of the appellant. There was no finding of any mala fide on the part of CHA such that trust operating between CHA and customs authorities was violated or irritably lost for future operation of the license. - Revenue appeal dismissed.

Summary

Issues Involved:
1. Forfeiture of Security Deposit and Imposition of Penalty on the Customs Broker.
2. Non-revocation of the Customs Broker License by the Revenue.

Summary

Forfeiture of Security Deposit and Imposition of Penalty on the Customs Broker:
The Customs Broker (CB) was penalized with a forfeiture of security deposit and a penalty of Rs. 50,000/- for failing to obtain authorization from the exporter and not verifying the correctness of KYC documents. The CB argued that the error was due to their employee's mistake, and they had taken immediate corrective action by terminating the employee and filing an FIR. The Tribunal found that the CB had acted diligently upon discovering the mistake and noted that the active role in the violation was played by the employee, not the CB. The Tribunal applied the doctrine of proportionality, concluding that forfeiture of the security deposit was disproportionate and set it aside, affirming only the penalty of Rs. 50,000/-.

Non-revocation of the Customs Broker License by the Revenue:
The Revenue appealed against the decision not to revoke the CB's license, arguing that the CB violated Regulations 10(a), 10(e), and 10(n) of CBLR, 2018. The Tribunal held that while the CB did fail to verify the exporter's address and obtain proper authorization, there was no evidence of the CB's involvement in the fraudulent export attempt. The Tribunal emphasized that revocation of the license is a severe punishment and should be reserved for grave infractions. Given the CB's prompt corrective actions and lack of evidence of their knowledge or involvement in the fraud, the Tribunal found no justification for revocation. The appeal by the Revenue was dismissed, and the impugned order was upheld.

Legal Provisions and Precedents:
The Tribunal referred to various legal provisions under the Customs Act, 1962, and CBLR, 2018. It also cited precedents, including decisions in Kunal Travels (Cargo) Vs. CC (I & G) and Falcon Air Cargo and Travels (P) Ltd. Vs. Commissioner of Customs, emphasizing the importance of proportionality in penalties and the necessity of evidence for revocation of licenses.

Conclusion:
The Tribunal modified the impugned order by setting aside the forfeiture of the security deposit while affirming the penalty of Rs. 50,000/- on the Customs Broker. The appeal by the Revenue for revocation of the CB's license was dismissed, reinforcing that severe penalties like revocation require substantial evidence of grave infractions.