2024 (4) TMI 80 - AT - Customs

Revocation of Customs Broker License - forfeiture of security deposit - imposition of penalty - export of textile articles - overvaluation and misdeclaration with intent to claim drawback under section 75 of Customs Act, 1962 - HELD THAT - From the records, it appears that the offence by the exporter was one of overvaluation with intent to claim drawback under section 75 of Customs Act, 1962 beyond that entitled. Though misdeclaration too, has been cited, there is nothing on record to evince that description or quantity was also called into question. It is apparent that, in the absence of evidence to the contrary, the appellant was not responsible for ascertainment of value or declaration of value. There is nothing on record to indicate that undue benefits were received by them either. The appellant was found to have contravened the obligation to advise compliance with Customs Act, 1962 and to report non-compliance. Value, being a contractual element, is convergence of intent in monetary terms; it can be limitless but, for the purposes of assessment, is limited to a conceptual framework that is rarely without controversy when disputed. An adjudicatory finding of overvaluation is based on certain parameters which has consequence in law without altering the contracted engagement - There is no evidence to substantiate the charge; moreover, this is a tertiary consequence of one of the other charges, viz., that of not having been in contact with the exporter to which failure to advice does not add for enhancing gravity of breach but merely conjoins. The appellant has been charged with failure to verify antecedents and identity of client as well as operations at the declared address. This is, probably, the only obligation that specifies identifiable action on the part of customs broker and against which failure to measure up can be ascertained. It is on record that the appellant had not contacted the exporter at all. That is the most fundamental of obligations and breach thereof jeopardizes the reliability of the broker. The only breach that survives does not merit harshest of retribution - the revocation of licence under regulation 20 of Customs Broker Licencing Regulations, 2013 and the penalty imposed under regulation 22 of Customs Broker Licencing Regulations, 2013 is set aside - forfeiture of deposit is upheld - appeal allowed in part.

Issues involved: Appeal against revocation of customs broker license, forfeiture of security deposit, and imposition of penalty under Customs Broker Licensing Regulations, 2013 in connection with alleged overvaluation and mis-declaration of textile articles in exports.

Summary:

1. The appeal was filed by M/s Shabari International, a customs broker, against the revocation of their license and other detriments under Customs Broker Licensing Regulations, 2013. The proceedings were initiated following completion of adjudicatory proceedings against the goods, exporter, and customs broker under the Customs Act, 1962.

2. The notice alleged breach of various obligations under Customs Broker Licensing Regulations, 2013. The inquiry report confirmed culpability in certain aspects, leading to the impugned order by the licensing authority, Commissioner of Customs, Nagpur.

3. The appellant's counsel argued that the findings were erroneous as the offense of undervaluation was beyond the customs broker's control. Reference was made to previous tribunal decisions highlighting limited scope for customs brokers in cases of contravention by importers/exporters.

4. It was pointed out that the appellant had filed shipping bills with a claim for drawback of a specific amount. Previous tribunal decisions were cited to argue against the imposition of penalties.

5. The Authorized Representative contended that the appellant was complicit in mis-declaring goods and failed to comply with obligations under the Regulations.

6. The offense by the exporter was identified as overvaluation for claiming drawback under the Customs Act, 1962. The appellant was not responsible for determining or declaring the value, and there was no evidence of receiving undue benefits.

7. The appellant was found to have contravened the obligation to advise compliance with the Customs Act, 1962, but there was no evidence to substantiate the charge.

8. Another charge was the failure to exercise due diligence, but there was no demonstrable evidence linking the appellant's actions to the overvaluation offense.

9. The appellant was charged with failure to verify client antecedents and operations, which was considered a fundamental obligation for customs brokers.

10. The tribunal found one charge to sustain against the appellant but concluded that the severity of penalties imposed was not warranted based on the circumstances and previous tribunal decisions.

11. The revocation of the license and penalty were set aside, while the forfeiture of the deposit was upheld. If the appellant chooses to operate the license, a fresh deposit will be required as per the regulations.

(Order pronounced in the open court on 01/04/2024)

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