2024 (6) TMI 784 - AT - Customs

Revocation of a customs broker's license - forfeiture of security deposit - imposition of penalty - violation of regulation 10(e), 10(m) and 10(q) as well as regulation 13 of Customs Broker Licensing Regulations, 2018. Alleged failure to ascertain correctness of information which was imparted to the client in relation to clearance of cargo - HELD THAT - The enquiry report held the charge to be proved solely by inferring from the admitted position of the customs broker not having had any direct communication with the importer that the obligation under regulation 10(e) of Customs Broker Licencing Regulations, 2018 could not have been complied with - The specific contents of the obligation renders it necessary for the information that was imparted to the importer to have been verified for authenticity and for the charge to be preferred by elaborating on the contrariness thereof to law or facts. Such occurrence is not on record and there is also no such averment in statements of the importer. This charge against the appellant herein is not backed with evidence of any information imparted to the client, let alone of any incorrectness thereto, owing to which the finding on this count is not tenable. Failure in responsibility to verify correctness of details, such as import-export code (IEC) , goods and service tax identification number (GSTIN) , identity of client and that business of the client was operated at the declared address, by using reliable, independent and authentic sources for ascertainment - HELD THAT - The appellant had failed to ascertain that the client did really operate from the address given in the records and no evidence was offered at inquiry stage or in subsequent proceedings, including the present, to establish otherwise. Therefore, notwithstanding the correctness of the several documents and the correctness thereof having been established by reference to resources in the public domain, the lack of diligence in establishing identity of the client, as well as place of operation, is certain breach of obligation and hence must be affirmed as proved. Failure to cooperate with customs authorities and to join investigations in enquiry against them or their employees - HELD THAT - There is no record available to indicate that, at the relevant time, it was the customs broker who was the subject of an enquiry against them which, considering that regulation 10(q) of Customs Broker Licensing Regulations, 2018 stipulates cooperation and joining for investigation in the event of an enquiry against them or their employees, precludes the inclusion of this charge. It was incumbent upon the licensing authority initially, as well as the enquiry authority subsequently, to examine the summons issued for ascertainment of the subject of investigation before preferring, or offering conclusions on, such charge. In the absence of such examination and also the justification furnished for non-appearance in response to summons, the finding that the charge was proved is not tenable. It is already on record that neither was identity established nor antecedents verified and, consequently, it is not relevant if the person who, it was claimed had actually undertaken such verification and such identification, had been approved or not. In effect, the activity of employees, other than the F and G card holders, are not related to any acts of omission or commission as customs broker even if the client be the beneficiary of these agency function - the charge that the appellant had failed to ensure proper conduct of employees in customs-related transaction does not sustain as also the validity of the charge arising from the stipulations in regulation 13 of the Customs Broker Licensing Regulations, 2018. There is no doubt that the client of the appellant had attempted to violate provisions of Customs Act, 1962 by alleged erroneous declaration of origin to evade higher rate of duty. At the same time, the breach by the appellant has been observed only on this single occasion and also only in relation to only one aspect in one of the charges. The licensing authority had proceeded on the presumption that, with all the charges having been held as proved, gravity of the offence deserved full measure of the detriment available under the Customs Broker Licensing Regulations, 2018. The revocation of customs broker licence and forfeiture of the security deposit ordered by the licensing authority is set aside and the detriment to penalty limited to Rs. 50,000/- imposed under regulation 18 of Customs Broker Licensing Regulations, 2018. Appeal allowed.

Summary

Issues:
Violation of Customs Broker Licensing Regulations, 2018 - Charges of failure to ascertain correctness of information, failure in responsibility to verify details, failure to cooperate with customs authorities, and violation of regulation relating to employment of persons.

Analysis:

1. Failure to Ascertain Correctness of Information:
The appellant, a customs broker, was charged with failing to ascertain the correctness of information imparted to the client, as required by regulation 10(e) of Customs Broker Licensing Regulations, 2018. The enquiry report inferred this charge solely based on the lack of direct communication between the broker and the importer. However, the regulation emphasizes exercising due diligence to verify information rather than focusing on the correctness of information imparted. The charge lacked evidence of any incorrect information imparted to the client, making the finding untenable.

2. Failure in Responsibility to Verify Details:
The appellant was also charged with failing to verify details such as IEC, GSTIN, and client identity. While some verification was done by an employee, it was insufficient to establish the client's operation at the declared address. Despite documents' correctness, the lack of diligence in verifying the client's identity and place of operation constituted a breach of obligation, affirming this charge as proved.

3. Failure to Cooperate with Customs Authorities:
Another charge against the appellant was the failure to cooperate with customs authorities and join investigations. The appellant claimed inability to comply with summons due to pandemic restrictions, but this plea was not considered during the proceedings. The charge was found to be not tenable as there was no examination of the summons issued or justification for non-appearance before preferring the charge.

4. Violation of Regulation Relating to Employment of Persons:
The appellant was charged with violating regulation 13 concerning employment of persons and supervision. The appellant argued that only the 'G card' holder handled customs-related work, absolving responsibility for actions beyond customs clearance. The charge related to the use of unapproved staff for verification, which was not relevant as no verification was conducted. The charge did not sustain as it was not related to acts of omission or commission as a customs broker.

5. Final Decision:
Of the seven charges, only one survived, pertaining to not establishing the client's identity and verifying the declared business address. The Tribunal found the breach limited to one aspect and one charge, leading to the revocation of the customs broker license being deemed disproportionate. The penalty was reduced to Rs. 50,000 under regulation 18 of Customs Broker Licensing Regulations, 2018, and the revocation of the license and forfeiture of security deposit were set aside, allowing the appeal by modifying the impugned order.