2024 (7) TMI 695 - AT - Customs

Revocation of customs broker license - levy of penalty - misdeclaration of description value and quantity of the goods - non-verification of antecedents of the importer - HELD THAT - The appellants claim that they have verified the IEC No. etc. on the Government website and they had no reasons to disbelieve the documents. We find that to this extent the contentions of the Custom Broker are acceptable as in terms of Regulation No.11(n) of CHLR 2018 the Custom Broker is required to verify through independent and authentic sources and he is neither required nor has any wherewithal to conduct an investigation into the importer s business. Regarding other allegations it is found that though it is alleged that the Custom Broker did not exercise due diligence and did not apprise the importer of various Rules Procedures and Prohibitions thereof. Except for bald allegation no evidence has been adduced to allege that the Custom Broker had the previous knowledge of mis-declaration of the value and contents of the consignment. Department merely mentions that the value declared was three and odd lakhs of rupees whereas the actual value was more than Rs.75 Lakhs and the fact in itself shows the culpability of the Custom Broker. This contention is not accepted as it is not alleged with any evidence. The act of the Custom Broker cannot be said to be in violation of the CHLR 2018 and therefore no case has been made to revoke the license of the Custom Broker jeopardizing the livelihood of the Custom Broker and their employees thereof. However looking into the fact that the appellant has been filing Bills of Entry on behalf of a series of mis-declared imports it is found that the appellants need to be suitably penalized so as to act as a deterrent for any future misdemeanor. The impugned order is set aside as far as the revocation of the license of Custom Broker is concerned - the penalty imposed is however upheld - appeal allowed in part.

Summary

Issues: Misdeclaration of goods, revocation of license, penalty imposition

Misdeclaration of goods:
The judgment revolves around the misdeclaration of goods imported by a company, where undeclared items were found during examination, leading to the confiscation of goods and imposition of penalties. The appellant, a customs broker, was alleged to have contravened certain regulations by not verifying the antecedents of the importer and failing to exercise due diligence. The appellant argued that they had verified the necessary information through authentic sources and were not aware of any misdeclaration. The tribunal found that the allegations lacked evidence to prove the appellant's involvement in the misdeclaration, especially regarding mens rea or any financial gain. As a result, the tribunal concluded that the license revocation was not justified, but imposed a penalty as a deterrent against future misconduct.

Revocation of license:
The Commissioner of Customs (Preventive) issued a show cause notice to the appellant customs broker, leading to the revocation of their license and imposition of a penalty. The appellant challenged this decision, citing previous instances where similar orders were set aside by the CESTAT. The tribunal analyzed the regulations allegedly contravened by the appellant, focusing on the requirements related to advising clients, due diligence, and verification of client information. The tribunal found that while the appellant had met some verification requirements, there was insufficient evidence to prove their involvement in the misdeclaration. Consequently, the tribunal set aside the license revocation but upheld the penalty imposed.

Penalty imposition:
The tribunal upheld the penalty imposed on the appellant customs broker as a deterrent against future misconduct, despite finding insufficient evidence to support the allegations of their involvement in the misdeclaration of goods. The tribunal emphasized the need for penalties to prevent future misdemeanors and ensure compliance with regulations. While the license revocation was set aside, the penalty was maintained to serve as a warning against any potential future violations.

In conclusion, the judgment addresses the issues of misdeclaration of goods, revocation of license, and penalty imposition concerning a customs broker in the context of verifying information, due diligence, and regulatory compliance. The tribunal found insufficient evidence to support the allegations of the appellant's involvement in the misdeclaration, leading to the setting aside of the license revocation but upholding the penalty as a deterrent measure.