2024 (7) TMI 1267 - AT - Customs

Violation of Regulation 10(d) of CBLR - SCN time-barred as asserted by the learned counsel for the appellant, or not - penalty of revocation of licence - forfeiture of security deposit - imposition of penalty. Violation of Regulation 10(d) - HELD THAT - The restriction on export in this case is evident as it was part of the Foreign Trade Policy and export of Triethanolamine to Mozambique required an authorization. When the client wanted to export this chemical to Mozambique, it was the obligation of the appellant under Regulation 10 (d) to advise the client about the requirement of authorization. Instead of advising the client, the appellant filed the Shipping Bill for its export. The appellant s submission on this count is that the client had given a declaration that Triethanolamine is not a SCOMET item and had also given a declaration that it was being exported for use in soil testing. This submission cannot be accepted. Firstly, it is the appellant who should know the law and advise the client and the appellant cannot depend on the client to say if Triethanolamine was a SCOMET item or not. If the appellant had checked the list of SCOMET items, it would have been evident that it was clearly a SCOMET item. Secondly, any declaration by the client cannot prevail over the law - the appellant had clearly violated Regulation 10(d) of CBLR 2018. Time Limitation - SCN time barred or not - another submission of the appellant is that the SCN was issued 255 days after the receipt of the offence report and hence it was time-barred - HELD THAT - The Commissioner could not have proceeded against the appellant at that stage when the offence report did not name the appellant at all. So, a clarification was sought by letter dated 8.8.2022 which was followed by a reminder on 4.11.2022. Thereafter, the Assistant Commissioner issued a corrigendum dated 17.11.2022 indicating the correct name of the Customs Broker which was the appellant. This corrigendum was received by the Commissioner on 18.11.2022 and the SCN under CBLR 2018 was issued on 6.2.2023, i.e., within 80 days of the receipt of the correct offence report - the submission of the appellant that the SCN was issued after 255 days of receiving the Offence Report contrary to facts recorded in the impugned order. The SCN was, therefore, not time-barred. If the appellant violated Regulation 10(d), is the penalty of revocation of licence, forfeiture of security deposit, and imposition of a penalty of Rs. 50,000/- upon the appellant proportionate to the violation? - HELD THAT - On the question of proportionality of action against the appellant, we find an attempt to export SCOMET item without the required authorization is a serious violation. In this case, it cannot even be said to be a mere oversight because the exporter had given a declaration stating that it was not a SCOMET item and therefore, the possibility of it being a SCOMET item was evident- all that the appellant had to do was to refer the policy where Triethanolamine was explicitly indicated as a SCOMET item. He should then have advised the exporter accordingly - there is no evidence of the appellant profiting from this attempted export of Triethanolamine valued at about Rs. 500/. Action has been taken against both the exporter and the appellant under the provisions of Customs Act and penalty of Rs. 5,000/- was imposed on the appellant under section 114(i). The appellant has been without a licence since 26.7.2023 which means out of work for about an year - the ends of justice is met if the penalty of Rs. 50,000/-imposed on the appellant is upheld but the revocation of licence and forfeiture of security deposit are set aside. The revocation of licence and forfeiture of security deposit of the appellant in the impugned order are set aside but imposition of penalty on the appellant is upheld - the appeal is partly allowed.

Summary

Issues:
a) Did the appellant violate Regulation 10(d) of CBLR?
b) Is the SCN time-barred as asserted by the learned counsel for the appellant?
c) If the appellant violated Regulation 10(d), is the penalty of revocation of licence, forfeiture of security deposit, and imposition of a penalty of Rs. 50,000/- upon the appellant proportionate to the violation?

Analysis:
1. Violation of Regulation 10(d): Regulation 10(d) mandates Customs Brokers to advise clients on compliance with relevant laws. The appellant, a licensed Customs Broker, failed to advise the exporter about the need for authorization before exporting Triethanolamine, a SCOMET item. The appellant's reliance on the exporter's declaration was deemed inadequate as the broker is expected to be knowledgeable about legal requirements, leading to a clear violation of Regulation 10(d).

2. Timeliness of SCN: The appellant argued that the Show Cause Notice (SCN) was time-barred, issued 255 days after receiving the offense report. However, the Commissioner clarified that the delay was due to incorrect information in the offense report regarding the involved Customs Broker. The SCN was issued within 80 days of receiving the corrected report, establishing that the delay was justified and not time-barred.

3. Proportionality of Penalty: The Tribunal assessed the proportionality of actions against the appellant for attempting to export a SCOMET item without authorization. Despite the seriousness of the violation, the appellant did not profit from the attempted export, and a penalty under the Customs Act had already been imposed. Considering the appellant's year-long suspension from work, the Tribunal upheld the penalty of Rs. 50,000 but set aside the revocation of license and forfeiture of the security deposit for a balanced outcome.

4. Final Decision: The Tribunal partially allowed the appeal, setting aside the revocation of license and forfeiture of the security deposit but upholding the penalty on the appellant. The appellant was granted consequential relief, emphasizing a balanced approach to justice in the case. The judgment was pronounced in court on 24.07.2024, concluding the legal proceedings comprehensively.