2024 (8) TMI 410 - AT - Customs

Revocation of Customs Broker licence, forfeiture of security deposit under regulation 14 of Customs Broker Licencing Regulations, 2018 along with imposition of penalty under regulation 18 of Customs Broker Licencing Regulations, 2018 - breach of the obligations of customs broker or contravention of the restrictions entailed to the licence in the Customs Broker Licencing Regulations, 2018 - HELD THAT - It is seen that the charge of not having advised the client to comply with Customs Act, 1962 and rules and regulations thereof is not founded on any allegation that advice sought had not been rendered and nor is there an allegation that customs broker is expected to explain the entirety of the law to the client; either the allegation is vague or the obligation is vague with neither contingency furthering the case against the appellant. It is, probably, owing to this conceptual commotion that the licencing authority has proceeded to uphold the charge on the supposition that exporter could not have executed overvalued exports without collusion from the appellant. That bridging of supposition with breach of obligation is too far-fetched to accept. The easiest of misdeclaration to undertake is overvaluation of export goods for the requirement to repatriate export proceeds confers advantage of presumption of correctness of contracted value combined with incomparability of local prices; it would appear that unnecessary premium has been placed on the need of a fellow conspirator for such overvaluation to succeed. The conclusion in the impugned order has nothing to do with obligation and is also not founded on any fact on record. The charge of having breached regulation 10(d) of Customs Broker Licencing Regulations, 2018 has been inappropriately held to be proved. The alleged breach of obligation to forbear from withholding information contained in any order, instruction or public notice from a client who is entitled to receive them has been established with the finding that details of local procurement said to be prescribed in circular no. 16/2009-Cus dated 25th May 2009 was in breach; however, this fact had not been set out in the notice issued to appellant. There is also no reference to the said circular in the report of the inquiry officer. As the appellant has pointed out, the regulation is studiously silent on the period for which the records are required to be preserved and the claim of the appellant that records were trashed has not been countered with any instruction requiring preservation beyond reasonable period - there are no reference to any stipulation by the officer designated for the purpose in the said regulation which should have been the foundation of this allegation and it was merely the inability of the exporter to furnish detailed records that has been attributed to flawed performance of obligation by the appellant. It would appear that the intent of the obligation has been incorrectly appreciated by the licencing authority; the allegation of having breached regulation 10(k) of Customs Broker Licencing Regulations, 2018 does not sustain. The charges of breach of regulation 10 of Customs Broker Licencing Regulations, 2018 do not sustain. There is no case that the goods had not been exported or evidence even that the impugned goods had not been manufactured out of duty paid inputs. The drawback involved in all the exports during the said period by M/s World Wide Export is not of such high order as to warrant penalties and detriments that were heaped upon them in the impugned order and those handled by the appellant were not under any claim at all. The impugned order canot be upheld - appeal allowed.

Summary

Issues Involved:
1. Revocation of customs broker license
2. Forfeiture of security deposit
3. Imposition of penalty
4. Alleged breaches of Customs Broker Licencing Regulations, 2018

Issue-Wise Detailed Analysis:

1. Revocation of Customs Broker License:
The proceedings arose from the challenge to the revocation of the customs broker license and forfeiture of the security deposit under regulation 14 of Customs Broker Licencing Regulations, 2018. The appellant, M/s Beejay Clearing & Forwarding Agency, was scrutinized for its dealings with M/s Basar Jewels Pvt Ltd, which involved claims of Rs. 2,83,000 as drawback against six shipping bills. The order of suspension was issued on 30th December 2022 under regulation 16 but was revoked on 10th March 2023 after a post-decisional hearing. The lack of clarity about the client involved and the strategy to revoke the suspension in anticipation of proceedings jeopardized the integrity of the final disposal.

2. Forfeiture of Security Deposit:
The foundation of the proceedings was the handling of three shipping bills out of thirty-one consignments involving claims of Rs. 3,31,000 as drawback on 'imitation jewellery' exported by M/s World Wide Export. The case against the appellant relied on statements from various individuals and reports portraying overvaluation and non-verification of the exporter's address. The appellant was not questioned about its role, and the justification for this was the alleged non-compliance with summons, which was not sufficiently substantiated.

3. Imposition of Penalty:
The imposition of penalty under regulation 18 was based on the alleged breaches of obligations under regulations 10(d), 10(e), 10(f), 10(k), and 10(n). The proceedings lacked sufficient evidence and clarity, with no allegations of non-export or misdescription of goods. The appellant's role in the alleged overvaluation and non-verification was not adequately established.

4. Alleged Breaches of Customs Broker Licencing Regulations, 2018:
- Regulation 10(d): The charge of not advising the client to comply with customs laws was not founded on any specific allegations or facts, leading to an illogical and untenable conclusion.
- Regulation 10(e): The allegation of failing to exercise due diligence was based on a sweeping presumption without any factual determination of misinformation or incorrect information.
- Regulation 10(f): The breach related to withholding information was based on an untested circular not mentioned in the notice or inquiry report, making the charge untenable.
- Regulation 10(k): The charge of failing to maintain records was based on the appellant's non-response to summons, which was not substantiated with any record of issuance. The regulation did not specify the period for record preservation, and the appellant's claim of trashed records was not countered.
- Regulation 10(n): The charge of failing to verify client antecedents was based on a statement from the exporter without verification or confrontation with the appellant. The conclusion lacked evidence and was based on fragile foundations.

Conclusion:
The charges of breach of regulation 10 of Customs Broker Licencing Regulations, 2018, did not sustain. There was no evidence that the goods were not exported or that they were not manufactured from duty-paid inputs. The drawback involved was not significant enough to warrant the penalties and detriments imposed. Consequently, the impugned order was set aside, and the appeal was allowed.

Order Pronounced:
(Order pronounced in the open court on 05/08/2024)