2024 (8) TMI 411 - AT - Customs

Revocation of Customs broker license and forfeiture of security deposit repeatedly - levy of penalty - export promotion schemes - diversion of electrolytic tough pitch copper rods instead of being used in manufacture of lead wire for electronic parts as required in terms of Customs (Imported Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - omissions and commissions leading to proceedings under Customs Act, 1962 - breach of regulation 10 (a), regulation 10 (d), regulation 10(e), regulation 10 (m) and regulation 10 (n) of Customs Broker Licencing Regulations, 2018. HELD THAT - It is noticed that regulation 10(a) of Customs Broker Licencing Regulations, 2018 pertains to obtaining of authorisations from the importer before taking up work for a client. Regulation 10(d) of Customs Broker Licencing Regulations, 2018 pertains to advising client to comply with provisions of Customs Act, 1962. Regulation 10(e) of Customs Broker Licencing Regulations, 2018 pertains to due diligence in ascertaining correctness of information imparted to a client - Regulation 10(m) of Customs Broker Licencing Regulations, 2018 pertains to discharging duties with speed and efficiency. Regulation 10(n) of Customs Broker Licencing Regulations, 2018 pertains to verifications and antecedent checks of the client. The sole imputation of misconduct, however, does not appear to relate most of these and, considering that the Central Board of Indirect Taxes Customs (CBIC) has set these out painstakingly, it was incumbent on the licencing authority to have inquired into, and to decide upon, the various facts and circumstances from which breach of each of the obligations could be imputed. Those are glaringly deficient except in relation to regulation 10(n) of Customs Broker Licencing Regulations, 2018. It is also apparent that the licencing authority has presumed that the obligations exist solely for the purpose of initiating proceedings for revocation of licence issued to customs broker and, therefore, to be dealt with thus. Obligations of customs brokers are manifold. The institution has been established under the authority of Customs Act, 1962 to act as a bridge between customs houses, or more properly speaking, between proper officer and importers/exporters in making their knowledge and experience available for facilitation of clearance of cargo. There are, therefore, obligations towards the proper officer and, doubtlessly, towards clients - Every government servant of the Union is aware, or should be, about the requirements under the Central Civil Service (Classification, Control and Appeal) Rules, and its linkage with Central Civil Service (Conduct) Rules, for invoking detriment to conditions of service of their employment under the Union; detriment to the continuation of licenced service of customs broker , whose appointment and renewal are governed by Customs Broker Licencing Regulations, 2018, is not dissimilar. A similar diligence in the approach to proceedings that jeopardize the livelihood of customs brokers is warranted. It is certainly beyond the stretch of credulity that advise to a client includes explaining all the provisions of Customs Act, 1962 with the presumption of not having done so because a breach of Customs Act, 1962 has occurred. Moreover, it does not escape attention that advise does not extend beyond Customs Act, 1962 - The obligation to ascertain the correct procedure and position is also obviously in relation to a client who would have to allege having been misled by customs broker for this charge to hold. Likewise, speed and efficiency are in interests of the client and it is for the client to fire the opening salvo before the charge to the contrary becomes meaningful. The proceedings are flawed and the outcome is, accordingly, flawed. That warrants fresh proceedings in each, and not simultaneously or in common, for which purpose the three impugned orders are set aside and remanded to the licencing authority for decisions in accordance with the framework set out - Appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of Customs Broker Licencing Regulations, 2018.
2. Validity of multiple penalties imposed on the same licensee.
3. Compliance with principles of natural justice in proceedings.
4. Adequacy of inquiry into alleged misconduct.
5. Applicability of obligations on customs brokers.

Analysis:
1. The judgment addressed the interpretation of Customs Broker Licencing Regulations, 2018 concerning the revocation of licenses and forfeiture of security deposits. The tribunal noted the lack of provisions empowering the licensing authority to repeatedly revoke a license or forfeit a deposit after the initial action. The tribunal highlighted the need for a clear understanding of the regulations to avoid puzzling outcomes and emphasized the importance of upholding the authority's functions with dignity.

2. The tribunal examined the validity of imposing multiple penalties on the same licensee for separate offenses. It questioned the logic behind ordering three revocations and forfeitures on the same day, suggesting a lack of clarity in the decision-making process. The tribunal emphasized the need for a structured approach to handling penalties to ensure fairness and justice in proceedings.

3. The judgment scrutinized the compliance with principles of natural justice in the proceedings, particularly in relation to the charges brought against the licensee. It raised concerns about relying solely on statements and confessions without thorough inquiry and proper adherence to procedural fairness. The tribunal underscored the importance of ensuring due process and fair treatment in all stages of the legal proceedings.

4. The tribunal evaluated the adequacy of the inquiry into the alleged misconduct by the licensee. It pointed out deficiencies in connecting specific charges to the obligations outlined in the regulations, highlighting the incomplete nature of the proceedings. The tribunal emphasized the necessity of establishing a clear link between the alleged misconduct and the regulatory obligations to ensure a comprehensive and justified decision.

5. The judgment delved into the applicability of obligations on customs brokers as stipulated in the regulations. It emphasized the multifaceted roles and responsibilities of customs brokers, highlighting the need for a nuanced approach in assessing compliance with the regulations. The tribunal stressed the importance of differentiating between various obligations and ensuring a thorough examination of each charge to avoid unjust repercussions on the licensee.

Overall, the judgment concluded that the flawed proceedings and outcomes warranted fresh decisions in each case, setting aside the impugned orders and remanding them to the licensing authority for further deliberation in accordance with the regulatory framework. The appeals were allowed by way of remand, emphasizing the need for a more meticulous and just approach in handling penalties and regulatory compliance in customs brokerage cases.