2024 (8) TMI 1350 - AT - Customs

Suspension of CB license - Violation of Regulations 10(d) and 10(e) of Customs Brokers Licensing Regulations (CBLR), 2018 - gross mis-declaration of the quantity, description and nature of the goods with an intent to evade the applicable customs duty - Delay in issue of SCN, submission of inquiry report - initiation of inquiry proceedings under Regulation 14 ibid read with 17 and 18 ibid, against violations of CBLR - levy of penalty. Vioaltion of Regulation 10(d) ibid - HELD THAT - The appellants have failed to file the bills of entry as per the correct documents given by the importers and available in their possession. They have also failed to inform the importers about the correct requirement of customs statute to properly declare the details of imported goods and for payment of applicable customs duty thereon, and hence the appellants CB is liable for their failure to advise their client importers to comply with the provisions of the Customs law. Further, if there was any doubt about the imported goods during the relevant point of time, from the time of its import to its storage in FTWZ under customs bond, then the appellants CB could have brought it to the notice of the Deputy Commissioner of Customs (DC) or Assistant Commissioner of Customs (AC), but they failed to do so. Thus, the violation of Regulation 10(d) ibid, as concluded in the impugned order is sustainable. Violation of the Regulation 10(e) ibid - HELD THAT - The charges framed under the SCN dated 09.03.2023 are an independent proceeding under CBLR, 2018 for which the adjudicating authority is required to give specific findings on the basis of inquiry proceedings conducted as per Regulation 17 and 18 ibid. Further, with respect of the packing lists containing the correct description, quantity etc., the appellants CB did not impart any specific information to the importers, rather it is the case that such information was provided by the importers to the appellants. Thus, it is not feasible to sustain this charge on the appellants CB, that they did not exercise due diligence to impart correct information to their clients on the basis of an adjudication done in different proceedings - the conclusion arrived at by the Principal Commissioner of Customs (General) is without any basis of documents or facts, and the impugned order with respect to Regulation 10(e) ibid, and therefore it is not sustainable. Delay in issue of SCN, submission of inquiry report - HELD THAT - There is slight delay in issue of SCN, submission of inquiry report; however, the adjudication of the case and passing of the impugned order by the learned Principal Commissioner was completed within prescribed time from the submission of inquiry report - it is not found that the argument made by the learned Advocate by referring to various case laws for compliance with the time limits prescribed under the CBLR, 2018 was not followed as in the present case it cannot be said that there was inordinate delay and there was reasonable grounds in terms of the test laid down by the Hon ble High Court of Bombay in the case of Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P Ltd. 2018 (4) TMI 1053 - BOMBAY HIGH COURT and there was no undue delay. Levy of penalty - HELD THAT - Tthe appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, when the correct packing list providing detailed and correct description, quantity of imported exports goods were available with the appellants CB and the same was not brought to the notice of the Customs department. Thus, to this extent the imposition of penalty for failure in not being proactive for fulfilling of regulation 10(d) of CBLR, 2018 is appropriate and justifiable. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants and for forfeiture of security deposit, inasmuch as there is no violation of regulation 10(e) ibid and the findings in the impugned order is contrary to the facts on record. However, in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under regulation 10(d), we find that it is justifiable to impose a penalty of Rs.10,000/- against the appellants, which would be reasonable. The appeal allowed in favour of the appellants.

Summary

Issues Involved:
1. Violation of Regulations 10(d) and 10(e) of Customs Brokers Licensing Regulations (CBLR), 2018.
2. Timeliness of inquiry proceedings under CBLR, 2018.
3. Revocation of Customs Broker License, forfeiture of security deposit, and imposition of penalty.

Detailed Analysis:

1. Violation of Regulations 10(d) and 10(e) of CBLR, 2018:
Regulation 10(d):
The Principal Commissioner of Customs concluded that the appellants violated Regulation 10(d) by failing to advise their clients to comply with customs laws and not informing the Deputy Commissioner or Assistant Commissioner of Customs about the mis-declaration of imported goods. The appellants argued that there was no evidence to prove that they abetted or colluded with the importers. However, the Tribunal found that the appellants had the correct packing lists but did not provide them to the customs department, leading to gross mis-declaration. Thus, the violation of Regulation 10(d) was upheld.

Regulation 10(e):
The appellants were charged with failing to exercise due diligence in ascertaining the correctness of the information imparted to their clients. The Tribunal noted that the correct packing lists were available with the appellants but were not used for filing the Bills of Entry (B/Es). Despite this, the Tribunal found that the charge under Regulation 10(e) was not sustainable as the appellants were not expected to verify the genuineness of the documents provided by the importers. Therefore, the violation of Regulation 10(e) was not upheld.

2. Timeliness of Inquiry Proceedings under CBLR, 2018:
The appellants argued that the inquiry proceedings were conducted and finalized beyond the 90-day time limit specified under Regulation 17(5) of CBLR, 2018. The Principal Commissioner of Customs relied on the judgment of the Hon'ble High Court of Bombay in the case of Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P Ltd., which stated that the timelines under CBLR are directory in nature and not mandatory. The Tribunal found no inordinate delay in the proceedings and concluded that the timelines were reasonably adhered to.

3. Revocation of Customs Broker License, Forfeiture of Security Deposit, and Imposition of Penalty:
The Principal Commissioner of Customs revoked the appellants' Customs Broker License, forfeited the security deposit, and imposed a penalty of Rs. 50,000. The Tribunal found no merit in the revocation of the license and forfeiture of the security deposit, as the violation of Regulation 10(e) was not established. However, the Tribunal upheld the imposition of a penalty for the violation of Regulation 10(d), but reduced the penalty to Rs. 10,000, considering the appellants' failure to act proactively in fulfilling their obligations.

Conclusion:
The Tribunal modified the impugned order by revoking the penalty under Regulation 10(e) and reducing the penalty for the violation of Regulation 10(d) to Rs. 10,000. The appeal was allowed in favor of the appellants, with the revocation of the Customs Broker License and forfeiture of the security deposit being set aside.