2024 (9) TMI 470 - AT - Customs

Penalty under Regulation 22 of Customs Broker Licensing Regulation (CBLR), 2013 - violation of Regulation 17(9) of CBLR, 2013 - cross examination as per Regulation 20(4) of the CBLR, 2013 - whether the Appellant can be penalized for the omissions of its employees as held in the impugned order? - HELD THAT - It is an admitted fact that as per the finding of the Inquiry officer and the Adjudicating authority, the Appellant is not directly involved in the act or omission on the part of their authorized signatory at Chennai. Further there is no allegation that they have got any undue financial benefits by abetting the illegality as alleged from the importer. Opportunity for extending cross examination as per Regulation 20(4) of the CBLR, 2013 - HELD THAT - As per the evidence on record, to proceed against the Appellant, statements of different persons were relied by the adjudication authority. As per the judgment of the Hon ble High Court of Telangana in the matter of M/s Shasta Freight Services Pvt Ltd 2019 (9) TMI 363 - TELANGANA AND ANDHRA PRADESH HIGH COURT , Regulation 20(4) of the CBLR is carefully worded. The entitlement of the Customs broker to cross examine is confined only to person examined in support of the grounds forming a basis of proceedings . Thus if statements of different persons were recorded during the investigation, Adjudication authority ought to have given an opportunity for cross examination before relying on such statements. Thus, condition precedent under Regulation 20(4) of the CBLR for considering the request of the Customs Broker for cross examination should have been satisfied. In the present case, the entire proceedings are initiated based on the statement of employees and agents of the importer. Facts being so, to find out the genuiness of the statement, the Inquiry officer/Adjudication authority ought to have extended the opportunity for cross examination as sought by the Appellant. Thus the proceedings in impugned order are in violation of Regulation 20(4) of the CBLR, 2013 and are not sustainable. Appeal allowed.

Summary

Issues:
Challenge to penalty imposed under Regulation 22 of Customs Broker Licensing Regulation (CBLR), 2013. Denial of cross-examination rights under Regulation 20(4) of CBLR, 2013. Responsibility of Customs Broker for the actions of employees. Compliance with Regulation 17(9) of CBLR, 2013.

Analysis:
The Appellant contested a penalty of Rs.10,000 imposed under Regulation 22 of CBLR, 2013 for alleged involvement in the import of raw materials without proper clearance and license. The Adjudicating authority found the Appellant negligent in supervising employees, leading to the penalty. The Appellant challenged this penalty on grounds of lack of direct involvement and failure to comply with Regulation 17(9) of CBLR, 2013.

During the hearing, the Appellant's counsel argued for the right to cross-examine witnesses, citing Regulation 20(4) of CBLR. The Appellant claimed that the denial of cross-examination rights was unjustified, as it impeded their defense. The Appellant relied on legal precedents to support their contention that without proper cross-examination, the proceedings were flawed.

The Appellant emphasized that the responsibility for employee misconduct should not automatically fall on the Customs Broker, especially in the absence of evidence of non-compliance with regulations. Legal judgments were cited to illustrate that penalizing the Broker for employee actions requires specific findings of non-compliance or misconduct on the Broker's part.

The Authorized Representative (AR) upheld the penalty and the denial of cross-examination rights, arguing that the Broker is accountable for employee actions. The AR supported the Adjudication authority's decision and reiterated the findings against the Appellant.

Upon considering both sides, the core issue revolved around whether the Appellant could be penalized for employee omissions. The Tribunal found that the Appellant was not directly involved in the misconduct and had not gained any undue benefits from the illegal activities. The Tribunal also highlighted the importance of cross-examination rights under Regulation 20(4) of CBLR, emphasizing the need for proper examination of witnesses relied upon in proceedings.

Ultimately, the Tribunal allowed the appeal, citing the violation of Regulation 20(4) of CBLR, 2013 due to the denial of cross-examination rights and the lack of evidence supporting the Appellant's direct involvement or non-compliance with regulations. The decision was made in favor of the Appellant, granting consequential relief as per the law.