2024 (9) TMI 1367 - HC - Customs

Revocation of Customs Broker License - forfeiture of security deposit - Failure to follow any of the condition mentioned under Regulation 11(a), 11(d), (k) and 11(n) of the CBLR 2013 - respondent has not obtained any job clearance from the exporter and the authorization has been obtained through intermediaries after filing of the shipping bill. The only allegation in the show cause notice issued by the Directorate of Revenue Intelligence (DRI) is that the respondent on receipt of the KYC documents, authorization letter IEC of M/s. Panel Pin Manufacturing Company Pvt. Ltd. had initiated the clearance work without meeting authorized person of the exporter and work was received through many people in between acting as middlemen. HELD THAT - Reading the order of adjudication does not show as to whether the Department/DRA investigated as to how seal came to be fixed by the authorities and whether there was any involvement of the officials in the said process. Be that as it may, the learned Tribunal has considered the facts of the case and has arrived at the finding that the relevant provisions of the CBLR does not envisage physical verification of the exporters and antecedents nor verification of the factory premises of the exporter concerned. One other aspect which needs to be also taken note of is that the proceedings initiated under the provisions of the Customs Act culminated in an order passed by the Commissioner of Customs (Port), Kolkata dated 14th February, 2019 imposing a penalty of Rs.10 Lacs on the partner of the respondent Surendra Nath Mallick. One more aspect which has been brought to notice by the learned counsel for the respondent is that the DRI initiated criminal proceedings against the partner of the respondent and based on a petition filed by DRI before the Chief Metropolitan Magistrate, Kolkata. An order was passed on 8th August, 2023 stating that the adjudicating authority did not recommend prosecution against the partner of the respondent who was arrayed as accused no.1. There is also a communication sent by the Senior Intelligence Officer (Group III), Kolkata Zonal Unit, DRI stating that necessary verification has been done regarding the Customs Broker namely, Surendra Nath Mallick and nothing adverse was noted against the firm or the respective person. Thus, the other collateral proceedings have also ended in favour of the partner of the respondent. The view taken by the learned Tribunal is one of the plausible views and the same cannot be faulted - the appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue.

Summary

Issues:
Whether setting aside the order in original by the Tribunal is justified when the respondent did not follow specific conditions under CBLR 2013, and whether the Tribunal's order is correct when the respondent did not obtain job clearance directly from the exporter.

Detailed Analysis:
The High Court of Calcutta heard an appeal filed by the Customs department under Section 130 of the Customs Act, 1962. The key issues revolved around the Tribunal setting aside the Commissioner of Customs' order revoking the Customs Broker License granted to the respondent under CBLR 2013. The Court considered whether the Tribunal was correct in allowing the assessee's appeal and setting aside the order passed by the Commissioner of Customs, which included revoking the license and ordering forfeiture of the security deposit under CBLR 2018.

During the hearing, the appellant's counsel sought an interim order to allow the respondent to operate their Customs Broker License. However, the Court dismissed this request, emphasizing that the interim order did not bar a final hearing on the appeal's merits. The Court then delved into the central issue of whether the Tribunal was justified in setting aside the Commissioner's order. The only allegation against the respondent was that they initiated clearance work without meeting the authorized person of the exporter and worked through intermediaries. However, the Tribunal found no evidence of malpractice or misfeasance beyond this. Notably, the Excise seal of the shipper was found intact, as admitted by the Department.

The Court also examined the Order-in-original, which revealed that the container's seals were intact before being broken. The Court highlighted that there was no investigation into how the seals were fixed or any official involvement in the process. The Tribunal's analysis concluded that the CBLR did not require physical verification of exporters or their premises. Additionally, the Court referenced a previous penalty imposed on the respondent's partner, which was later set aside by the Tribunal due to the lack of substantive evidence.

Further, the Court noted that criminal proceedings initiated against the partner of the respondent did not recommend prosecution, and verification by the DRI found nothing adverse against the firm or the individual. Considering these factors, the Court affirmed the Tribunal's decision, stating that it was a plausible view and dismissed the revenue's appeal, answering the substantial questions of law against the revenue.