2024 (11) TMI 805 - AT - Customs

Revocation of Customs Broker License - show cause why duty drawback should not be denied and the goods already exported should not be confiscated and penalty should not be imposed u/s 114 (iii) and 114AA of the Customs Act, 1962 - HELD THAT - It would be necessary to consider the charges that were leveled against the appellant in the show cause notice. It is seen that there is no specific allegation in the show cause notice, either with regard to violation of the provisions of Regulation 11 (n) or with regard to violation of Regulation 17 (9) of 2013 Regulations. Paragraphs 1 and 2 of the show cause notice, which have been reproduced above, merely talk of the Customs Broker License having been issued to the appellant and the order dated 07.02.2023 passed by the Additional Commissioner, which order has also been enclosed as a relied upon document no. 01. Paragraph 3 of the show cause notice is merely a reproduction of the order dated 07.02.2023 passed by the Additional Commissioner and continues from pages 135 to 173 of the appeal memo. After having reproduced the order passed by the Additional Commissioner in these many pages, the show cause notice, in paragraph 4 which has also been reproduced above, merely states that it appears that the Customs Broker violated these four Regulations and these four Regulations have been reproduced in the same paragraph. It clearly transpires that the show cause notice does not give any reason as to why the said four Regulations of the 2013 Regulations had been violated. The order impugned in this appeal is, therefore, liable to be set aside for this reason alone as the show cause notice is the very foundation of an order. The order that has been passed by the Commissioner of Customs can also been examined on merits. The Commissioner of Customs, after reproducing the reply filed by the appellant, merely observes that the Customs Broker had not obtained the KYC document directly from the exporter and secondly billing M/s Satyam Aviation Pvt Ltd. instead of the exporter would constitute a violation of Regulation 11 (n). Thus, it is not possible to sustain the finding recorded by the Commissioner of Customs that Regulation 11 (n) of the 2013 Regulations has been violated. In regard to violation of Regulation 17(9) of 2013 Regulations, it is to be noticed that apart from the fact that the show cause notice does not contain any specific allegation regarding violation of the Regulations, the Commissioner of Customs has merely reproduced the reply submitted by the appellant and, thereafter, the order passed by the Additional Commissioner and from those two facts has concluded that the Regulation 17 (9) of the 2013 Regulations had been violated. The show cause notice should have spelt out specific charges in regard to violation of Regulation 17(9) of the 2013 Regulations. Even the reply submitted by the appellant has not been considered at all and a finding is based on the order dated 07.02.2023 passed by the Additional Commissioner. Thus, the Commissioner of Customs was not justified in holding that the provisions of the Regulations 17 (9) of the 2013 Regulations have been violated.

Summary

Issues Involved:

1. Whether the revocation of the Customs Broker License and imposition of penalties on the appellant were justified under the Customs Brokers Licensing Regulations, 2013.
2. Whether the procedural requirements under Regulation 20(1) of the 2013 Regulations were adhered to by the Commissioner of Customs.
3. Whether the appellant violated Regulations 11(n) and 17(9) of the Customs Brokers Licensing Regulations, 2013.

Issue-wise Detailed Analysis:

1. Revocation of License and Imposition of Penalties:

The appellant's Customs Broker License was revoked by the Commissioner of Customs, and a penalty was imposed under the Customs Brokers Licensing Regulations, 2013. The order was based on the appellant's alleged violation of specific regulations, including failure to exercise due diligence and verify the correctness of client details. The order also included the forfeiture of the security deposit. However, the Tribunal found that the show cause notice did not provide specific reasons for the alleged violations, undermining the foundation of the order. Consequently, the order was set aside due to the lack of a proper basis for the revocation and penalties.

2. Adherence to Procedural Requirements under Regulation 20(1):

Regulation 20(1) mandates that a notice must be issued to the Customs Broker within 90 days from the receipt of the offence report. The appellant argued that this timeline was not adhered to, as the notice was issued beyond the prescribed period. However, the Tribunal found that the appellant failed to provide evidence of the exact date on which the offence report was received by the Commissioner of Customs. The Tribunal concluded that the procedural requirements under Regulation 20(1) were not violated, as the appellant did not substantiate the claim with specific dates.

3. Violation of Regulations 11(n) and 17(9):

- Regulation 11(n): This regulation requires the Customs Broker to verify the antecedents and correctness of the Importer Exporter Code (IEC) and the client's identity. The Commissioner of Customs held that the appellant violated this regulation by not obtaining KYC documents directly from the exporter and billing a third party. However, the Tribunal found that the appellant had submitted the necessary KYC documents, and the manner of obtaining these documents did not constitute a violation. The Tribunal determined that the reasons cited by the Commissioner were not relevant grounds for a violation of Regulation 11(n).

- Regulation 17(9): This regulation holds the Customs Broker responsible for supervising employees' conduct. The show cause notice did not specify allegations regarding this regulation's violation. The Tribunal noted that the Commissioner of Customs relied on the order by the Additional Commissioner without addressing the appellant's reply or providing specific charges. As a result, the Tribunal found no justification for concluding that Regulation 17(9) was violated.

In conclusion, the Tribunal set aside the order dated 30.10.2023 passed by the Commissioner of Customs, allowing the appeal due to the lack of specific charges and procedural deficiencies in the issuance of the show cause notice.