2024 (12) TMI 961 - AT - Customs

Revocation of of customs broker licence - forfeiture of security deposit under regulation 14 of Customs Brokers Licensing Regulations, 2018 - imposition of penalty under regulation 18 of Customs Brokers Licensing Regulations, 2018 - export of overvalued goods to claim ineligible drawback for which fake and bogus bills of purchase from purported buyers other than actual suppliers were furnished in support - violation of regulation 10(d), 10(e), 10(f) and 10(n) of Customs Brokers Licensing Regulations, 2018. Breach of regulation 10(d) of Customs Brokers Licensing Regulations, 2018 - HELD THAT - The portion of transactions prior to entering the consignments for export and filing of shipping bill does not come within the purview of activities for which licence has been issued under section 146 of Customs Act, 1962 to the customs broker. There is no allegation that any part of the process undertaken on behalf of the exporter by the appellant had involved breach of the provisions of Customs Act, 1962 or any other law. Alleged breach of 10(e) of Customs Brokers Licensing Regulations, 2018 - HELD THAT - The licence issued to a customs broker is certificate of competency of the broker as reliably familiar with all aspects of clearance and it falls to the licensing authority to initiate action for any deficiency thereof owing to which the transaction of importer/exporter has been jeopardized. Consequently, this allegation may be levelled only in circumstances in which the importer/exporter is found to have been innocently led to breach of statutory compliance in any transaction and such circumstance is brought to the attention of the licencing authority. There is no allegation, nor any suggestion from the importer/exporter, that incorrect information has been imparted which led to acts of omission and commission on their part. The invoking of this provision in these proceedings are incorrect. Breach of regulation 10(f) of Customs Brokers Licensing Regulations, 2018 - HELD THAT - Breach of this obligation has been erected on the imputation of incorrect information having been furnished in the declaration. That, under section 50 of Customs Act, 1962, is responsibility of the exporter to customs authorities and it is only upon evidence that the incorrect declaration was attributable to failure on the part of the customs broker to provide any relevant order or instruction withheld from the client and, that too, on such being adduced by the exporter in defence, that the charge may be brought to bear. That is glaringly absent here. Breach of regulation 10(n) of Customs Brokers Licensing Regulations, 2018 - HELD THAT - The impugned order appears to have stemmed from the licensing authority placing onus on the customs broker to evince discharge of the obligation thereof. It puzzles that such onus can be shifted; it was for the licensing authority to show, from the facts and circumstances, that such verification had either not been undertaken or that inference of such failure is apparent therefrom. In the absence of any allegation that goods and service tax identification number (GSTIN) or the import-export code (IEC) was incorrect or that either client was fictional or did not operate at the declared address such presumption is not appropriate. The are no merit in the impugned order which is set aside - appeal allowed.

Summary

Issues:
Challenge to revocation of customs broker license and imposition of penalty under Customs Brokers Licensing Regulations, 2018.

Analysis:
The appeal challenged the order of revocation of customs broker license and imposition of penalty by the Principal Commissioner of Customs (General), Mumbai. The appellant, M/s Rupali Logistics Clearing & Forwarding Pvt Ltd, was accused of involvement in exporting overvalued goods to claim ineligible drawback using fake documents. The charges included violations of various regulations under the Customs Brokers Licensing Regulations, 2018. The appellant contended that they were not directly involved in the purchase of goods or declaration of value and that the investigation did not prove the non-existence of the exporter. The appellant's counsel argued that their dealings through a third party did not breach the regulations as the third party was also considered an exporter under the Customs Act, 1962.

The tribunal examined the alleged breaches of regulations under the Customs Brokers Licensing Regulations, 2018. The appellant was accused of breaching regulation 10(d) by failing to advise the client to comply with export provisions. However, it was noted that activities before exporting goods did not fall under the licensed activities of a customs broker. There was no evidence of the appellant's involvement in breaching the Customs Act, 1962. Regarding the alleged breach of regulation 10(e) concerning due diligence in information verification, the tribunal found that the customs authorities misinterpreted the obligations of customs brokers. The tribunal emphasized that the license certifies the broker's competency, and any deficiency should be addressed by the licensing authority.

The tribunal addressed the alleged breach of regulation 10(f) related to withholding information. It was noted that there was no evidence of the appellant withholding information from clients. The tribunal clarified that the responsibility for correct declarations lies with the exporter, and attributing incorrect declarations to the customs broker requires substantial evidence. The tribunal also analyzed the alleged breach of regulation 10(n) concerning client verification. The licensing authority's findings lacked concrete evidence that the appellant failed to verify the exporter's credentials. The tribunal emphasized that the burden of proof was on the licensing authority to demonstrate any failure in verification. Due to these findings, the tribunal concluded that there was no merit in the impugned order and set it aside.

In conclusion, the tribunal ruled in favor of the appellant, M/s Rupali Logistics Clearing & Forwarding Pvt Ltd, overturning the order of revocation of the customs broker license and the imposition of penalties under the Customs Brokers Licensing Regulations, 2018. The judgment highlighted the importance of correctly interpreting the obligations of customs brokers and the burden of proof required to establish breaches of regulations.