2024 (12) TMI 1416 - AT - Customs

Revocation of the CB license - forfeiture of the security deposit - imposition of a penalty - alleged violation of Regulations 10(d), 10(e), 10(f) of CBLR, 2018 - failure to advice the exporter properly on the need to file declaration that they are not the dealing with export of Readymade garments - Fulfilment of obligations as required under CBLR, 2018 or not - HELD THAT - The issue of overvaluation of export goods based on the evidences of the report from Consulate General of India, Dubai etc., are exactly similar to the case already decided by this Tribunal in JOHN K MATHEW VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS (GENERAL) NEW CUSTOMS HOUSE, BALLARD ESTATE, MUMBAI 2024 (8) TMI 410 - CESTAT MUMBAI . In the above referred order, the Tribunal has held that the appellants CB cannot be fastened with the act of omission and commission in relation to a provision in the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 that intended empowering the Central Government to device a schedule of rates of drawback in lieu of engaging in computation of drawback on each incident of export. It was also held by this Tribunal, stating it clearly that the benefit, even if 'undue , derived by the exporter is not of such gravitas as to merit revocation of license to practice a profession and, more specifically, when the licensing authority itself appears to have discountenanced proper conjecture of the provision of law that supposedly made the impugned goods offending. Accordingly, the Tribunal had set aside the Order of the Principal Commissioner in suspending the appellants CB license - in the present appeals before us too, the findings of the learned Principal Commissioner in respect of charges against Regulations 10(d), 10(e) and 10(f) of CBLR, 2018 does not sustain on the same analogy adopted by the Tribunal in the case of appellants-CB on similar exports made by the same exporter M/s World Wide Export. It is also found that the Hon ble High Court of Delhi has held in the case of KUNAL TRAVELS (CARGO) VERSUS COMMISSIONER OF CUSTOMS (IMPORT GENERAL) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI 2017 (3) TMI 1494 - DELHI HIGH COURT , the appellants CB is not an officer of Customs who would have an expertise to identify mis-declaration of goods. Conclusion - A Customs Broker cannot be held liable for the actions of the exporter unless there is clear evidence of the broker's involvement in the alleged misconduct. Thus, CB did not violate the relevant regulations. There are no merits in the impugned order - appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the appellant Customs Broker (CB) violated the obligations under Regulations 10(d), 10(e), and 10(f) of the Customs Brokers Licensing Regulations (CBLR), 2018.
• Whether the revocation of the CB license, forfeiture of the security deposit, and imposition of a penalty were justified based on the alleged violations.
• Whether the CB had knowledge or involvement in the overvaluation of export goods by the exporter.
• Whether the CB fulfilled its duty of due diligence and proper advice to the client as required under the CBLR, 2018.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Alleged Violations of CBLR, 2018

• Relevant Legal Framework and Precedents: The relevant regulations under CBLR, 2018 are Regulations 10(d), 10(e), and 10(f), which outline the obligations of a Customs Broker, including advising clients, exercising due diligence, and not withholding information.
• Court's Interpretation and Reasoning: The court found that the Principal Commissioner of Customs had incorrectly concluded that the CB violated these regulations. The court noted that the CB acted based on the documents provided by the exporter and had no role in the valuation of goods.
• Key Evidence and Findings: The investigation revealed that the CB filed declarations as per the documents from the exporter and that the exports were assessed and permitted by Customs officers. The court also referenced a similar case where charges against another CB were dropped.
• Application of Law to Facts: The court applied the CBLR, 2018 regulations and found that the CB had not breached its obligations as there was no evidence of the CB's involvement in overvaluation.
• Treatment of Competing Arguments: The court considered the arguments of both the appellants and the respondent, ultimately finding the appellant's arguments more persuasive.
• Conclusions: The court concluded that the CB did not violate the regulations and that the revocation of the license and other penalties were not justified.

Issue 2: Justification for Revocation of License and Penalties

• Relevant Legal Framework and Precedents: The CBLR, 2018 provides the framework for the obligations of Customs Brokers and the consequences of violations.
• Court's Interpretation and Reasoning: The court found that the revocation of the license and penalties were not warranted as the CB had not violated the regulations in question.
• Key Evidence and Findings: The court referenced a previous tribunal decision which set aside similar charges against another CB, reinforcing the lack of evidence against the appellant.
• Application of Law to Facts: The court applied the principles of the CBLR, 2018 and found that the penalties imposed were disproportionate to the alleged violations.
• Treatment of Competing Arguments: The court considered the respondent's justification for the penalties but found them unsustainable in law.
• Conclusions: The court concluded that the penalties, including license revocation, were not justified and set aside the impugned order.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The charges of breach of regulation 10 of Customs Broker Licencing Regulations, 2018 do not sustain. There is no case that the goods had not been exported or evidence even that the impugned goods had not been manufactured out of duty paid inputs."
• Core Principles Established: The court emphasized that a Customs Broker cannot be held liable for the actions of the exporter unless there is clear evidence of the broker's involvement in the alleged misconduct.
• Final Determinations on Each Issue: The court determined that the CB did not violate the relevant regulations and that the penalties imposed were unjustified. The appeal was allowed, and the impugned order was set aside.

Overall, the judgment highlights the importance of evidence and due process in disciplinary actions against Customs Brokers, reinforcing the need for clear proof of violations before imposing severe penalties such as license revocation.